AutoNation posted a 15-percent surge in net income to $95.1 million in the first quarter of 2014, thanks to a huge wave of sales in the last few weeks of March that offset weak sales in the period prior. The surge was attributed to higher gross profits in all four of AutoNation’s business categories: new cars, used cars, finance and insurance and parts and service.
The group posted a 7-percent rise in revenues to $4.36 billion. AutoNation chief executive Mike Jackson remarked the sales growth in the last 10 days of March is likely to continue throughout the year. Jackson said in a statement that the retailer expects growth for entire 2014 to be between 3 percent and 5 percent, continuing the momentum set during last couple of days in March.
He said that AutoNation expects industry new vehicle sales for 2014 to top 16 million units. During the first quarter of 2014, AutoNation posted a5-percent rise in overall vehicle unit volume, selling 71,223 new vehicles (up 6 percent) and 52,136 used vehicles (up 3 percent). The retailer, however, saw its new-vehicle profit margins drop during the quarter as gross profit in the category surged just 3 percent despite an 8-percent jump in new-vehicle revenue.
On the other hand, AutoNation saw a leap in used-vehicle profit margins as gross profit in the category jumped 11 percent, outpacing the 5-percent rise in used-vehicle retail revenue. AutoNation logged an 11-percent jump in finance and insurance (F&I) gross profit overall.
On a same-store basis, F&I gross profit surged 6 percent to $1,407 per vehicle in the first quarter of 2014 from $1,322 in the same period in 2013. Parts-and-service revenue and gross profit both rose 5 percent. The retailer’s overall first-quarter gross profit in the category rose almost 7 percent to $707.4 million.
AutoNation also posted a 21-percent climb in first-quarter income in the premium luxury segment to $83 million. Income at its domestic-brand segment jumped 9 percent to $64 million while income at its import-brand segment dropped 8 percent to $65 million.