AutoNation CEO Mike Jackson Warns of Auto Sales Plateau, Stair-Step Programs

2016 was a record-setting year in retail automotive. Sales skyrocketed. However, the CEO of the largest dealer group in the U.S. is telling fellow dealers to be careful.

Mike Jackson, CEO of AutoNation, thinks no assumptions should be made about continued auto sales success. Speaking at the Automotive News World Congress Jan. 12 in Detroit, Michigan Jackson Said, “The auto industry is cyclical and anyone who says it’s not is in denial.”

Jackson’s comments seemed to give caution to the retail auto industry that while sales are soaring now, there is not room for much more growth. The AutoNation CEO sees U.S. auto sales as hitting a plateau in 2016. Jackson also warned the industry about the danger of so-called “stair step” programs in which automakers offer dealers a bonus to hit a sales target, which can mean selling vehicles below cost to hit their bonus. Jackson feels the auto industry doesn’t manage plateaus very well. Automotive News summed up Jackson’s feelings about stair-step programs and industry trends with a tweet saying:

“Jackson: Growth + stair steps=tolerable

Plateau + stair steps = nightmare

Downturn + stair steps = catastrophe.”

Jackson also spoke about the future of electric vehicles. He reportedly felt these green machines are only attractive to between 3 percent and 5 percent of car shoppers. However, when gas prices are lower, as they are now Jackson noted, “There is no economic rationality or payback for the technology.” The AutoNation CEO also endorsed the idea of a carbon tax. His endorsement puts him in the company of Tesla Motors CEO Elon musk.

Do you think soaring auto sales trend will plateau after 2016? Do you think the mass appeal of electric vehicles will grow during the next few years above 5 percent of consumers? How do you think the automotive industry has handled downturns historically?