The industry isn’t “over the cliff” at this point, but AutoNation chief executive officer Mike Jackson reiterated concerns he made earlier this year about too much incentivizing in the new-vehicle market, stressing that it’s an “unsustainable” model.

During the Q&A portion of Friday’s quarterly earnings call, Jackson responded to an analyst expressing concern about record new-car SAAR pulling used-car demand ahead, and the possible demand ramifications when used-car supply increases.

Jackson emphasized the importance of the warning he made earlier this year, saying in Friday’s call that “if the OEMs overdo it and push incentives too far, overproduce, push leasing too far, you are absolutely taking customers from the used-vehicle market and converting them into the new-vehicle market.”

“And at the same time, you’re increasing the supply of used vehicles coming back to the market on a faster turn,” he continued.

“Well, you can see that that is unsustainable. And there will be a day of reckoning. So, I’ve been very clear that there is a risk there. I don’t think we’ve gone over the cliff yet. I think there’s still plenty of time to manage this rationally and (be) disciplined,” Jackson said. “And don’t forget the retail market for used vehicles is 40 million units, so if you put it all together, we’re looking at a market that’s 55 to 60 million units between new and used. It’s very manageable.

“But can you screw it up? Yes, you can. And that’s why we’re speaking up.”

Jackson was quick to add that AutoNation’s public dealer group peers are mentioning putting more discipline towards cost and inventory.  

The OEMs may not like it, he said, but the healthy route would be a “very profitable, sustainable, rational plateau period until we have very high interest rates or a major recession. And then volumes will fall.”