AutoNation Inc., the nation's largest car dealership chain, reported a 38 percent increase in net income and a 72 percent increase in revenue during the first quarter of 1999.
The results include only the Fort Lauderdale, Fla.-based company's auto rental and retail businesses. AutoNation has sold off its waste business.
Net income for the quarter increased to $50.7 million from $36.8 million during the corresponding period in 1998 and first-quarter revenue rose to $5.35 billion from $3.1 billion during the first quarter of 1998.
Armed with $1.2 billion in proceeds from the sale of its waste business, it would be easy for AutoNation to rely exclusively on acquisitions for growth.
But in the first quarter, the company increased same-store sales at new- and used-vehicle operations 9 percent overall and 10 percent at new-car dealerships.
Same-store sales are revenues at stores owned for more than a year.
Though AutoNation is hurting in the used-car department - with same-store sales down 6 percent - same-store sales for new vehicles climbed 16 percent.
AutoNation attributes the decline in revenue at used-car stores to manufacturer incentives on new vehicles, which cause used-car shoppers to opt for a competitively priced new car.
Operating margins at the company's retail chain, including franchised dealers and used-vehicle megastores, increased to 3 percent from 2.9 percent for the same quarter of last year.
At new-car dealerships, operating margins averaged 3.6 percent, up from 3.5 percent in the first quarter of 1998.
Steve Berrard, co-CEO of AutoNation, said the new-car stores 'are on track to reach the company's goal of 4 percent operating margins by the end of the year.'
AutoNation, with pro forma 1999 annual revenue of $17 billion, has a chain of 380 franchises, 223 dealerships and 36 Auto-Nation USA used-vehicle megastores.