DeBoer said: "We still believe if you can continue to drive top-line volume in vehicles, it's worth the sacrifice in margin because volume drives service revenue and back-end gains."
Revenue and profits generally rose, powered by higher new and used volumes and strong earnings in fixed operations and finance and insurance.
On a same-store basis, Lithia's new-vehicle retail sales rose 5.7 percent, topping the 3.3 percent rise in U.S. light-vehicle sales in the quarter, but the average gross profit per vehicle retailed slid 5.6 percent to $2,124.
DeBoer said some automakers' incentive programs prompted some Lithia stores to ease back on pricing to hit sales targets and win added incentive money.
AutoNation Inc., Asbury Automotive Group and Group 1 Automotive Inc. all posted higher new-vehicle sales but lower per-vehicle gross profit on those sales. They attributed that margin pressure to shifting consumer demands.
"We're very heavy with Toyota, Honda, Nissan. They're more car brands than truck brands," Group 1 CEO Earl Hesterberg said in a conference call. With the supply of cars outstripping demand, he added, "Everybody's pushing us. I don't think anybody likes it, but you either sell the car or you don't."
Added Group 1 CFO John Rickel: "With F&I as lucrative as it is, you don't want to miss that opportunity with the sale." At Group 1, F&I gross profit per new vehicle retailed in the U.S. rose 6.4 percent to $1,535.
At AutoNation, "Our most stressed segment is midsize cars because of the drop in gas prices. There's also been a shift in customer demand," CEO Mike Jackson told Automotive News. "We're feeling the most pressure with Nissan."
On a same-store basis, gross profit per new vehicle retailed slipped 5.3 percent at AutoNation to $1,905, fell 10 percent at Asbury to $1,865 and dropped 12 percent at Group 1's U.S. stores to $1,551.