(Bloomberg) -- Cheryl Miller, the chief executive officer of AutoNation Inc (NYSE:AN)., has been on the job less than two months, but she’s summoning 20 years of automotive experience to navigate softening auto sales, technology disruption and trade wars.
Miller, 47, is the first woman to run the largest automotive retailer in the U.S. and one of the few female senior executives in a still male-dominated industry. Previously the CFO of AutoNation (NYSE:AN), Miller was promoted to the position in July following Executive Chairman Mike Jackson’s ouster of his initial successor, Carl Liebert, after just four months.
She spoke with Bloomberg News on Sept. 5 about President Donald Trump’s trade tweets, Nissan Motor Co.’s struggle to rehabilitate its brand, whether Tesla (NASDAQ:TSLA) Inc. needs traditional dealerships and her experience as a woman working in the auto industry. The discussion has been edited and condensed for clarity.
Q: What’s your take on Nissan, which has seen shrinking U.S. sales volumes?
A: Nissan certainly has had its issues with incentives, which we’ve spoken about publicly before, and we’ve decreased substantially our position in Nissan.
Think about it from a consumer lens: If I draw the lucky straw, and I get the incentive, my vehicle costs $5,000 less than my neighbor’s vehicle. How does that feel from a brand perspective? And people look at the dealer.
We have a smaller Nissan footprint today than we did two years ago, and five years ago.
This isn’t just specific to Nissan, but if you have brand damage, sometimes it takes time to sort it out.
Q: Are you revisiting your lower-inventory strategy as interest rates head lower?
A: When customers come in to a dealership now, the average monthly payment on a new vehicle is $550 a month. The last time they might have been in the market -- call it three, five, seven years ago -- interest rates were effectively zero and the prices were multiple points lower than they are today.
The rate cut that we just had, followed by the potential for another 25 basis-point cut, or maybe more of a 50 basis-point cut, that’s helpful. And that kind of basis-point decline -- compared to a 75 basis-point increase last year -- will help provide some additional tailwind.
Q: Will buyers ever revert to favoring sedans over SUVs?
A: People like the command seating position of a SUV. So once people get into those, and with fuel prices where they are, it’s been relatively sticky demand. I don’t see an immediate reversal of that trend. I think with fracking, the advent of some other technologies, and also just the improvement in fuel economy of combustion engine vehicles, I think that trend will be pretty sticky.
Q: How has AutoNation (NYSE:AN) been impacted by Trump Administration tariff policy?
A: The proposed Nafta replacement, USMCA, was a good outcome. We’re keeping an eye on the European side to see where things go there with threatened tariffs, and we do not import any parts directly from China, not directly. But the automotive industry is, and would continue to be, somewhat impacted by it. What’s challenging is just the variability around the news cycle. But we’re continuing to monitor it and we feel good, given our multiple business lines, about our relative position.
Our manufacturer partners have got some great pros at the top. Some of these people navigated through the Great Recession. When you’ve managed through those things, you’ve got some battle scars and you’re pretty agile.
The manufacturers have proven to be relatively resilient. I can’t say that at every moment in time we agree with all their decisions, but at the end of the day, this is about the U.S. consumer and the U.S. voter. Are these things good or bad for those people? I think that’s the lens to consider.
Q: What do you make of Tesla’s direct-to-consumer sales model?
A: With Tesla (NASDAQ:TSLA) not having retailers, I’m not sure how well that’s served them in their service model. They can’t handle trade-ins, for example. From a customer value proposition, there’s some benefits to having retailers.
Is their core competency retail? Is their core competency servicing vehicles?
Q: How important is being female to the value you bring as CEO?
A: It’s important. It’s not just gender.
The hidden secret about me is that I’m part Puerto Rican. Do you understand and resemble the communities that you serve?
So when I think about AutoNation (NYSE:AN), we’re coast-to-coast. Our regional president for the western U.S. happens to be Asian. So I think it reflects an understanding of your customer base. I like that element of diversity.