This is a partial transcript from "Your World with Neil Cavuto," April 29, 2004, that was edited for clarity.
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TERRY KEENAN, GUEST HOST: My next guest doesn’t see any signs of the economy or demand for autos is slowing down. First quarter profits at AutoNation, the nation’s largest dealer in the United States, racing past Wall Street estimates today.
Joining us now from Fort Lauderdale is Mike Jackson, the chairman and CEO of AutoNation.
And welcome, Mike. Good to have you with us.
KEENAN: Thank you. A lot of people thought consumer spending would slow down in the first quarter. The GDP numbers reflect that, yet you don’t seem to be seeing that in your business.
JACKSON: No. New vehicle sales for us on a revenue basis were up 8 percent in the first quarter, 4 percent on a unit basis. And we have tremendous new products from the manufacturers, combined with a very compelling value story through incentives. What is interesting, and what we see on the showroom floor is that the consumer is using the incentives to buy more vehicle, and to add more content. Meaning their willingness to spend is greater than what the incentives would seem to indicate.
KEENAN: And is that a change from a year ago or two years ago?
JACKSON: It is somewhat. There is no question that the product is what is keeping the consumer coming into the showroom. They are really excited about what they see and are willing to use that incentive to get more vehicle.
KEENAN: Gasoline prices, of course, going through the roof in the last six months or so. Everyone is complaining about them. But when they come in to buy a car, are people still going for the gas-guzzling SUVs?
JACKSON: Gasoline price is not a factor in the purchasing decision other than something to talk about. And from a retailer’s perspective, I would say the pain threshold is much more like $2.50, $3 a gallon before you’ll see significant change in consumer behavior as to the type of vehicle they buy because of fuel consumption.
KEENAN: Yes. I mean, back in the late ‘70s, early ‘80s, that was one of the key questions people would ask when they’d go into a showroom to buy a car. Do you find that people are even asking you what the miles-per- gallon are on these vehicles?
JACKSON: I think -- and I lived through those previous disruptions -- it was much more this panic feeling about availability at any price that drove behavior to a great extent. This time, you know, availability is not an issue, it is just price is an issue. If you adjust for inflation from those times, I’m not sure you are seeing prices that would equate to those levels. So it is a discussion point, but it is not a factor in the purchase decision.
KEENAN: It’s a lot of talk...
JACKSON: Now, at the same time, we look at some hybrids, though...
KEENAN: Are they selling?
JACKSON: ... such as the new Toyota Prius, and for the first time we see appeal outside of just the state of California. But here, the vehicle has addressed all the concerns as far as size, and power and performance. So you don’t -- the consumer doesn’t have to make that trade-off. What will be very interesting is when hybrids move into sport utilities, such as the Ford Escape.
KEENAN: Yes, that will be interesting to watch. And we’ll have you back to talk about that then. Thanks so much for joining us.
JACKSON: Always a pleasure to be here.
KEENAN: Mike Jackson of AutoNation.
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