AutoNation Still Selling, But Not Delivering, Implicated Toyotas

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Toyota's Safety Crisis

WASHINGTON – AutoNation Inc. CEO Mike Jackson continues to sell, but not deliver, cars and trucks from Toyota Motor Corp., as the auto maker struggles to fix sticky accelerator pedals.

Jackson, who heads the nation’s largest dealership conglomerate, also appeals to U.S. lawmakers for a gasoline tax to end whipsawing consumer preferences when fuel prices rise and fall.

“We tell (customers that) not selling the vehicles is an over-abundance of caution,” Jackson tells Ward’s after delivering a speech to the Society of Automotive Engineers Government/Industry meeting here.

“Everything shows it is a wear issue, and obviously there is no wear on a brand-new car. But with an issue of this type, it’s just best to have the fix and put the fix in. We’re still selling them, but we’re not delivering them.”

Jackson says AutoNation’s strategy falls in line with the U.S. law that shut down sales of certain Toyota vehicles Tuesday because the products are defective.

He says his Toyota dealerships, including the massive Power Toyota Cerritos and Champion Toyota Gulf Freeway locations in California and Texas, booked sales of implicated cars and trucks yesterday.

“And if it turns out (the shutdown) is going to be protracted, we’ll give the deposit back,” he says. “But nobody really knows that at the moment. Are we talking a week or a month? We don’t know.”

Subject to the sales stoppage and recall are ’10 Toyota Camry, Corolla, Avalon and Matrix cars and Highlander, Sequoia, Tundra and RAV4 light trucks.

AutoNation CEO Mike Jackson calls for gasoline tax.

Also yesterday, Toyota expanded its recall of cars and trucks with faulty or ill-fitting floor mats to additional models. The floor mats are seen as another potential cause of unintended acceleration.

Jackson says his customers never made him aware of either sticky pedals or bad floor mats, although Toyota admits sudden-acceleration problems date back to 2007.

“There was a lot of conversation when the whole floor-mat thing came back,” he says. “There was a lot of debate, ‘Was there something else?’ But no, we learned (of the problem) in real time.”

Jackson says he remains in touch with Toyota officials “four times a day” and says “there needs to be a technical solution soon,” but most customers ringing his dealerships are satisfied with the auto maker’s actions.

“Of course we got a lot of calls, a lot of concerns, and we walk them through everything,” he says. “Ninety-nine percent of the time that takes care of it. We hope to have a solution on the sticky pedal soon.”

Jackson scoffs at suggestions Toyota may have grown too quickly, missing items such s sticky pedals and bad floor mats because of hasty development processes.

“We stand with Toyota,” he says. “We’ll get through this together.”

Jackson also uses the event to urge Washington lawmakers to consider a gas tax. He admits it is an unpopular solution to raising fuel economy, trimming carbon-dioxide emissions and reducing the nation’s dependence on foreign oil, but says there is no other way to change consumer buying habits.

“The only way we can sell fuel efficiency is if the price of gasoline goes up,” says Jackson, whose company has sold 7 million vehicles.

He doesn’t suggest taxation to the extent of Europe, where $8-a-gallon gas is the norm, compared with $2.50 in the U.S., but asks for incremental increases over an extended period. And at the end of every year, he offers, the U.S. could rebate the tax back to lower-income Americans.

In the meantime, a government working to improve fuel efficiency while keeping gasoline cheap amounts to a ridiculous irony.

“It’s like owning a donut shop and selling the best-tasting donuts in town, along with some broccoli,” he says. “And then the government comes along and says, ‘We want people healthier, so you’re going to have to sell more broccoli. But we’ll help you out by making the donuts cheaper.’

“There’s a disconnect between what the government mandates and cheap gasoline.”

And dealers and their customers are caught in the middle, he says. When U.S. gasoline prices shot over $4 a gallon, consumers wanted small, fuel-efficient cars and most of what Jackson could offer were thirsty trucks.

After gas went back down under $3 a gallon in November 2008, his lots had changed over to fuel-sippers, but customers wanted to trade their cars back in on the gas guzzlers.

“I looked like an idiot in the summer of 2008, and then I looked like an idiot again in November 2008.”

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