Lithia Motors Inc. said Wednesday new-vehicle sales and net income slipped in the first quarter because of the coronavirus pandemic and related stay-at-home orders across the country.
Finance and insurance profit, used-vehicle sales and body and parts profits rose in the quarter despite significant sales declines in the second half of March.
The Medford, Ore., retailer said Wednesday net income dropped 18 percent to $46.2 million in the first quarter. First-quarter revenue fell 1.6 percent to $2.8 billion.
Before the coronavirus pandemic, which shuttered stores and slowed sales across the U.S., the nation's third-largest retailer experienced growth across its major business lines, CEO Bryan DeBoer said in a statement. Lithia is the first publicly-traded dealership group to report first-quarter earnings.
"These results continued through early March before being negatively impacted by varying levels of shelter-in-place policies enacted in most states due to COVID-19," DeBoer said.
On a call with investors, Lithia executives said once stay-at-home orders were issued, sales volumes halved for new and used vehicles, though measures to slow the virus varied across the retailer's 188-store footprint. Some markets, such as Pennsylvania and Vermont, had virtually no sales, while dealerships in Montana and Texas adjusted hours.
This month, Lithia said it cut staffing 37 percent, affecting more than 5,000 employees, mainly as furloughs. The company said during the call with investors that about half of the layoffs will be permanent.
Shares of Lithia closed Wednesday's trading up 8.5 percent to $95.41.
Acquisitions, cash position
Lithia acquired two California Lexus stores during the quarter. Lexus of Sacramento and Lexus of Roseville are expected to generate $160 million in annual revenue.
"We are working closely with our future acquisition partners to restructure transactions in order to preserve capital. In addition, we are also deferring closing until the second half of this year to gain greater insights into earnings quality and market conditions," DeBoer said.
DeBoer said Lithia has the capital to continue dealership acquisitions and "weather this period of uncertainty." The dealership group finished the quarter with over $550 million in cash and credit availability and an additional $500 million in unfinanced real estate.
Sales: New-vehicle retail sales fell 9.5 percent to 35,907 in the quarter, while used-vehicle retail sales rose 4.8 percent to 42,631. Overall sales totaled 78,538 vehicles, down 2.3 percent from a year earlier.
Same-store sales: On a same-store basis, new-vehicle retail sales slid 15 percent to 33,178, worse than the 12 percent drop in U.S. light-vehicle sales across the industry in the first quarter, according to the Automotive News Data Center. Used-vehicle retail sales rose 1.7 percent to 40,374.
Lithia is No. 3 on Automotive News' list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 180,532 in 2019.