AutoNation Inc., during the second quarter, increased profits in all business areas despite the supply constraints on Japanese-brand vehicles. Specifically, the country’s largest vehicle retailer recorded a net income of $71.9 million, an increase from $47.2 million during the same period last year. Revenue increased 8 percent to $3.3 billion while operating income rose 15 percent to $144.4 million.
The company’s Chief Executive Officer Mike Jackson credited the increases to strong new and used vehicle gross profit figures which were up 26 percent and 11 percent, respectively, on a per vehicle basis.
In addition, AutoNation posted higher profits in its parts and service as well as its finance and insurance businesses. The company recorded increases even with the dwindling availability of vehicles for its Japanese-brand stores.
Meanwhile, shortages are being resolved but will continue into the third quarter, Jackson stated. He forecasted that Japanese-brand car shipments decreased 40 percent below the planned levels in the second quarter.
In addition, it is forecasted to be 10 percent to 15 percent below planned levels by September. Moreover, Jackson disclosed that margins on cars from Japanese manufacturers benefited from constrained supply. The income of AutoNation’s import segment rose by 25 percent despite the 12 percent decline of new vehicle sales in the segment.
Jackson mentioned that while he foresees import-brand vehicle margins to remain strong in the third quarter, they will drop just like in the second quarter due to the improving supply environment.
Furthermore, the company forecasted that the new-vehicle sales environment will start to resume its normal operations in the fourth quarter. The company will continue to remain optimistic about the long-term recovery for the U.S. auto market, Jackson stated.