AutoNation's profit slips as per-car margins rise

AutoNation Inc.'s first-quarter net income and revenue slid as new-vehicle sales tumbled, but gross profit rose on the strength of the used-vehicle and parts-and-service business. The nation's largest new-vehicle retailer also said a new effort to improve vehicle margins delivered sharp increases in per-vehicle profitability during the quarter.

The Fort Lauderdale, Fla., dealership group reported Friday that net income dropped 1.8 percent to $92 million in the quarter, while revenue fell 5.3 percent to $4.98 billion.

Total variable gross profit per vehicle retailed, on a same-store basis, rose 6 percent, a $200 gain, to $3,559 as AutoNation posted improvements in both new- and used-vehicle margins and finance-and-insurance sales. Same-store gross profit per new vehicle retailed rose $134, or 7.5 percent, while the same measurement for used vehicles increased $47 or 3.5 percent, AutoNation said.

"In the first quarter, AutoNation made a strategic decision to focus on new vehicle margins and continued growth in penetration rates" of F&I products, new CEO Carl Liebert said in a statement. Liebert joined the retailer in March, replacing longtime CEO Mike Jackson, who is now executive chairman.

AutoNation said it incurred a $3 million after-tax charge during the quarter related to a restructuring and cost-savings plan announced in January.

Records: Same-store F&I gross profit per vehicle set an all-time company record at $1,904, up 7 percent. Earnings per share from continuing operations of $1.02 was a new record for first-quarter results.

Sales: New-vehicle sales dropped 14 percent to 63,513 vehicles. Used-vehicle sales declined 1.7 percent to 61,171 vehicles.

Same-store sales: New-vehicle sales tumbled 13 percent on a same-store basis to 62,897. That compares with a dip of 3.2 percent in new light-vehicle sales across the U.S. during the first quarter, according to the Automotive News Data Center. Used-vehicle same-store sales declined 0.5 percent to 60,230.

AutoNation ranks No. 1 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 310,839 new vehicles in 2018.

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