AutoNation CEO Pitches Gas-Tax Hike to Spur Demand for Fuel-Efficient Cars

Special Coverage

NADA Convention & Exposition

NEW ORLEANS – As a Mercedes-Benz dealer, Mike Jackson pitched so many ideas to corporate they asked him to work on their side of the automotive business.

Jackson, who eventually became president of Mercedes-Benz USA, subsequently returned to auto retailing as CEO of AutoNation Inc., the largest dealership chain in the U.S.

He’s still full of ideas – and voicing them, as evidenced by his feisty how-to-fix-the-industry speech at a J.D. Power and Associates conference held here in conjunction with the National Automobile Dealers Assn. convention.

“My disclaimer is that you are giving the next hour of your life to a car salesman from New Jersey,” he says after his introduction as the country’s No.1 dealer. “I’ll try not to break anything.”

Jackson proceeds to denounce Wall Street greed; lament how the credit crisis has marred vehicle sales; rap auto makers for pushing inventory on dealers; and call for a gasoline-tax increase to promote demand for fuel-efficient vehicles.

The tax-hike proposal is provocative, controversial and something he is most passionate about. “I pray each night that OPEC (Organization of the Petroleum Exporting Countries) will screw us as much as possible, so we can sell more fuel-efficient cars and establish a sustained energy policy.”

AutoNation’s Mike Jackson dubbed country’s No.1 dealer.

He predicts a fuel tax increase would influence American consumer behavior for the better; keep money in the U.S. that would otherwise go to oil-producing nations and help stabilize the auto industry that has seen widely varying fuel prices mar product planning.

“Yet, some people make it sound like it is treason to advocate a tax increase on fuel,” Jackson says. “And it’s not good that all the auto executives tell me, ‘You’re right, but I’m not going to say so publicly.’”

The U.S. government’s reluctance to tax fuel to the extent European countries have makes Americans think “they have a divine right to low gas prices,” he says. Among other things, that’s led consumers to “strategically decide” to live farther from their jobs “and then to drive big SUVs to make the commute more comfortable.”

There are other things that need to be done in these tough economic times, Jackson says. Among them is to normalize credit. “I’m not asking for easy credit, but we can’t even finance some prime customers. I could improve business 20% to 25% just by finding credit normalization. The government understands lack of consumer credit is killing our industry.”

Next is stabilizing housing prices, as housing values and auto sales are closely linked. “Homeowners who see the value of their homes drop are not going to feel confident about buying a car,” he says.

Another is stimulating the economy with massive government aid. “It is less dangerous to do too much than to do too little,” says Jackson, who also advocates a return to tax deductions for interest paid on car loans.

He blames the government for letting Lehman Brothers fail, which sparked the credit crisis. “That was a colossal mistake.”

But Jackson’s strongest criticism is aimed at titans of finance. “It would be a travesty if the irresponsibility and greed of Wall Street led to the sweeping away of the auto industry. The industry needs bridge loans to get through this, a situation not of their making.”

Early in the decade, U.S. light-vehicle sales were more than 17 millions annually. In 2008, they were down to 13.1 million units, and this year forecasters expect a drop to 11.4 million.

A leaner AutoNation is being run on the premise that “we’ll be at 10 million units forever,” Jackson says. “If business picks up, I can handle that. But I’m not going to say, ‘I think it will be better in June; let’s order more cars.’ That’s not going to happen.”

A conference attendee asks if he would be interested in becoming the nation’s “car czar,” an as-yet unfilled new post created to oversee federal aid to General Motors Corp. and Chrysler LCC.

Not interested, Jackson replies. “I’ve decided at this stage of my life I’m not going to work for the government, and I’m not going to work for a dollar.”