Don’t feel sorry for Group 1 Automotive. They’re doing just fine, thank you. More than fine, in fact.
From the outside, one might assume Houston’s Group 1 would be hurting.
The nation’s third-largest dealership group gets 48 percent of its U.S. new car and truck sales in Texas -- with 20 percent in the Houston area alone -- and another 9 percent in Oklahoma.
Think falling energy prices and laid-off oil-patch workers. Toss in the devastating floods in Houston this spring. Ouch. That’s gotta hurt.
In the April-June quarter, Group 1 said today, its adjusted net income jumped 20 percent to a second-quarter record $47.9 million, as revenue climbed 8.6 percent to $2.73 billion.
Group 1 CEO Earl Hesterberg, talking to analysts about the quarter’s results, sounded almost pleasantly surprised by how well his company coped with what could have been Texas-sized headaches.
“We were very much braced, and took quite a few actions, assuming we’d get hit pretty hard” by the drop in energy prices, he said. “I’m now starting to think the Houston economy is diversified enough we won’t see much” impact from lower oil.
At least, not there. Oklahoma is another story.
“We’re the biggest retailer of autos in Oklahoma,” Hesterberg said. “It’s very energy dependent.” He didn’t have solid figures on Oklahoma sales in the second quarter, but said it “may’ve been down double digits.” In contrast, Group 1 was down only 2 or 3 percent there, he said.
But what about the floods? They were “a net positive,” he added, between replacement demand afterwards and “some decent service business.”
You might call it Lone Star Luck. Except that in auto retailing, a dealership makes its own luck.
News Editor James B. Treece oversees Automotive News’ retailing coverage.