Group 1 Automotive Inc. said its second-quarter net income fell 16 percent compared with the year-ago period to $39.1 million on weakness in U.S. markets impacted by low energy prices, particularly in its hometown of Houston.
Total revenue at the nation's third-largest dealership group slipped 4 percent to $2.67 billion on a 6 percent drop in new-vehicle revenue and a 1 percent fall in revenue from finance and insurance. Revenue from used-vehicle retail sales slipped 4.2 percent while parts and service gained 3 percent, the company said in its earnings report filed Thursday.
On a volume basis, Group 1 new-vehicle sales fell 6.3 percent to 40,876, and retail used-vehicle sales were down 2.9 percent to 32,003. Group 1 has dealerships in the U.S., U.K. and Brazil.
In the U.S., the group sold 30,802 new vehicles for a 7.2 percent drop compared with the year-earlier period. Sales of retail used vehicles were 25,202 for a 6.2 percent fall. F&I gross profit per retail vehicle rose 5.4 percent to $1,688, the company said.
"While we had a strong quarter in Brazil, solid growth in aftersales revenue, and a new record in U.S. F&I performance, these factors were not enough to offset ongoing weakness in vehicle sales in our energy-price-impacted markets," Group 1 CEO Earl Hesterberg said in a statement.
"Combined new and used sales dropped seven percent in the quarter for our Texas and Oklahoma stores. Our single largest market of Houston was extremely volatile in the second quarter with Houston total industry auto sales dropping 24 percent in June after an increase in May," he said. Sales at Group 1's Houston stores decreased 12 percent in June, beating the local market.
The U.K. market as a whole declined about 10 percent in the second quarter, Hesterberg said, while Group 1 dealerships posted a 1.4 percent drop in new-vehicle sales there. The group's Brazil stores remained profitable in the quarter, he added.