AutoNation Inc.’s third-quarter profits are higher as buyers paid higher prices for automobiles while inventories were reduced by the March earthquake in Japan. Net income from ongoing operations climbed to $71 million, or 20 percent. AutoNation pointed out that its profits established a third-quarter record on a per-share basis.
Operating income leaped to $144 million, or 19 percent. Total revenue increased 7 percent to $3.5 billion. Unit sales of new automobiles decreased 2 percent on a same-store basis, yet margins increased as shortage brought prices higher.
AutoNation revealed that its gross profit per unit went up by $460 to $2,454, a 24 percent growth. However, those margin increases will not go on in the last three months of the year, according to CEO Mike Jackson, citing the “improving supply environment.” He also attributed the third-quarter increases to greater finance and insurance gross profits.
Gross F&I profit per automobile improved 7 percent to $1,214. For the period, AutoNation's sales for domestic brand automobiles increased 12 percent, while premium luxury sales leaped 11 percent.
On the contrary, import-brand sales slipped by 10 percent. Jackson said he is still optimistic about the long-term recovery for the U.S. vehicle industry, adding that the new vehicle sales environment will continue to improve in the fourth quarter. AutoNation hasn’t revised its projections and still believes that U.S. industry sales will reach the mid-12 million unit target for 2011.