AutoNation Inc.‘s net income tumbled sharply in the first quarter as revenue slipped and the country’s second-largest dealership group sold fewer new and used vehicles.
AutoNation reported Thursday that first-quarter net income dropped 20 percent compared with the year-earlier quarter, to $288.7 million. Revenue dipped 5 percent to $6.4 billion.
“There’s a lot of mixed economic signals in the market and within auto retail, which do warrant a more cautionary approach than the past few years,” AutoNation CEO Mike Manley said during the company’s earnings call.
While the current economic environment is having an impact, it hasn’t been as dramatic as initially thought, Manley said.
“The consumer in our opinion is in no way tapped out, and the industry is benefiting from lower unit sales over the past few years, and an aging vehicle population which has historically supported demand within the industry,” Manley said.
The retailer’s new-vehicle retail sales declined 2.4 percent for the period, while used-vehicle retail sales dropped by 15 percent.
AutoNation CEO Mike Manley said in a statement that the retailer managed its used-vehicle business “with a deliberate focus on driving gross profit.” The company’s gross profit per used vehicle retailed rose 35 percent to $2,117. Gross profit per new vehicle retailed dropped 15 percent to $5,210, down from the year-earlier lofty levels driven by the industry’s new-vehicle shortage.
Manley also touted an 11 percent jump in gross profit for AutoNation’s parts-and-service business.
AutoNation continued the expansion of its AutoNation USA used-vehicle-only stores in the first quarter. The company added locations in Austin, Texas, and Albuquerque, N.M., bringing the current store count to 15, CFO Joe Lower said during the call.
In February, Lower said that the company had 20 additional AutoNation USA stores under development, with at least half that number slated to open in the next 12 months. Four were opened during 2022 with plans to grow the division to more than 130 by the end of 2026.
“The AutoNation USA stories play an integral part of both our long-term growth plans and achievement of scale, scope and density in our markets to better serve and meet the needs of our customers,” Lower said.
AutoNation repurchased 2.4 million shares of stock during the first quarter, continuing a practice it has regularly pursued.
AutoNation’s shares were trading at $131.82, down 3.3 percent, on Thursday morning just after the stock market’s opening.
Q1 revenue: $6.4 billion
Q1 net income: $288.7 million
Vehicle sales: 55,065 new vehicles retailed, down 2.4 percent; 67,539 used vehicles retailed, down 15 percent.
Ranking: AutoNation, of Fort Lauderdale, Fla., ranked No. 2 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., with retail sales of 229,971 new vehicles in 2022.
