Production discipline makes for happy dealers

DETROIT -- New production discipline by GM, Ford and Chrysler is flowing through to retailers’ bottoms line.

Tighter inventory helped contribute to a 40-percent ($30 million) increase in new-vehicle gross profits in the first quarter for AutoNation.

At Asbury, lower supplies helped new-vehicle margins. “New-vehicle pricing appears more rational now ,” says COO Michael Kearney. And manufacturer assistance covered more than two-thirds of floorplan interest expense for Group 1. That’s up from half a year ago, and the primary reason is speedier turn rates.

“We need this supply-and-demand balance to continue,” says Group 1 CEO Earl Hesterberg.

Many retailers say inventories are the healthiest they’ve ever seen.

The flip side: Short supplies on some popular vehicles mean losing a few sales.

But isn’t that a good problem to have?