Republic Industries Inc., the largest auto dealer group in the United States, pleased stock analysts last week by posting higher-than-expected profits.
Net income for the quarter increased to $77.1 million, up from $37.6 million for the same period in 1997.
Operating income on automotive retailing grew to $56.4 million from $14.2 million for the same period a year ago.
'They're making real progress, and they're making real progress in the new-car piece of it,' said Ursula Moran, an analyst for the Sanford C. Bernstein invest- ment banking and research firm in New York.
Analysts are paying particularly close attention to Repub-lic's 26 AutoNation USA used-car superstores. Those stores lost $2 million in the quarter, although they were profitable in February and March, Republic officials said.
Republic announced plans to trim costs in order to make the stores profitable.
Steven Berrard, Republic co-CEO, said AutoNation USA has brought the break-even point for its stores down to about 200 cars per month.
Sandy Greenberg, CEO for Chatfield Dean & Co., an Engle-wood, Colo., brokerage firm, said he estimated the break-even point for the stores had been above 300 cars per month.
'The key thing Republic had to do was get costs down in the used-car stores so they can ramp up the business,' he said.
Michael Maroone, president of the AutoNation USA automotive retail division of Republic, said the company will spend less from now on acquiring land and building the stores - between $15 million and $20 million per store.
Earlier stores had cost up to $25 million to build, not including inventory costs.
Republic will also close its four Valu Stop budget-priced used-car outlets and roll their cars into AutoNation USA stores under a new three-tiered pricing strategy.
Two of the four existing Valu Stop stores will be converted into AutoNation USA stores.
Republic, based in Fort Lau-derdale, Fla., has interests in auto sales and in rental and waste disposal.