AutoNation Reports Strong Third Quarter Results
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
All business sectors experienced gross profit growth; company continues acquiring stores
On October 24th, AutoNation reported a strong third quarter, with revenue increasing 14 percent and reaching $4.5 billion, up from $3.9 million in Q3’12. Stronger business in all the company’s business sectors—new vehicles, used vehicles, parts and service, and finance and insurance, was primarily responsible for the company’s stronger results. In particular, new vehicle unit sales increased 13 percent overall — beating the industry’s 9 percent US gain. Used vehicle sales came in a little higher, with the company reporting an increase of 15 percent overall. Together, new and used vehicle sales were the highest they’ve been in any quarter since Q3’06.
Net income is also up by $9 million from Q3’12 when the company had a net income from continuing operations of $82 million ($0.66 per share). This quarter, the company’s net income amounted to $91 million, or $0.75 per share.
Income for all three of the business’ segments—Domestic, Import, and Premium Luxury—was also up in the third quarter. Import and Premium Luxury report income of $73 and $74 million respectively, while domestic segment income was $64 million. There has been the largest amount of improvement—a 24 percent increase—in the domestic segment income from Q3’12, when the segment’s income was $52 million, or 12 million less than this quarter’s results. Similarly, export income increased by 5 percent from $69 million in Q3’12 and Premium Luxury increased 18 percent from $63 million in Q3’12.
For the year thus far, the AutoNation revenue totaled $13 billion, a 13 percent increase compared to the first nine months of last year when revenue was $11.5 billion.
The company recently announced it will be acquiring two Chicago-area dealerships in the fourth quarter: O’Hare Honda and O’Hare Hyundai. Combined, these two dealerships bring annual revenue of $85 million in sales to the table for roughly 3,100 new and used vehicles. This acquisition will bring the AutoNation store count up to 230 stores. Within the past year, the company also acquired six Texas dealerships, several Honda and Hyundai stores in Phoenix, and a Toyota dealership in Texas.
These new import-segment acquisitions should help the company remain competitive in the face of rising production and market place pressure to sell mid-size vehicles. AutoNation president, Mike Maroone, says there is intense competition in the mid-size car segment, in particular among Toyota Camry, Honda Accord, Nissan Altima, and Ford Fusion. Maroone says, “It’s not across all lines. It’s very specific sectors, very specific brands, and almost entirely imports. There’s a big share fight and there are a lot of new products in mid-sized… It’s intense competition, there’s a lot of production and a lot of pressure in the market place.” Only time will tell if these recent acquisitions will help AutoNation achieve sales in these challenging import segments. However, overall strong third quarter results put the company on solid footing to hold its own in the competitive industry.