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VW Scandal a “Black Eye” for US Diesel Market

Sales likely to collapse; long-term revival uncertain.

by on Sep.24, 2015

The 2015 Golf TDI is one of the diesels VW has temporarily stopped selling in the US.

For motorists looking for sporty but environmentally friendly alternatives to sluggish hybrids, diesels like the Volkswagen Jetta TDI has been a welcome addition to the U.S. market. The ability to deliver real performance along with high mileage is one reason why diesel sales have continued to grow even as demand for gas-electric models has plunged in the face of cheap gas.

But that growth spurt is likely to sputter out, industry insiders warn, in the wake of the Volkswagen cheating scandal. Last week, the Environmental Protection Agency ordered the recall of 482,000 VW diesel models, revealing that the maker had used software to scam the government’s emissions tests.

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In real world situations, vehicles like the Jetta TDI actually produce up to 40 times the permissible level of noxious emissions.

“This is another black eye for diesels,” said Mike Jackson, CEO of Florida-based AutoNation, the country’s largest automotive retailer. “You now have a passionate constituency that feels betrayed.”

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AutoNation Won’t Sell Recalled Cars

Move could pressure other retailers, lawmakers to follow.

by on Sep.09, 2015

AutoNation CEO Mike Jackson.

The nation’s largest automotive dealer network has announced it will no longer sell either new or used vehicles subject to a recall until they have been repaired.

The announcement by Ft. Lauderdale-based AutoNation comes as the number of safety-related recalls has been surging to record levels. But while the U.S. Senate recently passed a measure that would force rental companies to pull recalled vehicles out of their fleets pending repairs, dealers were not required to take similar actions before selling such vehicles. And the House has yet to take action on its own version of the bill.

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“There’s no way to expect that customers would or should know of every safety recall on every vehicle they might purchase, so we will ensure that our vehicles have all recalls completed,” said AutoNation CEO Mike Jackson. “We make it our responsibility as a retailer to identify those vehicles and remove them from the market until their safety issues have been addressed.”

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NADA Blasts Web Analysis of Clunkers as Flawed

Economist says clunker cost per vehicle is $4,600 not $24,000.

by on Nov.11, 2009

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The analysis is wrong on two main points, Taylor says.

After what is said to be a “thorough review” of the Cash for Clunkers program, the chief economist of the National Automobile Dealers Association (NADA), Dr. Paul Taylor, says that the cost of each incremental vehicle sold was around $4,587. Taylor defined incremental as a sale that would not otherwise have occurred without the Clunkers program, formally known as CARS.

His findings bring into serious question the methodology — and ideology– behind the $24,000 estimate publicized by the car-buying web site Edmunds.com.

“It’s really not that hard to determine a credible cost estimate for the Clunkers program,” says Taylor.

“You subtract projected sales from actual sales for July and August when the Clunkers program was operating, and divide the program’s $3 billion by that number.”

Taylor says that, based on sales volume for previous months, a realistic projection of auto sales for July and August would be around 1,600,000 vehicles. Actual sales for those two months totaled 2,253,963. The difference is 653,963. That is the number of incremental sales generated by the Clunkers program. Divide the program’s $3 billion by that number and you get $4,587, the average cost per incremental Clunker sale.

Taylor’s criticism mirrors that of many others, including Mike Jackson, chairman and CEO of AutoNation, Inc, the biggest auto retailer in the U.S.

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The End of the Auto Show?

Auto Makers are thinking about skipping the circuit.

by on Mar.02, 2009

Just say "nyet" to auto shows: Costly events, like the Moscow Auto Show, even the Tokyo Motor Show, could soon fade away.

Just say nyet to auto shows: Costly events, like Moscow, or even Tokyo, could soon fade away.

The automotive world’s spotlight will hit Geneva, this week. The city by the lake plays host to Europe’s first big auto show of 2009, an event that will draw dozens of manufacturers and witness the launch of more than 50 new cars, trucks, concepts and crossovers – with the Tuesday news conference schedule alone bringing a news conference every 15 minutes from dawn to dusk.

Car makers and car journalists will have only a matter of weeks to recover before the industry’s next big show, in New York City. Indeed, the calendar is densely packed with car shows large and small, some little more than dealer exhibitions at a local mall, others like the Geneva Motor Show and Detroit’s North American International Auto Show, which has drawn as many as 70 different product “reveals” to its annual press days.

Under the helm of former CEO Jacques Nasser, Ford spent more than $50 million designing a new auto show stand for the Detroit show. Even a small presence at a major show, like the ones in Frankfurt, Paris or New York, can set a maker back by $3 million. But traditionally, manufacturers have considered that the price of doing business, as essential as the spots they run on network television. So, today, with every marketing dollar under close review, it’s probably no surprise that some carmakers are seriously rethinking their commitment to the auto show circuit.
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Interest in EVs Gaining Ground

by on Feb.10, 2009

Interest in electric vehicles, like Chevy's Volt, is charging up

Interest in electric vehicles, like Chevy's Volt, is charging up

A new study from Maritz Automotive Research Group suggests consumer interest in new automotive technology is continuing to grow, particularly when it comes to electric vehicles.

