He Sees a Huge Disconnect Between Consumers and Auto Makers' Product Plans

While advocating a gasoline tax increase to encourage consumers to drive more fuel efficient vehicles, AutoNation Inc. CEO Michael Jackson gives his take on alternative fuels around today.

This year's Detroit auto show placed much emphasis on future electric cars, but Jackson, the retailer, warns that marketplace interest in such vehicles may be tepid.

There is a “huge disconnect” between what Detroit is highlighting and what consumers may want to buy up the road, he says.

Even today, many consumers are interested in hybrid-electric vehicles, but relatively few actually end up buying one.

“Eighty percent of our customers want to talk about hybrids, but our closing rate for them is 2%,” Jackson says. “Until we can create an economic payback, hybrids will be for people who are the most environmentally conscience.”

Impending plug-in HEVs, such as the Chevrolet Volt due out next year, could represent the big first step toward electric vehicles, he says. “But the challenge is that a gas tank costs $100 and weighs 100 pounds, while the Chevy Volt's batteries cost $10,000 and weigh 1,000 pounds.”

He admires today's diesel powertrains, but says they present marketing challenges.

“We lost generations of diesel technology because we had dirty diesels (fuel) that turned off a lot of consumers. Today's diesel engines are so much better and cleaner, but their price premiums may scare people away.”

Direct injection allows diesel engines and others to be smaller, yet powerful, but “customers, who are used to paying more for bigger engines, may look at those smaller engines and say, ‘I should pay less, not more, for those.’”

Jackson places little hope in the future of E-10, a blend of 10% gasoline and 90% ethanol, as an alternative fuel.

“It's a complete joke,” he says. “The U.S. government is paying $7 billion to $8 billion to oil companies to use ethanol in the E-10 blend. You really can't make this up.”