AutoNation Inc.'s earnings will continue to rise in the second half as the industry heads toward U.S. new-vehicle sales in the mid-15 million range, CEO Mike Jackson predicted today.
"There is an automotive recovery under way that has drivers bigger than us," Jackson told Automotive News. "Financing has helped, as has a recovery in the housing and job markets. That gives us the opportunity to grow our business in every segment."
Second-quarter results released today showed AutoNation's net income rose on strong revenue growth in new- and used-vehicle sales, sales of finance and insurance products, and service and parts business.
AutoNation's second-quarter net income rose 14 percent from the year-earlier quarter to $89.9 million, as revenue rose 13 percent to $4.43 billion.
The company also completed its rebranding initiative during the latest quarter. AutoNation's 226 stores, representing 23 brands, now are marketed under a unified AutoNation brand from coast to coast, the company said.
AutoNation spent $18 million through the end of the second quarter to rebrand its stores, and expects no further expenses from the rebranding effort.
Parts and service promise
COO Michael Maroone said the strongest opportunity for future revenue growth is in AutoNation's parts and service business, which the company calls its customer-care business.
In the second quarter, though, growth of parts and service revenue lagged that of most other categories. Parts and service revenue rose 9 percent in the quarter to $655.9 million. On a same-store basis, parts and service revenue rose 6 percent to $638.4 million.
AutoNation executives say parts and service is in the early stages of recovery.
"We are particularly excited about our customer-care business, where increasing units in operation should continue to support solid growth in the business for the next several years," Jackson said in a statement.