The quarterly earnings of two big public dealership groups reflect the cost of their aggressive growth strategies.
AutoNation Inc. of Fort Lauderdale, Fla., and Group 1 Automotive Inc. of Houston posted lower net earnings in the second quarter of 2004, with those earnings related to dealership acquisitions.
Group 1 incurred a 14 percent increase over the year-ago period in administrative costs associated with acquiring stores. The company has added $1 billion in annual revenues through acquisitions this year - more than any other large public car dealer.
Group 1 also took a $1.8 million after-tax charge against earnings because of hail damage in June to about 1,000 vehicles at its Amarillo, Texas, dealerships.
AutoNation still is paying for its shopping sprees in 1997 and 1998, when founder H. Wayne Huizenga's prime goal was to build critical mass. In recent years the company has purchased more import and luxury dealerships.
But AutoNation still has a large number of Ford Motor Co. and General Motors stores, which suffered steep sales declines in the second quarter. AutoNation also took an after-tax charge of $4 million that was primarily related to store divestitures.
Sonic Automotive Inc. of Charlotte, N.C., reported improvements in its second-quarter results. The company has slowed acquisitions and cut costs.
|These are net income figures for the second quarter and first half of 2004 reported by the 6 largest publicly traded U.S. dealership groups. Comparisons are with year-ago periods. Dollars are in millions.|
|2ND QTR.||% CHANGE||1ST HALF||% CHANGE|
In most cases, the publicly held retailers said they offset the cost pressures of a highly competitive market with profitable finance and insurance and service and parts departments at their dealerships.
Here is a summary of second-quarter results.