DETROIT -- Dealership group AutoNation Inc.'s profit more than doubled, aided by strong parts and service business and a large gain from the resolution of a tax audit.
The largest U.S. automotive retailer said second-quarter net earnings rose to $194.8 million from $92.1 million in the year-earlier quarter.
Income from continuing operations for the second quarter was 40 cents per share. Wall Street analysts on average had expected the company to post earnings of 39 cents a share, according to Reuters Estimates.
Second-quarter earnings included a benefit of 36 cents per share from the resolution of various tax matters under audit from prior years, the company said.
Revenue grew 4 percent to $5.03 billion, resulting from sales growth in new vehicles of 3 percent; retail used vehicles gained 4 percent; parts and service rose 8 percent and finance and insurance grew 4 percent.
"The foundation of our business in service and parts," AutoNation Chairman and Chief Executive Mike Jackson told Reuters in an interview. "That made a significant contribution to our results."
Cost cuts also helped, Jackson said.
At the end of the second quarter 2005, AutoNation's new vehicle inventory level was 51 days supply versus 74 days at the end of second quarter 2004, representing a 26 percent decline.
"We are in excellent position going into model-year changeover with (2006 vehicles) just being released," Jackson said.
Currently operating in 17 states, AutoNation is always looking at buying car dealerships, but the prices currently appear "quite high," Jackson said. "We are just opportunistic buyers," he added.
The company's shares rose 38 cents, or 1.70 percent, to $21.81 in early trading on the New York Stock Exchange.
AutoNation is first on the Automotive News ranking of top dealer groups in the United States in 2004 with 677,717 total vehicles sold.