AutoNation Inc. said it has 20 additional AutoNation USA used-vehicle-only stores under development, with at least half that number slated to open in the next 12 months.
The company opened four during 2022 and plans to grow the division to more than 130 by the end of 2026.
“The AutoNation USA stores play an integral part of both our long-term growth plans and achievement of scale, scope and density in our markets,” CFO Joe Lower said Friday during the company's fourth-quarter earnings call.
Net income dropped 26 percent to $286.4 million, AutoNation reported Friday. Revenue rose 1.7 percent to $6.7 billion in the quarter.
AutoNation's new-vehicle retail sales increased 4.3 percent in the quarter compared with the year-earlier period, but used-vehicle retail sales dropped 9.2 percent.
AutoNation's full-year new-vehicle sales dropped 12 percent, and Lithia Motors Inc. knocked AutoNation out of its longtime spot as the country's No. 1 new-vehicle retailer.
AutoNation’s adjusted net income for the quarter was $319.2 million, down 16 percent. The change stems from an initial credit loss expense of $34.2 million connected to an acquired loan portfolio, according to the company’s financials. AutoNation acquired CIG Financial in 2022 for $85 million and rebranded as AutoNation Finance, an in-house captive finance company.
AutoNation CEO Mike Manley in a statement highlighted the retailer's strategy moves in 2022.
"During the year, we expanded our footprint, introduced additional transportation solutions, and leveraged our strong cash flow to fund investments and return capital to shareholders," Manley said.
Manley said new-vehicle sales will remain below pre-pandemic levels this year.
"The peak we had post-pandemic was an unsustainable peak," Manley said. Consumer interest in buying new vehicles is strong, but high prices and high interest rates mean "that interest is not translating through to sales," he added.
While some buyers are apprehensive about spending, analysts said vehicle demand could outperform other sectors of the economy.
"I think U.S. auto sales (will) go up even in a recession this year because autos have already had some severe recessionary sales levels due to the pandemic and chip shortage," Morningstar analyst David Whiston said.
Also AutoNation acquired four dealerships in Colorado from Moreland Auto Group in December. In January, AutoNation finalized its acquisition of RepairSmith, a mobile automotive repair and maintenance provider.
AutoNation repurchased 4.6 million shares in the fourth quarter and 15.6 million shares for all of 2022. On Wall Street, investors liked the results and AutoNation shares finished the day up 11.35 percent at $157.30.
