AutoNation beats earnings estimates and expects demand for new vehicles to remain strong
July 19 (Reuters) – AutoNation Inc (AN.N) said it expected strong demand for new vehicles to continue next year as low interest rates and strong demand helped the leading retailer US auto to beat its quarterly profit estimates.
The company said Monday that sales of new and used vehicles rose 42% and 37% in the second quarter, respectively.
“Consumers buy vehicles before they even arrive in our stores. We expect the current environment of demand exceeding supply to continue into 2022,” Managing Director Mike Jackson said in a statement.
The global semiconductor chip shortage has depleted vehicle inventories and forced automakers to cut production, causing consumers to pay more for cars.
In its latest auto industry forecast released in June, JD Power said the average price of a new vehicle is expected to hit a record $ 38,088 in the first half of 2021, up 10.1% a year ago. year when pandemic lockdowns brought in the US auto industry. to a virtual stop. (https://bwnews.pr/3rrjBeP)
“Everyone is comparing (current prices) to last year’s collapse,” Jackson told Reuters on Monday.
A year ago, used vehicle prices were depressed as rental fleets rushed to unload vehicles stranded by the drop in travel, he said.
Today, AutoNation is stepping up its efforts to acquire used vehicles directly from consumers to meet strong demand. A new AutoNation USA used vehicle store in San Antonio has been profitable in its first month of operation, Jackson said.
Fort Lauderdale, Fla.-Based AutoNation’s gross margin per new vehicle jumped 89% to $ 4,157 in the quarter ended June 30, while used-vehicle gross margin increased by 24 % to reach $ 2,240.
The company had 14 days of supply for new vehicles in the quarter, down from 49 a year earlier.
Adjusted net income from continuing operations hit a record $ 4.83 per share, easily exceeding a Refinitiv IBES estimate of $ 2.81. The record revenue of $ 6.98 billion was also higher than expected.
The company said overhead costs in the second quarter were 56.5% of revenue, down from 68.9% a year ago. Jackson said he expects overhead to be 60% of revenue for the full year, up from more than 70% before the pandemic, as more than half of customers use the online tools of the company to make their purchases and complete the steps of a purchase.
“We’re at a good price, and the digital capability has made it possible,” Jackson said.
The company had $ 1.6 billion in cash as of June 30 and said its board of directors authorized a $ 1 billion share buyback.
AutoNation also said it is on track to open four new stores in the United States in the second half of the year and 12 new stores in 2022.
Reporting by Shreyasee Raj in Bengaluru and Joe White in Detroit; Editing by Aditya Soni and Bernadette Baum
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