A car guy who wants you to drive less
America's biggest auto dealer has a plan to cut oil imports but it won't win him many friends in the business.
NEW YORK (FORTUNE) - Mike Jackson has a prescription for reining in energy usage that is simple, straightforward and guaranteed to be effective. The CEO of AutoNation (Charts), the largest chain of auto dealers in the United States, suggests that the government raise the tax on gasoline by another $1 per gallon.
If that sounds like suicide for someone who makes his living selling new cars, well, that's Jackson. Talking straight is his MO and he's using his bully pulpit to make a uniquely personal campaign against dependence on imported oil. He spoke with FORTUNE Senior Editor Alex Taylor III.
What impact are high gasoline prices having on the cars and trucks you sell?
This is one of those issues where you have to look at what the consumer does - usually a lot of complaining but very little change. However, I've always said that $3-a-gallon gas is a tipping point for consumer behavior. Now we're there for the second time in a year and consumers are beginning to believe that prices are going to be higher for extended periods.
The coolness factor has left sport utility vehicles. SUVs are being purchased on an as-needed basis. Consumers would be switching to crossover utility vehicles anyway, because they offer many benefits over SUVs, like better ride and handling and fuel efficiency, but that process is being accelerated.
We're also seeing a resurgence in small cars, but that is primarily product-driven. These aren't the econoboxes from 15 years ago. Today's small cars are highly refined and sell at an attractive price point. Fuel efficiency is only part of the equation. When they saw the old Dodge Neon, people would say, "You expect me to pay $14,000 for that?" When they see the new Dodge Caliber, they ask "That's only $14,000?"
Can we legislate fuel economy by forcing manufacturers to make more efficient vehicles?
Clearly, what has been done for the last 30 years won't work. There has been tremendous improvement in engine technology in the last 20 years, and it has been used to increase performance and power heavier cars.
Today's vehicles weigh 30 percent more than ten years ago because so many of them are SUVs. Consumers have gotten what they are demanding, and if gasoline is cheap, that is what they will continue to buy.
So the answer is a higher gasoline tax?
To shift behavior, you have to change the consumer's mindset. The party is over - cheap gasoline is not in our best interests. We have to have a tax at the pump that will justify a whole slew of technologies that are just sitting there if we can make them economical, both for existing engines and new engines. But $3-a-gallon gasoline isn't going to get it done.
Experts say that a higher tax is politically impossible.
I don't think that is true today. American consumers have moved far beyond the leadership in Washington. Our research shows that if we had a realistic energy policy, a majority of Americans would support a gradual increase. It put it at ten cents per year.
There is no question the tax is regressive. At the end of the year, it should be returned to consumers as a rebate. You will still get behavioral change at the pump. It is not as much about revenue as it is about changing behavior.
Will hybrid gas-electrics eventually make an impact on fuel consumption?
Hybrids are purchased by people who have a high sense of social responsibility along with the means to express it. But they can't be mass market because it takes you 12 to 14 years to get your money back on fuel savings. The premium has to come down by half and gas needs to stay at $3 for hybrids to become mass-market vehicles.
What about ultra-small city cars like Mercedes-Benz's Smart?
Smart is a great brand. They could sell 20,000, 25,000 cars a year here, but from everything I've seen, they don't have an economically viable business plan. I can't get excited about a money-losing brand.
What do you drive?