Mike Jackson, unscripted

"We made money selling [new] cars 10 years ago," he said, but that's changed. "The manufacturers, through various marketing programs, are deliberately driving down the front-end profitability on the cars. The manufacturers have changed the game, saying to retailers, 'You can't make money selling cars anymore. Everything you make has to be downstream.' And if you want to have control of your destiny and grow, then you have to say, 'I have to be innovative and creative in the way I make money downstream, in ways I traditionally have not made money downstream.'"

Jackson blasted automakers that use stair-step or target-based bonus programs. "That target is set in an arbitrary, capricious, opaque, discriminatory way. We have enough stores that we can say, 'OK, let's square this circle and see, does this box?' Well, it doesn't box. They're arbitrary, they're capricious and it's opaque. There's always a missing piece to the puzzle that you can't solve. It's very disruptive in the marketplace, and it's very difficult to deal with.

"It's basically unfair to customers because you create a perception that something's available in the marketplace that's really not. Because certain players, based on their target, are at one price and others have another price. It's a multi-tier pricing system, and you're asking customers to figure it out. And it's exactly the opposite of what a customer wants. It's three-card monte, find the weenie. That dissatisfaction is being observed by many in the industry. Aggressive practitioners have the lowest residual values because it's basically a corrosive program."

"The payments system [for stair-step programs] is based off the latest [monthly sales] report. If you have manufacturers whose field organizations are pressuring for aggressive reporting combined with the reward of substantial payments, that's an unhealthy situation that's leading to unsavory practices.

"The industry should just do away with monthly sales reporting. Quarterly GAAP reporting, monthly production is fine. It's a real hard number." AutoNation dropped its own monthly sales report at the beginning of 2016.

"This isn't working. There are no common rules across manufacturer. There's no accounting firm that says this is what counts as a sale. There are no rules whatsoever -- just make up whatever you want."

In the past, unreliable sales reporting may have been "an amusing subject," he said. "In a multi-tier pricing system, it affects the price I have to compete against with competitors. Now it's a real issue. It's nitroglycerin.

"It's a very bad combination now where there's significant money attached to aggressive sales reporting that's unhealthy.

"The practices: Everything from programs that are wink-wink, end-of-the-month 'Report these number of vehicles into demos even though you don't need one more demo.' You end up with a significant percentage of your inventory reported as demos, even though they're not really demos. But it's an official program in writing and you do it. It's a great deal of customer dissatisfaction because you now have two identical vehicles -- one is a demo, and one's white and one's blue and you can't explain to your customer why there's a $5,000 price difference. It disappears from the system, and you can't deal with or exchange it efficiently."

It continues "down to pressure to just make up names or the worst: manufacturer reports your vehicles as sold and doesn't even tell you."

Jackson kicked off 2016 predicting a plateau in industry sales for the year.

"I'm still in plateau, but mind you, plateau means plus or minus a few percentage points. It shouldn't go crazy one way or the other. Now the plateau is not as nice and neat as everyone would like, in that it took a significant increase in incentives. Incentives went up 12 to 15 percent, depending on your source. Leasing got pushed to 30 percent. Retail is down slightly, fleet is up.

"So the quality of that plateau of 2016 has to be observed. What saved the day for everyone at the OEM-supplier level was the big shift to trucks -- or else you'd have a very different story.

"The only way you could afford all that is because of cheap money and cheap gas. So that was the secret sauce that makes everything wonderful, particularly this mix to trucks."

"I'm concerned the level of incentives can take another notch out. Manufacturer incentives are now 10 percent of MSRP, and there is a point of diminishing return where whatever you give on the front end in incentive comes off the back end in resale value -- and then have you really given the customer anything? We're right on the tipping point.

"Thirty percent leasing is above any natural market preference, completely distorted by what the incentives are. Can you really take leasing to 35 percent? Can you really take incentives to 12 percent? Another step up? I don't know.

"But the mix benefit should be even stronger because the last several years the manufacturers have moved heaven and earth to bring a closer alignment between what they're producing and what the marketplace wants. So in this consumer stampede of a truck mix of 45 percent to now 60 percent, there's a big disconnect between what's being processed and what people wanted to buy and with time that's getting better and better and should be even more optimal in 2017. So it should be another good year overall for the industry."

