DETROIT - AutoNation Inc., the nation's largest car dealer chain, said on Thursday fourth-quarter earnings rose as cost cutting offset a drop in sales from a year earlier when carmakers introduced 0-percent loans.
The company, with 370 franchises in 17 states, reported a profit of $79.4 million, or 26 cents a share, compared with net earnings of $6.9 million or 2 cents a share a year ago. Results from 2001 included $65 million in charges.
Revenue for the quarter fell 12 percent, to $4.5 billion from $5.1 billion in 2001, when AutoNation benefited from the introduction of 0-percent loans by automakers.
The company said it was able to increase its margins per new vehicle sold by about 6 percent, and squeezed slightly better margins from used vehicles as well. It cut sales and administrative costs by about 5 percent.
While cost cutting has helped profits at dealer groups such as AutoNation, concerns over lower new car sales this year and falling prices for used cars has worried some analysts.
AutoNation President and COO Mike Maroone told Reuters the company was trying to keep most of its used car inventory in a range of three-year-old to five-year-old models, to reduce any overlap with pricing on new models, and that it was expecting slight increases in used car sales and pricing this year.
Excluding one-time items in both periods, profits fell 12 percent in the quarter from the same period a year earlier.
The average of analysts' forecasts was 23 cents a share, according to Thomson First Call.
AutoNation also affirmed its full-year earnings forecast for 2003 of $1.25 to $1.30 per share, with first-quarter earnings of 28 cents to 30 cents a share. The average of analysts surveyed by First Call for 2003 is $1.24.
As with other dealership groups, AutoNation has been expanding in the past few years, buying dealerships with annual revenues of about $500 million last year. Chairman and Chief Executive Mike Jackson said AutoNation was targeting similar growth this year.