DETROIT -- AutoNation Inc. on Tuesday posted weaker quarterly earnings due to slower vehicle sales for Detroit automakers, and set its third-quarter earnings target below Wall Street forecasts.
AutoNation, the largest U.S. dealership chain, cited weak U.S. sales at General Motors and Ford Motor Co. for its lower second-quarter earnings. GM and Ford posted double-digit drops in June sales, pulling industry sales to a nearly six-year low.
"We don't fully understand what happened in June and what the implications are for the third quarter," Chief Executive Mike Jackson told Reuters in a telephone interview. "While we certainly saw the increases in incentives, it's too soon to say exactly what their impact is going to be."
Both GM and Ford hiked their sales incentives earlier this month to try to spark July sales.
AutoNation said second-quarter earnings fell about 13 percent to $92.1 million, from $106.3 million in the year-earlier quarter.
Excluding a one-time charge of $4 million, AutoNation earned $96 million, or 35 cents per share in the quarter.
Other car dealership companies have also been hit by the sales slowdown. Last week, car dealership company Group 1 Automotive Inc. warned that earnings would be weaker than expected in the second quarter, due to slow sales and damage from a hailstorm in Texas. On Monday, Asbury Automotive Group Inc. canceled a planned stock offering due to the low price of its shares.
"June's retail velocity was disappointing," Jackson said. "And it's difficult to fully understand or explain, when you factor in that we have an economic recovery, excellent inventory and excellent incentives."
AutoNation is first on the Automotive News ranking of top dealer groups in the United States in 2003 with 414,765 total vehicles sold.