Wednesday, August 23, 2006

AutoNation chief warns of recession

by Calculated Risk on 8/23/2006 07:03:00 PM

The Orange Country Register reports: AutoNation chief warns of recession

The chief executive of the nation's largest auto-dealing company said Tuesday the economy is "at a tipping point," threatened with recession as rising interest rates undermine consumer confidence.

"The question is how bad a recession," said Mike Jackson, CEO of AutoNation, which owns 338 auto franchises, including House of Imports in Buena Park, Power Toyota Cerritos, Lexus Cerritos and Power Toyota Irvine.

During the first six months of this year, auto sales fell 0.3 percent nationwide and 6.8 percent in Orange County. Sales of autos and gasoline account for almost one-third of retail spending in Orange County...
Click on photo for larger image.

TIPPING POINT: "Sales of pickup trucks are down because construction activity is backing off," says, Mike Jackson, CEO of AutoNation. "Pickups are the backbone of construction."

Photo: Jeff Kowalsky, Bloomberg

And from the AP: Slowing Pickup Truck Sales Hurt Profits
Much to the detriment of Detroit's Big Three, people like [carpenter Tom] Wright are delaying truck purchases, cutting into profits and forcing Ford Motor Co., General Motors Corp. and DaimlerChrysler AG's Chrysler Group to idle some assembly lines.

Pickup sales overall are off 15.7 percent in the first seven months of the year from the same time last year.

Sales of Ford's F-series pickups, the highest-selling vehicles in the nation, are down 12.3 percent. The No. 2 seller, the Chevrolet Silverado, is off 20.1 percent as the company changes production to a new model. Dodge's Ram line is down 11.7 percent.
This is a secondary effect from the housing bust; slower auto sales, especially slower truck sales as construction workers find less work.