AutoNation Inc.’s second-quarter net income dropped 22 percent to $87.7 million, while revenue dipped 3 percent to $5.28 billion.
The declines come as market conditions prove to be challenging in Texas and Florida, where AutoNation sells 45 percent of its retail units, the company said in a statement. AutoNation’s same-store retail vehicle sales fell 6 percent combined in the states. Industry retail unit sales decreased 5 percent in Florida and Texas industrywide, AutoNation said, citing JD Power.
Preowned margins declined because of “implementation changes with our centralized One Price strategy during the quarter” CEO Mike Jackson said in a statement. “However, we’ve taken decisive action to resolve those issues by realigning our leadership and structure to fully realize the opportunity of our brand extension strategy.”
Since Jan. 1, AutoNation has opened two AutoNation auctions in Orlando and Houston and acquired three collision centers in Fort Lauderdale, Bellevue, Wash., and Lewisville, Texas. The company operates and owns 72 AutoNation collision centers nationwide.
The AutoNation Precision Parts and AutoNation Auto Gear brand extensions are on track, the statement said. The dealership group expects multiple parts categories to be available at AutoNation USA stores by the end of this year.
Gross profit at the largest retailer in the U.S. fell in each of its business lines except F&I and parts and services, which grew 1.5 percent and 4.4 percent respectively. New-vehicle gross profit slid 15.1 percent; used-vehicles fell 11.3 percent; total variable operations fell 6.5 percent.
AutoNation’s new unit sales declined 6.7 percent from the year earlier to 79,892 vehicles in the quarter, but its revenue per unit rose 2.3 percent from the year earlier to $36,686.
The Fort Lauderdale company retailed 58,266 used vehicles in the quarter, a 2.9 percent increase the year earlier. Revenue, however, dipped 2.1 percent to $19,413 per unit.
Although AutoNation faced market challenges in Florida during the second quarter, Jackson said new-vehicle sales at the company’s Florida stores stabilized in July, falling 2 percent from a year earlier. “I think we are finding the right line,” Jackson said during the company’s earnings call.
On a same-store basis, AutoNation’s new-vehicle sales dipped 6 percent to 78,491 units, more than double the industrywide decline of 2.7 percent. Used-vehicle sales increased 3.9 percent to 57,065 units.
Combined, AutoNation’s retail unit sales fell 2 percent on a same-store basis to 135,556 units.
AutoNation acquired Alpine Jaguar in Fort Lauderdale, nearby an existing AutoNation Land Rover store, Jackson said. Alpine Jaguar represents about $68 million in annual revenue and is the dealership group’s first Jaguar franchise in the South Florida market.
The retailer also said Wednesday that it received an open point for a Jaguar dealership in Delray Beach, Fla., with an expected annual revenue of about $130 million when fully operational. The point will complete the Premium Luxury automotive row in Delray Beach, which includes a BMW add-point announced in October and Mercedes-Benz of Delray. AutoNation expects the three stores to generate about $500 in annual revenue.