Transcript: AutoNation's Mike Jackson

This is a partial transcript from "Your World with Neil Cavuto," April 28, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: According to the Associated Press, sales of hybrid vehicles were up 81 percent in 2004. And thanks to higher gas prices, my next guest continues to see the same kind of demand. AutoNation, America's largest retailer on both new and used cars, rose 11 percent in its first-quarter profits.

With us now from Fort Lauderdale, the Mike Jackson. Mike is AutoNation's chairman and CEO

Mike, good to have you back.

MIKE JACKSON, CHAIRMAN & CEO, AUTONATION: Neil, pleasure to join this afternoon.

CAVUTO: I'm always curious, Mike. I always hear this talk about SUVs, not nearly as popular now. They sit on lots a little longer, unless they're either the hybrid type or the not-so-gas-guzzling type. What is it?

JACKSON: Well, I'm a little bit of a contrarian on the whole fuel consumption issue, Neil.

If I look at last year's figure, the average consumption of all the vehicles sold in America went down by half-a-mile per gallon. And Americans per vehicle actually drove more last year. And I think fuel prices are still adjusted for inflation nowhere near the peaks of the '70s and '80s. That would take $3 a gallon. And as a percent of household income, they are much lower.

I think large SUVs are a combination of product issues. Namely, consumers have a new choice with these crossover vehicles that are based on car platforms, which are much smoother and quieter. And, most importantly, the large SUVs, particularly for General Motors, are at the end of their life cycle. They're in the sixth year of production.

So, if you go to another segment -- let's take cars -- large cars are booming. They're up 40 percent, driven by a vehicle like the 300C. And people are screaming for the Hemi engine all day long and nobody is talking about fuel prices...

CAVUTO: Yes, but, Mike, you know, you're in the business, obviously. You're not going to say it's lousy. So, I'm not meaning to disparage that.

But I guess what I'm curious is, what is hot in this environment right now?

JACKSON: Well, you mentioned hybrids. And there's no question that hybrids are hot.

The segment went from 80,000, from almost nothing to 80,000 last year. And the outlook is, there will be another dramatic increase this year. And I think, in the next three to four years, hybrid sales will increase to 400,000 to 500,000 units.

However, it's not driven by the economics of fuel efficiency. It's more a social responsibility issue, because these vehicles are super clean, as well as fuel efficient.

CAVUTO: All right.

JACKSON: And the segment didn't really boom until they were able to engineer out the big compromises that were in the original vehicles, namely size and performance.

And if you look at consumers who are buying these vehicles, they are highly educated, high income. They're making a social statement. And so I think the hybrid segment can grow to 400,000, 500,000 units.


JACKSON: To go beyond that, the economic equation would have to work. Namely, the premium for the technology vs. the cost of fuel would have to change. And we're not there yet, not at the price of fuel today.

CAVUTO: All right.

Mike Jackson, AutoNation chairman and CEO, he's just the more conservatively dressed Michael Jackson, if you ever get confused.

Michael, good to have you. Thank you very much.

JACKSON: Thank you, Neil. I appreciate that.

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