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Revenue gains in all areas of the business helped drive up third quarter operating profit for AutoNation Inc., but net income dropped, primarily on higher interest expense.
The nation's largest automotive retailer said third quarter revenues increased 13 percent to $3.3 billion. Operating income rose 2.5 percent to $120.9 million, but net income slid 12.5 percent to $56.9 million.
AutoNation officials said the lower profits were largely a result of higher interest expense related to debt refinancing used to fund a share buyback plan. With fewer shares during the latest period, AutoNation's earnings on a per-share basis, not counting discontinued operations, actually rose 8 percent.
“We delivered strong performance in the third quarter, which was driven by both new and used vehicle unit sales and revenue,” AutoNation CEO Mike Jackson said in a prepared statement.
Operating highlights for the quarter came in the retailer's domestic-brand segment and in used vehicles. Sales of new domestic-brand retail units rose 15 percent, and income in the domestic segment jumped to $43 million, up from $33 million a year ago. Ford and Chevrolet led the way, Jackson said.
Unit sales in AutoNation's import segment dropped 3 percent, and income declined to $51 million from $63 million a year ago.
Luxury unit sales rose 3 percent, and income in the luxury segment increased to $48 million, up from $44 million a year ago.
Used vehicle revenue increased 28 percent to $812.4 million. New vehicle revenue rose 9.7 percent to $1.8 billion. Parts-and-service revenue jumped 6 percent to $564.1 million, while net finance-and-insurance revenue jumped 18 percent to $111.9 million.
Separately, AutoNation said today that Chrysler has granted it seven Fiat franchises, making it the biggest Fiat dealer in the United States. The retailer's Fiat locations will be located in California, Colorado, Arizona, Washington, Virginia and Georgia.
AutoNation said it has also launched new stores to sell lower-priced used vehicles that it previously would have sent to auction. The company opened 16 of these no-haggle “Value Vehicle Outlets” at existing locations to sell used vehicles with an average price of less than $8,000. AutoNation plans to open six more Value Vehicle Outlets by next March.
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