Maritz’s Automotive Research Group has been tracking awareness of alternative fuels in its annual New Vehicle Customer Study (NVCS) since 2005, and the data show electric power growing as a primary alternative fuel among the current choices. Approximately 9 percent of consumers, who bought or leased a new vehicle in 2008, judge the electric-powered vehicle as the alternative fuel that was most appealing. As measured by the Maritz survey, the appeal of the electric vehicles has grown from 3.4 percent in 2006, to 6.6 percent in 2007 to 9.4 percent.

Another finding of the survey, which has held up in each of the past three years, was that interest is higher among those who purchased or leased a car rather than a light truck, suggesting a natural market divide could develop as more electric vehicles come on the market.

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Brand X-ed?

Some brands just need to go away, says AutoNation CEO

by on Jan.28, 2009

Jackson tosses Mercury onto the trash heap

Jackson tosses Mercury onto the trash heap

The top executive at America’s largest auto retailer is not known for his shy demeanor, reluctance to express his mind or not having an opinion – quite the contrary, as Jackson once again demonstrated during an appearance in Detroit, where he made it clear which automotive brands should be tossed on the industry’s trash heap.

While not Vice President Biden-like, Mike Jackson is not afraid to speak his mind on CNBC, at stockholder meetings or at the 2009 Automotive News World Congress, in Detroit. If he were not as successful in a varied automotive career his articulate, often funny, remarks and views might not be acknowledged, accepted, much less admired as they are.

Following his what ails the auto industry speech and the subsequent Q&A follow-up, Keith Crain, publisher of Automotive News, asked Jackson for his opinion on what he’d do, “Buy, sell or hold,” as he read a list of auto franchises. Here are his remarks as I recorded and transcribed them.

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Dealers Singing The Blues Down in New Orleans

Bad news to mark annual auto retailers convention.

by on Jan.23, 2009

2009 NADA Convention Poster

2009 NADA Convention Poster

They’ll be shucking oysters by the barrel, at the Acme, this weekend, and serving up plenty of crawfish gumbo at The Court of Two Sisters. But even the most lavish feast, on Bourbon Street, won’t do much to brighten the mood when thousands of the nation’s dealers gather in New Orleans.

There’s always a blend of camaraderie and confrontation at the annual conference of the National Automobile Dealers Association, but this year’s event is likely to have a distinctly elevated stress level. According to the NADA, the number of new car retailers in the U.S. is falling off at the fastest pace in decades. As 2008 came to a close, at least two dealers a day were closing up shop. And since most own more than one showroom, the storefront decline is even more rapid.

Typically, the NADA convention attracts the nation’s more prosperous retailers, yet this year, even they recognize there’s no guarantee of survival. “The fact is,” warns Chrysler Vice Chairman Jim Press, “when you take one-third of the market out, the number of dealers has to be reduced.”

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Tax-and-drive Republicans

In a "post-partisan" era, who will lead the political fight for stiff new gas taxes?

by on Jan.21, 2009

Is it time to raise the federal fuel tax?

Is it time to raise the federal fuel tax?

So, when did so many Republicans start sounding like Democrats? I know, I know, President Obama is all about a “post-partisan” America, and it’s not uncommon to hear even the most vociferous political opponents making nicey-nice with each other in the first weeks after an inauguration. But what I’m talking about is a serious, seemingly heartfelt transformation by some of the auto industry’s most traditional members of the Grand Old Party. Like Bob Lutz, GM’s Vice Chairman. Like Michael Jackson, the CEO of retail giant AutoNation.

No, they’re not going off on gay marriage, or national day care. But they are touching upon one of the traditional “third rails” of American politics, something even the most hard-core “tax-and-spend” Democrats have largely chosen to sidestep, in recent years. And that’s the idea of a stiff, new gas tax.

Go to Europe and a good 80% of what you pay at the pump is tax, as much as $8 a gallon – at the current exchange rate – in some countries, or about 40 times what Americans pay in the federal fuel tax. And the number hasn’t changed in two decades, here at home, even though much of the world has consciously increased fuel taxes in order to discourage demand, promote the sale of fuel-efficient vehicles and, of course, balance their budgets.

There are, of course, plenty of environmentalists who’d like to see the U.S. catch up. But the Sierra Club and the World Wildlife Federation aren’t going to move the political needle. If anything, it may take the loyal opposition, and the industrial side of the Republican Party seems to be rushing in to fill that gap.

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