Jackson supported Hillary Clinton in the presidential election after leaving the Republican Party over its failure to turn back Donald Trump's anti-immigration, anti-trade campaign. "I didn't vote for the guy, but I accept now the American people have spoken. It's a democracy, and he's our president-elect."

If Trump can actually do something in Washington about fiscal barriers to economic growth, it could be good for the overall economy, Jackson said. On the NAFTA trade deal, with auto parts and vehicles moving back and forth across the borders of Mexico and Canada daily, Trump's opposition is a "wild card."

Jackson called on Trump to bring more scrutiny of the Consumer Financial Protection Bureau. "I don't believe there's systemic discrimination in auto retail, maybe some bad apples that need to be dealt with.

"Here you have an agency that has unprecedented power. Its budget comes from the Federal Reserve by dictate, not through Congress. It has one individual leading it. It's not a commission. It's a long-term appointment by the president. It's very powerful. The regulatory burden from it has been tremendous. And I expect the structure of CFPB -- that its budget is automatic and that there's only one individual running it -- will be looked at."

He doesn't see the unexpected Trump win hurting near-term auto sales. "There is a sense of relief that it's over one way or the other and that Mr. Trump was able to give a coherent, gracious acceptance speech. Everybody took a deep breath and said maybe we can survive this."

"Paying people super premiums to buy them out of their family legacy -- the numbers just don't work. If you take the top 100 dealers in America today, they probably sell approaching 20 percent of the business. If you ask me what it's going to be 10 years from now, maybe it's 25 percent. How the top 100 are capitalized can be private equity, private entrepreneurs, publicly traded. But I see no stampede where you end up in the foreseeable future -- by that I mean 10 years -- with players big enough to really change the game with the manufacturers.

"Entrepreneurial auto dealers and their families love what they do. It is a life. It is defining of who they are. When you come in to make an offer to someone who doesn't want to sell, the premium you have to pay to make them give up their lifestyle and what defines them is almost double the value of the business. So this business will consolidate at the rate of willing sellers that come to market, not faster."

"It could be zero or it could be a lot. It all depends on willing sellers and the price from the sellers. What's different is I now have an alternative for our capital that produces a higher return in our forecasts than buying stores.

"Building a freestanding, pre-owned customer care center that is already branded combined with the brand extension and all the capital that goes into it produces a higher return than buying another franchised volume store. So I have a choice, and we'll have to see how that plays out."

"Electric vehicles do not exist without mandates from the states that you must sell a certain percentage of your vehicles as electric cars or buy credit from somebody who is making electric cars.

"Now maybe that mandate was appropriate. The perspective of five to 10 years ago was that you would never get over the hump without a mandate and without subsidies.

"The point I see that we've crossed now is going to make it very interesting over the next seven years. The cost of the technology has come down to the point where it makes sense for manufacturers to hit their compliance targets by making an electric vehicle rather than paying Tesla a subsidy. So you're at that crossover point. Almost every manufacturer is looking at this and saying, 'With where the cost has gone, we can now be an electric vehicle maker in a reasonable way and not be a complete insane loser, because we have to pay one way or the other.' You either have to pay for the credits or subsidize what you produce."

AutoNation is rolling out new pay plans across the country to improve retention and customer satisfaction. They include a base wage plus bonuses for volume, customer satisfaction and other criteria such as longevity. The work schedule also will change with fewer hours required.

"That should slow down the turnover and attract a different kind of person. If you can move away from needing negotiation skills [with one-price selling], that would be a huge plus."

"I felt the time will come when AutoNation would need a way to grow [and] have more control of our own destiny.

"We know the customer is aching for a fair, transparent, easy transaction experience, which means you need to go to one price. That's almost impossible to do in the new-car business. But in pre-owned, it's doable. And so, we'll have a one-price selling system for pre-owned across the entire AutoNation enterprise."

"It's very hard to take a brand name and say you can extend it from $5,000 pre-owned cars to $250,000, $300,000 pre-owned luxury cars. That's a big extension and I'm not sure it would work. And the premium-luxury manufacturers would hate it."