The six largest public auto retailers weathered a tough new-vehicle sales climate in the second quarter, largely on the strength of import-brand sales. Rising interest rates and higher gasoline prices took a toll.
Still, four public groups - United AutoGroup Inc., Sonic Automotive Inc., Asbury Automotive Group and Lithia Motors Inc. - boosted new-vehicle revenue.
All six groups strengthened their used-vehicle, finance and insurance, and service and parts revenues. In some cases, growth in those higher-margin businesses offset lower new-vehicle revenue.
"It was a solid performance in a challenging overall environment," says Rick Nelson, an analyst with Stephens Inc. in Chicago.
The companies' operating strength rests largely on their emphasis on high-volume import and luxury brands, Nelson says.
Group 1 Automotive Inc., Asbury and United AutoGroup all posted double-digit increases in net earnings in the second quarter.
AutoNation Inc., Lithia and Sonic reported lower net earnings. Each of these groups attributed the decline to extraordinary charges. "The charges were unrelated to our operating performance," says Sonic President Jeff Rachor. Rachor cites the company's 50 percent gross profit margin in service and parts operations - a quarterly record. Used-vehicle revenue rose 15 percent at dealerships Sonic has run for at least a year, he adds.
Asbury and UnitedAuto especially have benefited from a high concentration of import and luxury franchises. The other retailers say they also are getting rid of unprofitable dealerships and adding luxury and import brands.
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