Lithia Motors Inc.'s net income rose in the third quarter as the expanding auto retailer posted modest increases in new-vehicle and used-vehicle sales and continued to benefit from rising gross profits on each new vehicle sold.
Lithia's net income increased 6.9 percent to $330.3 million as revenue rose 18 percent to $7.3 billion, which the Medford, Ore., retailer said marked its highest third-quarter revenue ever.
Lithia sold 69,743 new vehicles in the quarter, an increase of 4.3 percent, and 81,215 used vehicles, up 6.4 percent.
The average selling price for a new vehicle in the third quarter was $47,416, up 9.4 percent, Lithia said, while the average sales price for a used vehicle rose 11 percent to $30,361.
The average gross profit per new vehicle increased 11 percent to $5,789, Lithia said. The average gross profit per used vehicle, however, dropped 19 percent to $2,478. The average gross profit per vehicle for finance and insurance also increased.
"Our teams are focused on improving operating leverage as fundamentals normalize across our industry," Lithia CEO Bryan DeBoer said in a statement Wednesday.
Lithia's buy-sell activity continued in the third quarter.
In July, the group bought a Ford store in Northern California. Last month, Lithia reentered Wisconsin when it bought five dealerships from Wilde Automotive Group.
In October, Lithia said it bought six Airstream dealerships in the Pacific Northwest from Airstream Adventures.
Lithia also sold three dealerships in the third quarter and a Northern California Toyota store this month. In September, Lithia said it expected to sell dealerships in 2022 representing $625 million in annual revenue.
The annual revenue from dealerships it has acquired so far this year is over $3 billion, Lithia said.
The retailer said it has acquired dealerships representing $13.3 billion in annualized revenue since July 2020, when it revealed its five-year plan to reach $50 billion in annual revenue by 2025 — nearly quadruple 2019's revenue.
Lithia shares were trading down about 2 percent in pre-trading on Wednesday. Its shares closed up 1.3 percent on Tuesday to $207.36.
Q3 revenue: $7.3 billion, up 18 percent from a year earlier
Q3 net income: $330.3 million, up 6.9 percent from a year earlier
Q3 adjusted income: $307 million, down 10 percent from a year earlier
Vehicle sales: Lithia sold 150,958 vehicles, new and used, in the third quarter, up 5.4 percent. On a same-store basis, Lithia sold 130,378 new and used vehicles in the third quarter, down 6.4 percent.
Records: Third-quarter revenue
Ranking: Lithia ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 260,738 new vehicles in 2021.