Lithia Motors Inc. still expects to meet its long-term goal of conquering 5 percent of the U.S. vehicle market. But the coronavirus pandemic presents new hurdles to that aspiration as Lithia deals with lower vehicle sales, dented profits and postponed acquisitions.
Acquisitions are central to Lithia's strategy, and ongoing deals were pushed off by the crisis to the second half of 2020.
The Medford, Ore., retailer, the third-largest new-vehicle retailer in the U.S., said its 5 percent target, first shared late last year, has not been derailed by the virus. The goal is many multiples of Lithia's current new- and used-vehicle market share.
All but 5 percent of Lithia's 188 stores operate in markets affected by government orders restricting business or customer movement.
All service departments remained operational, and 95 percent of Lithia's sales departments are open to varying degrees. Vehicle sales were cut in half during the last two weeks of March, with some markets hit harder than others.
Lithia responded by cutting staffing by 37 percent, or 5,100 positions. Half of the cuts will be permanent, as the retailer said it trims underperforming personnel.
The company also terminated or deferred $65 million in planned capital expenditures, including facility upgrades.
Lithia's net income dropped 18 percent to $46.2 million in the first quarter.