DETROIT -- Mike Jackson, CEO of AutoNation Inc., has a new crusade: ridding auto dealers of manufacturers' stair-step incentive programs.
Stair-step programs, which pay dealers if they reach certain sales goals, cause "irrational" and "crazy pricing" and weaken dealers' credibility, the head of the nation's largest dealership group told the Automotive News World Congress.
The practice is out of place in today's marketplace, in which consumers demand transparency, he said: "It undercuts the confidence, goodwill and integrity around your pricing. Customers no longer believe us when we tell them: 'This is the best price you're going to find.' "
He called the stair-steps a "stairway to hell" and said they expand the range of prices for affected vehicles because they prompt dealers to manipulate those prices in order to log enough sales in a given month to get the incentives.
"If a living, breathing human being walked into your dealership, you could almost say, 'Here's a check for $5,000 and take this car free,' just so you can report it to the manufacturer," and collect that month's bonus, said Jackson, 61.
He said vehicle sticker prices should be set closer to transaction prices. Incentives then should be used to fix specific problems or manage the life cycle of a product.
Jackson also commended the industry for a successful switch from the old "push" production model to a "pull" model. For several years, Jackson had attacked the "push" concept -- automakers stuffing excess vehicles onto dealer lots and then offering big incentives to sell them. In the "pull" model, consumer demand, not factory output, determines dealers' inventory.
Separately, Jackson said Detroit should "pass a hat and take up a collection to build a statue" of Ford Motor Co. CEO Alan Mulally to honor his indirect role in the federal bailout of the auto industry.
Mulally, soon after joining Ford, made decisions that strengthened the company.
"When the industry was twisting in wind -- whether to be saved or not saved," he said, "Ford was a shining company to look at and say, 'This is what can be.' "