AutoNation Inc. said Thursday that it will buy four dealerships in Colorado from Moreland Auto Group, as it reported net income in the third quarter slipped amid lower vehicle sales and higher expenses for technology investments and new business ventures.
AutoNation said that the acquisition is expected to generate $320 million in annual revenue and should close in the fourth quarter. The deal includes an Acura store and three Stellantis dealerships.
The auto retail giant said net income dropped 2.5 percent to $352.6 million.
"Inventory in the industry remains constrained and retail sales of new and used vehicles remain well below historical levels," AutoNation CEO Mike Manley said in a statement.
He credited higher average vehicle sales prices and growth in parts and service and finance and insurance with fueling the company's 4.5 percent uptick in revenue to $6.67 billion.
AutoNation said it completed this month its purchase of Irvine, Calif., auto finance company CIG Financial. CIG will serve as the retailer's captive finance company, creating AutoNation Finance. Manley has said this move is a key part of the company's growth strategy, especially in the used-vehicle business.
The retailer in the third quarter opened its 12th standalone used-vehicle AutoNation USA store, in Kennesaw, Ga., near Atlanta. The company said it has two dozen stores in development, and it confirmed it has a long-term goal to have more than 130 AutoNation USA stores. The retailer previously said it wanted to open those stores by the end of 2026, and an AutoNation spokesman confirmed the 2026 date remains its target.
AutoNation in the third quarter spent $428 million to repurchase 3.8 million shares of common stock, representing 7 percent of shares outstanding. Through Tuesday, AutoNation has bought back 22 percent of the outstanding shares it had at the start of 2022. The company said its board authorized up to an additional $1 billion to buy back its common stock, bringing its total available authorization to $1.4 billion.
Shares of AutoNation closed up 2.7 percent to $105.22 on Thursday.
Q3 revenue: $6.67 billion, up 4.5 percent from a year earlier
Q3 net income: $352.6 million, down 2.5 percent from a year earlier
Q3 sales: 130,920 combined new- and used-vehicle sales, down 3.6 percent. On a same-store basis, AutoNation sold 125,446 new and used vehicles, down 7.4 percent.
Records: Finance and insurance gross profit per vehicle
Ranking: AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 262,403 new vehicles in 2021.