AutoNation Chief Executive Mike Jackson isn't a typical car dealer. The former head of Mercedes-Benz North America has been on a crusade to generate awareness that the U.S. should have a stiffer gasoline tax to drive sales of more fuel efficient vehicles and push the country to independence from Middle East oil. That's bold talk from a businessman who's part of a fraternity that typically suffers when gas prices climb.
With no sign of a gas tax increase coming from the White House or Congress, Jackson this week is going to help auto makers push more fuel efficient and cleaner-running vehicles by putting AutoNation's own marketing dollars behind those vehicles that get at least 28 mpg or deliver 10% better fuel efficiency than the average for their vehicle class. The vehicles will be promoted as "E-Vehicles" online, and with signage and display material in AutoNation's more than 350 dealerships nationwide.
"We want to increase consumer awareness of the number of fuel-efficient vehicles we offer," says Jackson. "Our E-Vehicle program lets them know in as direct a way as possible which vehicles satisfy specific efficiency standards. We hope that this increased exposure will help consumers become more aware of vehicles that contribute to making us less dependent on foreign oil, which is an issue of national security."
Doing a better job of pushing green vehicles, which often don't pack the profits of thirsty luxury cars and SUVs, could, in part, work against Jackson's own interests. The company's one-year sales growth is down 1.4% year-over-year, and net income was down 36.2% for the same period. But if gas prices continue to climb again toward $4.00 per gallon, it's in his best interest to not only attract buyers of fuel-sippers to his dealerships, but also to include flex-fuel trucks and SUVs in his marketing scheme to help those vehicles hold their own.
If Jackson had his way, car dealers would be selling many more Toyota Priuses, Honda Civics, and Ford Focuses than Cadillac Escalades, Hummer H2s, and Toyota Sequoias, even though dealers make much more profit on the big gas guzzlers than the fuel sipping small cars. A self-described Republican, Jackson nevertheless sounds more like the head of the Sierra Club than the head of the world's biggest chain of car dealerships.
Specifically, Jackson has been calling for a 10-cents-a-year hike in the current federal gas tax of 18 cents per gallon to decrease dependence on foreign oil. At $3 a gallon, which is where the prices of regular gasoline is in many states today, consumer behavior changes a bit, Jackson says. But for consumers to really change their behavior on the scale that it changed in the 1970s and 1980s, gas has to reach $6 a gallon.
Getting on the E-list
"This is the way that Europe moved its population to buy much smaller and more fuel-efficient vehicles, and specifically drove the adoption of clean diesel fuel," says Jackson. The average fuel economy of new cars sold in Europe is above 40 mpg, twice the level in the U.S.
AutoNation's list of "E vehicles" includes 212 vehicles, or about 23% of 906 vehicles on the market. It includes any vehicle that gets 28 mpg or delivers 10% better fuel efficiency than the average for their vehicle class.
Toyota has 26 vehicles on AutoNation's list, the most of any manufacturer. The makes range from the Yaris — a subcompact that gets 36 mpg — to the five-speed Tacoma, which gets 20 mpg, and which leads the small pickup category. Honda and Chevrolet tied for second, with 16 vehicles on the list, followed by Ford and Hyundai, with 15 each. Edmunds.com, the online vehicle-research site, crunched the numbers for AutoNation using data from the EPA. The list includes 80 vehicles.
In addition to these green-labeled E-Vehicles, AutoNation will also be identifying what it calls "F-Vehicles" with a yellow leaf logo. These are cars and trucks that make use of flex-fuel or ethanol-based technology. AutoNation believes promoting the greater consumption of renewable and alternative energy sources will motivate energy companies to more aggressively pursue the production and distribution of non-fossil-based fuels, a critical component of a more responsible energy policy.
Mark Cooper, research director for the Consumer Federation of America, applauds AutoNation's effort, but says the retailer's formula is too conservative. "The idea is wonderful, but the targets are way too low," Cooper says. "That may do more harm than good by making people think they're doing a good job when they're not." The Washington-based consumer group has its own system for rating vehicle fuel efficiency: 40 mpg or higher is excellent; 30 to 40 mpg is good; 20 to 30 mpg is fair; and under 20 mpg is poor. The complete listing of AutoNation's E-Vehicles are available at AutoNation.com.
Jackson knows marketing can move consumer behavior. When he had the Mercedes-Benz North America job — the first American to hold the top U.S. job for the German auto maker — he broke the mold for Mercedes-Benz advertising. When he took over in the early 1990s, Mercedes was running ads that often featured German engineers in lab coats, or pictures of a big Mercedeses rolling past stately mansions. During his tenure, Mercedes ran an ad featuring the whiskey-soaked voice of Janis Joplin singing, "Oh Lord, won't you buy me a Mercedes-Benz." Other ads featured Hollywood stars such as Gary Cooper and Marlene Dietrich, and then-popular TV actor Michael (Kramer) Richards from Seinfeld.
The hybrid high horse
Marketing experts say programs like AutoNation's can help drive consumer purchasing. "A lot of consumers say in surveys that they will buy more fuel-efficient vehicles even if they're smaller, but then [they] don't when they're in the showroom," says marketing consultant Dennis Keened. "But others, my research has shown, might well buy a more fuel-efficient vehicle than the one they have in mind if the messaging and imagery around the vehicle is compelling and the information is clearly presented."
Gasoline-hybrid cars have gotten the lion's share of attention among more fuel efficient vehicles for the last three or four years. The Toyota Prius, which is rated by the government to achieve 60 mpg in the city and 51 mpg on the highway, has been the leading gas-electric hybrid seller by far, in large part because the sedan, which has no non-hybrid version, is so widely identified as being a "green car." The Toyota Camry hybrid, Toyota Highlander hybrid, Honda Accord hybrid, and Ford Escape hybrid haven't been as successful, nor are they as widely known as the Prius for being hybrids.
"In today's time-pressed world, car-shoppers will appreciate that AutoNation is making it easy to see which vehicles achieve the best fuel economy," commented Edmunds.com President Jeremy Anwyl. "This program is likely to generate a great deal of interest, especially as gas prices continue their seasonal climb."