Sales Reports

CarGurus first earnings call as public company reveals 56% revenue spike

CAMBRIDGE, Mass.  - 

After holding its IPO in October, CarGurus hosted its first earnings call as a public company on Tuesday. And results from the third quarter, which ended Sept. 30, didn’t disappoint.

Total revenue for the online vehicle marketplace came in at $83.0 million, which represents growth of 56 percent year-over-year.

 “We are very pleased with our third-quarter results, which are highlighted by robust top line growth and ongoing profitability,” Langley Steinert, founder and chief executive officer of CarGurus, said.  

“Our strategy of building the world’s most trusted and transparent automotive marketplace is delivering a disruptive value proposition to consumers,” he said.

Steinert went on to call the recent initial public offering — which generated net proceeds to the company of approximately $43.0 million — an “important milestone” for the business.

“CarGurus now has greater brand awareness and enhanced resources to execute our growth strategy and further extend our rapidly growing leadership position,” he explained.

As for what contributed to the impressive revenue growth in Q3, the company shared during the call that marketplace subscription revenue was at $73.9 million. This is a jump of 59 percent when compared to the same quarter last year. Advertising and other revenue came in at $9.1 million, which also increased considerably — 36 percent — compared to $6.7 million in Q3 of last year.

As for how these numbers break down by dealers — you guessed it, those numbers were up considerably, as well. Total paying dealers on the site came in at 26,553 at the close of the third quarter—up 37 percent from a group of 19,403 in Q3 2016.

And revenue from these dealers was up by double-digits, as well. Average annual revenue per dealer in the U.S. came in at $11,526, an increase of 16 percent compared to $9,939 in the third quarter of 2016.

It seems more consumers are aware of the site, as well, since the U.S. average number of monthly unique users on CarGurus.com of 26.0 million in Q3 represents an increase of 24 percent year-over-year.

It has been a big year for players in the online automotive space going public. Cars.com, Carvana and now CarGurus have each rolled IPOs in 2017.

And with CarGurus public, at least four of the major players in its space are now publicly traded (TrueCar, AutoWeb [formerly Autobytel], Cars.com and CarGurus).

AutoNation praises One Price strategy for improved Q3 used sales

FORT LAUDERDALE, Fla. - 

AutoNation chairman, chief executive officer and president Mike Jackson didn’t hesitate to point out the reason why the dealer group’s used-vehicle sales during the third quarter jumped 6.4 percent year-over-year.

AutoNation stores retailed 59,330 used vehicles during Q3, up from 55,760 units a year earlier. Jackson told investment analysts why stores moved more used metal when the company hosted its quarterly conference call on Thursday.

“I would say the AutoNation branded One Price experience for pre-owned drives tremendous traffic and interest through our website and through our stores,” Jackson said. “So the One Price sale has to be competitive in the marketplace.”

Announced last October, AutoNation explained One Price allows the company to leverage centralized capabilities, such as centralized pricing and appraisals, and offers consumers a “transparent and stress-free buying experience.”

AutoNation was to fully implement One Price in all existing locations by the end of the second quarter of this year.

While AutoNation turned more used vehicles year-over-year, the company’s gross profit per unit on those vehicles softened by $105 to settle at $1,414. Jackson addressed that metric, too.

“On the margin side, we have to have really strong operational execution. That was not there in the second quarter. We had some issues. I was very forthright about that. We've comprehensively addressed them, and yes, I see more stability in that going forward,” Jackson said.

“So that’s how I see it,” he continued. “The One Price is an experience and a brand attribute that customers like and draws us a lot of business. Sales associates are very enthusiastic about it, particularly millennials that we're now able to attract to work for us, so they don't have to negotiate.

“And then, we on the operating side have to bring in the gross margins. That’s the formula,” Jackson went on to say.

Also in connection with its retail performance, AutoNation watched its new-model sales figure dip 2.4 percent year-over-year in Q3, coming in at 86,192 units after it had been 88,322 units a year ago.

In the F&I office, AutoNation generated an extra $66 per unit in gross profit in that department as the metric rose to $1,660.

All told, AutoNation reported its Q3 net income from continuing operations came in at $98 million, or $1.00 per share. The company estimated that Hurricane Irma negatively impacted Q3 net income by approximately $8 million after taxes, or $0.08 per share.

Also during the third quarter, AutoNation repurchased 9.2 million shares of common stock for an aggregate purchase price of $400 million. As of Oct. 31, AutoNation has approximately $114 million remaining board authorization for share repurchase and 91 million shares outstanding.

