Gains in parts and service, used-vehicle sales and finance-and-insurance income boosted Asbury Automotive Group Inc.'s net income in the first quarter despite tighter new-vehicle margins, slipping same-store sales and a dramatic jump in floorplanning costs.
Meanwhile, Asbury's floorplan interest expense leaped 55 percent to $10.2 million in the quarter, up from $6.6 million for the comparable period in 2018.
Average gross profit per new vehicle retailed fell 3.7 percent to $1,572. That was driven mainly by a 12 percent drop, or $225, in the per-vehicle gross profit for new domestic-brand vehicles. Asbury's domestic-brand dealerships represented 19 percent of the company's same-store new-vehicle revenue for the quarter.
Even as new-vehicle profits slid, Asbury's parts-and-service revenue increased 9.5 percent to $217.6 million, and used-vehicle revenue increased 5.2 percent to $509.9 million. Used-vehicle sales, parts and service, and F&I made up 48 percent of Asbury's revenue in the first quarter but contributed 86 percent of its gross profit.
"We benefited by the business mix," Asbury CFO Sean Goodman said Tuesday on a call with analysts. "As you saw in our results for the quarter, parts and services was the strongest growth area."
The Duluth, Ga., dealership group also closed on the purchase of four Indianapolis-area dealerships in the first quarter, Asbury said in a statement. The new stores are expected to generate approximately $250 million in annualized revenue.
Sales: New-vehicle sales rose 1.9 percent in the quarter to 24,109, while used-vehicle retail sales increased 2.5 percent to 21,083.
Same-store sales: New-vehicle sales slid 1.5 percent to 23,223. That compared with a 3.2 percent drop in U.S. light-vehicle sales across the industry in the first quarter, according to the Automotive News Data Center. Same-store used-vehicle sales at Asbury dipped 1.4 percent to 20,236.
Asbury ranks No. 7 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 105,275 new vehicles in 2018.