Companies with the heaviest domestic exposure devalued or planned to close Detroit 3 dealerships, after seeing earnings declines as high as 199 percent. Penske and Asbury automotive groups -- which have the least Detroit 3 exposure of the five companies to report this week -- both remained in the black during the third quarter.
In reporting losses Tuesday, No. 3 Sonic Automotive Inc. wrote down about $21 million in devalued Detroit 3 franchises and properties.
No. 4 Group 1 Automotive Inc. took an aftertax charge of about $30 million in franchise value impairments -- all related to the Detroit 3, said Pete DeLongchamps, a Group 1 vice president.
And No. 8 Lithia Motors Inc., which looks to Chrysler LLC for almost a third of its unit sales, said it aims to decrease the impact of the Detroit 3 so that half its franchises are domestic and half imports.
Sonic reported a $25.3 million loss, compared with earnings of $26.1 million in the year-ago quarter.
The company’s third-quarter presentation included a slide titled “Stop making stupid mistakes.”
For example, Sonic had leased most of its properties. But President Scott Smith said it was a better investment to own them.
Group 1 said it lost $20.6 million; it earned $20.8 million in the same quarter of 2007.
Lithia reported losing $2.4 million, compared with net earnings of $11.2 million in the same quarter last year.
Penske Automotive Group Inc., which ranks No. 2 on the Automotive News list of the top 125 U.S. dealership groups, earned $24.2 million in the third quarter, down from $43.4 million in the year-ago quarter.
No. 6 Asbury Automotive Group reported $6 million in net income, down from $19 million in the same quarter last year.
AutoNation Inc., which tops the Automotive News list, reports a week from today.
Most Detroit 3 sales
Of the companies that reported new-vehicle sales by brand, Lithia reported the highest concentration of Detroit 3 transactions. Detroit vehicles accounted for 53.7 percent of vehicles sold in the third quarter, down from 57.6 percent in the third quarter last year. Chrysler was Lithia’s highest seller, accounting for 29.2 percent of vehicles sold in the quarter.
But Lithia is closing 15 stores and aims to reduce its store count by 27 percent to help reach an equal domestic-import balance, CEO Sid DeBoer said in a statement.
Detroit 3 brands accounted for 19.8 percent of Group 1’s third-quarter unit sales, down from more than a quarter of sales during the same period last year and 39 percent in the third quarter of 2004. Sonic did not report new-vehicle sales by brand, although 17 percent of its sales in 2007 came from nonluxury domestic brands.
Detroit 3 models accounted for 5 percent of Penske’s third-quarter brand mix. Asbury attributed 16 percent of its sales to the Detroit 3.
Separately, Group 1, Asbury and Sonic all announced they would postpone all new acquisitions. Smith said Sonic would ignore manufacturer pressure to boost capacity unless captive lenders offered reasonable financing rates.
Smith added: “If they won’t invest in their own facilities, why would we?”
Jim Henry contributed to this report