Lithia Motors Inc.’s third-quarter net income rose 25 percent from a year earlier to $54 million, as revenue rose 8.9 percent to a third-quarter record $2.27 billion, the company said today.
“Our store leadership increased revenue in all departments, though selling expense grew slightly,” CEO Bryan DeBoer said in a media statement. “In the moderating new-vehicle sales environment, sustaining sales volume and taking market share from our competitors is crucial to future incremental used vehicle and service transactions, and maintains high performance levels for our manufacturer partners to earn continued support for acquisitions.”
In the latest quarter, Lithia recorded a pretax extraordinary gain from an equity investment of $3.5 million, while a year earlier it had posted a pretax extraordinary loss of $18.3 million related to an employee transition agreement.
Gross profit pressures
Revenue gains were led by the retailer’s service and finance and insurance operations. Total same-store sales increased and the average selling price for new and used vehicles rose slightly, but the gross profits on all vehicles declined.
Lithia’s new-vehicle retail sales in the quarter rose 2.7 percent to 38,417 units. Its used-vehicle retail sales rose 13 percent to 29,636 units.
On a same-store basis, total revenue rose 4.5 percent to $2.17 billion. Lithia’s new-vehicle retail sales declined 1.7 percent to 36,681, slightly worse than the industrywide decline of 1.3 percent in the third quarter. Lithia’s same-store used retail sales rose 8.5 percent to 28,322.
On a same-store basis, the average gross profit per unit fell 4.3 percent to $1,972 for new vehicles and declined 1.5 percent to $2,344 for used vehicles. Average gross profit per unit from finance and insurance rose 8.1 percent to $1,302.
In the quarter, Lithia completed 14 acquisitions and opened one store. The acquisitions have added more than $1 billion in estimated annualized revenue so far this year.
Last month, Lithia completed the purchase of the nine-store Carbone Auto Group, pushing its presence into the Northeast with stores in Vermont and New York. Lithia made its first move into the Northeast with the 2014 acquisition of DCH Auto Group, which had stores in New Jersey and New York, as well as southern California.
Lithia’s geographic footprint had been concentrated in smaller, rural markets in the Northwest, but DeBoer has aimed to take his company east of the Mississippi River.
Lithia also said it is promoting Chris Holzshu to chief human resources officer effective Jan. 1. Holzshu, who has been Lithia’s CFO, will now lead its human resources, information technology and store administration teams. Chief Accounting Officer John North will replace Holzshu as CFO.
Lithia, of Medford, Ore., ranks No. 5 on Automotive News’ list of the top 150 dealership groups based in the U.S., with retail sales of 137,486 new vehicles in 2015.