AutoNation's Jackson sees reliance on incentives, leasing as 'yellow flags'

AutoNation CEO Mike Jackson said automakers could be “sowing the seeds for disruption” by increasingly relying on incentives and leasing to sustain sales figures.

Jackson, in an interview today on CNBC, said that although higher sales figures would appear to indicate a healthy market, rising incentive spending and lease penetration raise concerns.

“All those are yellow flags that you’re starting to take steps to try to sustain a sales volume that really isn’t there,” Jackson said.

U.S. new-vehicle sales are up 3.4 percent this year through February compared with 2015, a record sales year. Jackson said incentive spending is up 14 percent compared with a year earlier, while leasing now accounts for more than 30 percent of sales.

Despite his concerns, Jackson said strong demand for high-margin trucks should keep automakers profitable in the short term.

‘Unthinkable’ primary

Jackson, when asked about today’s Republican presidential primary in Florida, said he expects “the unthinkable” to happen: a victory for front-runner Donald Trump and a devastating defeat for Sen. Marco Rubio, R-Fla.

“I think Rubio’s last chance[s] were really hurt when he blundered a few weeks ago and went to schoolyard, gutter tactics against Donald Trump, leaving his aspirational, inspirational message,” he said. “The voters of Florida simply didn’t recognize that Marco Rubio.”

The CEO of Florida-based AutoNation said he is not eligible to vote in the state’s primary because he left the GOP last year over its response to Trump’s rise.

“I left the Republican Party last year when they didn’t take on Donald Trump early,” he said. “I’m now an independent; I’m more in Switzerland.”

Today’s contests in Florida and Ohio, two winner-take-all states with 165 total delegates up for grabs, are seen by many political analysts as the Republican establishment’s last chances to stop Trump from winning the nomination.

“If Donald Trump sweeps these winner-take-all [states], I think he’s on the way to getting the delegates he needs to win on the first ballot,” Jackson said.

Rubio, seen as Trump’s top challenger in Florida, is polling well behind the Manhattan real estate mogul and would have his chances at the nomination significantly hampered by a loss.

Meanwhile, in Ohio, polls show Gov. John Kasich edging out Trump in what would be a crucial victory on his long-shot path to the nomination. The Kasich campaign is banking on an Ohio win to boost his momentum and prevent Trump from winning a majority of delegates, leading to a contested convention.

Jackson praised Kasich, whose campaign he said he donated to, as “competent, reasonable [and] positive,” while questioning whether Republican voters will give him a chance.

“You have to admire that effectiveness that Gov. Kasich has demonstrated, but in today’s environment, I don’t know how much that counts for,” he said.

A Republican candidate must win 1,237 delegates to be nominated. Trump led the way heading into Tuesday, with 460 delegates. Sen. Ted Cruz of Texas was in second, with 370 delegates, followed by Rubio with 163 and Kasich with 63.