Recession

AutoNation chief warns of recession
Largest auto chain in U.S. sees O.C. as leader in long-term growth of luxury-car segment.
By JOHN GITTELSOHN
The Orange County Register
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, according to the Center for Economic Research at Chapman University.
Esmael Adibi, the center's director, said it's premature to call it a recession but agreed that rising interest rates are undermining spending. "You can clearly see a slowdown, but it's still growing," he said.
Fort Lauderdale-based AutoNation accounts for about 3.5 percent of vehicle sales nationwide, with 2005 revenue of $19.25 billion.
Jackson, who gave an interview to The Orange County Register before addressing 2,500 AutoNation employees at the Orange County Performing Arts Center, said interest rates, not rising fuel prices, are the biggest damper on purchasing decisions.
Orange County's auto market is, in some ways, a leader of national trends, especially among premium luxury brands, such as Mercedes, Lexus and BMW, which ranked fifth, seventh and eighth respectively among the most popular brands in Orange County.
"Luxury has increased from 11 percent to 22 percent of revenue for us today," he said. "Our feeling is premium luxury is going to grow faster in the next 10 years."