DETROIT -- Used-car sales helped Lithia Motors Inc. post improved earnings and revenue during the fourth quarter.
The dealership group said yesterday that it posted net income of $2.8 million, compared with a net loss of $1.5 million in the same period in 2008.
Lithia also said it generated fourth-quarter revenue of $419 million, up 4.9 percent from $399 million in the same period the year before.
Problems at Lithia’s biggest manufacturer partner, Chrysler Group, created severe sales challenges, according to the retailer’s report.
Chrysler brands accounted for 23.7 percent of Lithia’s new-vehicle unit sales during the quarter, down from 35.9 percent of vehicle sales during the fourth quarter of 2008.
“Our fourth-quarter results were impacted by weak new-vehicle sales at our Chrysler stores,” CEO Sid DeBoer said in a statement. “This was caused by the delay in the release of new products like the 2010 Ram heavy-duty pickup and lower advertising and incentive spending by Chrysler which slowed floor traffic.”
DeBoer also said Lithia responded by focusing on increasing used-vehicle sales at the affected locations.
“Excluding Chrysler, we had approximately 18.5 percent new-vehicle same-store sales growth over the fourth quarter of 2008,” he said in the statement. “On an adjusted basis, we were profitable in the fourth quarter despite significant headwinds.”
Lithia, a publicly traded group of 86 auto dealerships in 12 states, said that while its inventory position has improved, it thinks sales challenges will continue in early 2010. Lithia is sticking with its original 2010 earnings-per-share estimate of 63 cents.
Placed on hold
Standard & Poor’s reiterated its hold recommendation on shares of Lithia.
“While [Lithia] has expressed interest in making a modest number of dealership acquisitions in 2010, we would still like to see further balance-sheet improvement,” S&P analyst Efraim Levy wrote in an e-mail report. “Domestic branded market share losses are likely to penalize repair-related sales.”
For the full year, Lithia's total sales declined 15.2 percent to $1.7 billion from $2.1 billion in 2008. Earlier this month, Lithia made a preliminary estimate of 2009 sales totaling $1.8 billion to $1.85 billion.
For the year, same-store new-vehicle sales decreased 23.6 percent; retail used-vehicle sales increased 3.1 percent; and service, body and parts sales decreased 3.3 percent.
Lithia, of Medford, Ore., ranks No. 8 on the Automotive News list of the top 125 U.S. dealer groups, with 2008 sales of 46,725 new vehicles.