Public dealer groups seen posting higher Q2 sales, profits
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The outlook is good for strong sales and earnings for the publicly traded dealership groups when they report second-quarter results later this month, a Wells Fargo analyst said Tuesday.
"It should be a pretty good second quarter," said Matt Nemer, senior research analyst for Wells Fargo Securities, in a conference call for investors, analysts and media. "I'm encouraged for this group."
He cited rising auto sales, interest rates that are stable at a low level, wide availability of consumer credit, and greater availability of nonprime and subprime credit as contributing to rising new-vehicle sales, and hence profits at retailers.
Nemer quoted Earl Hesterberg, CEO of Group 1 Automotive, Inc. in Houston, who said in April, "We don't accept financing as an excuse from our people anymore, that they didn't sell a vehicle."
Nemer said the entire publicly traded retail sector appears to be on the rise, but he said Group 1 and Penske Automotive Group, of suburban Detroit, stood out in the first quarter of 2012, in terms of earnings growth. Wells Fargo Securities is a unit of Wells Fargo & Co. of San Francisco.
AutoNation Inc., of Fort Lauderdale, Fla., is typically the first public dealer group to report its quarterly earnings. It is expected to release second-quarter results on July 19. Group 1 reports on July 26. Penske expects to announce second-quarter results on July 31.
In the first quarter, Group 1 net income increased 49 percent from a year earlier to $23.1 million. Penske net income increased 38 percent to $46.8 million.
You can reach Jim Henry at autonews@crain.com.
