AutoNation Inc., joining three of its public dealership group peers, last week pointed to a new-vehicle profit margin squeeze driven by BMW and Honda.
During the second quarter, AutoNation, Sonic Automotive Inc., Penske Automotive Group and Group 1 Automotive Inc. all reported narrower new-vehicle profit margins because of BMW and Honda incentive changes. AutoNation said it also felt new-vehicle margin pressure at its Nissan stores.
Same-store new-vehicle gross profit margin at AutoNation tightened to 4.2 percent in the quarter, from 4.7 percent the year earlier, and profit per new vehicle dipped $172 to $1,568.
About 70 percent of the profit pinch came from BMW, Honda and Nissan, AutoNation COO Lance Iserman said.
CEO Mike Jackson said the margin compression comes as no surprise.
"The consumer is armed with digital transparency, and you have manufacturer programs that make the marketplace hypercompetitive," Jack- son told Automotive News.
AutoNation's same-store new-vehicle sales volume increased 1.4 percent from the year earlier, but "we definitely gave up gross profit per new vehicle sold," Jackson said.