Update on parts initiative

Also announced last year, the company offers AutoNation branded parts and accessories at AutoNation USA — standalone pre-owned vehicle sales and service centers.

A year ago when explaining the concept, the company emphasized AutoNation Precision Parts is a high quality, competitively priced line of maintenance and repair parts.

The new product line has been integrated into the company's reconditioning operations, and now enable improved customer retention for retail service, wholesale parts and collision repair business units, including AutoNation USA.

AutoNation Precision Parts was launched in the third quarter of last year in the company's existing stores, with the introduction of AutoNation-branded batteries that feature an industry-leading free lifetime replacement guarantee.

AutoNation Auto Gear, the company’s branded automotive accessory line, offers auto accessories for lifestyle, appearance, protection and vehicle security. AutoNation Auto Gear was also launched in the third quarter in the company's existing stores and is available at each AutoNation USA store.

The company plans to expand both AutoNation Precision Parts and AutoNation Auto Gear product lines in phases as their product portfolios are developed.

With all of those developments in motion, Jackson responded to an inquiry about how much pushback AutoNation has received from automakers.

“Yes, there’s been a discussion of course, and I say to them, ‘Look, if I go back 10 years ago, we had front-end gross on new vehicle sales of 8 percent, 9 percent, cost of 4 percent or 5 percent And today, we have front-end gross of 5 percent and new-vehicle sales is almost a commodity pass-through business and that we have to make all our profits somewhere other than selling the new car.’ Now, I have a franchise, so I've agreed that we will do tremendous volume on new vehicles.

“I understand that. That’s my responsibility,” he continued. “But then I say to the manufacturer, ‘By the way, it’s your stair steps and your margin programs that have brought us to this state, and you’re quite delighted with the fact that front-end gross margins are down to 5 percent. So you have to understand I’ve made this investment in this facility, and I need a way to grow and to do that profitably. And a lot of business that I gave you in the past for relationship reasons, just only for relationship reasons, and partnership reasons, no longer make sense with a front-end gross of 5 percent.’”

So is there a bitter divide between OEMs and AutoNation? Perhaps not.

“And the end of the conversation, I would say is I have earned their respect,” Jackson said. “And they said, ‘If I was in your shoes, I'd be doing the exact same thing and I guess. We don't have to worry about it too much, because who else can do it other than AutoNation?’

“So OK, and I'll take it. That’s fine with me,” he added.

Group 1 sees unprecedented sales in Houston

HOUSTON - 

The significant damage Hurricane Harvey left in Texas gave Group 1 Automotive the opportunity to watch new and used vehicles roll over the curb at daily sales rates during the last three weeks of September that “were the highest we have ever seen,” says president and chief executive officer Earl Hesterberg.

During the dealer group’s third-quarter conference call, Hesterberg elaborated about the development saying, “we’ve never seen anything like that before, and I don’t think we will ever see anything like that again. Our Houston stores on new vehicles basically doubled what they normally do. And bear in mind, these are some pretty big stores.

“Used vehicles were not up to that degree. They were probably up, depending on the stores, 30, 40 or 50 percent, probably more like 50 percent. But that tapered off, I would say, as we moved into the second week of October, but it’s still significant,” Hesterberg went on to say.

As Group 1 mentioned as a part of its third-quarter financial statement, some of its stores in Houston and Beaumont, Texas, were closed for seven days or longer as Harvey soaked the region with some of the highest rainfall totals ever recorded. With experts suspecting that Harvey might have destroyed nearly 1 million vehicles, Hesterberg is projecting sales to remain brisk at Group 1 stores

“I would expect that to continue well beyond the fourth quarter. Now, it will probably taper off from where it is now, but I think this will last for quite some time,” he said.

While not related to Harvey, Hesterberg also pointed out that Group 1 posted “noticeable improvement” in other regional footprints, including Oklahoma, central Texas and New England.

Group 1 executives did not specifically address their used-vehicle inventory, but Daryl Kenningham, who is president of U.S. operations, touched on new-model inventory. Kenningham said that the company overall was “happy” with the amount of new units on group lots, but that the company remained “tight” in connection with three brands, “Toyota, Honda, Lexus, specifically.”

Stockpile of cash

Group 1 finished the third quarter with nearly $67 million in cash among its assets; an amount representing a 218-percent spike compared to the figure at the end of the 2016 and triggering curiosity from Wall Street observers about what the company might do.

“We think acquisitions is our first best use of cash. You have seen that we have pulled the trigger on a few recently,” said John Rickel, senior vice president and chief financial officer of Group 1 while referencing how Group 1 purchased a pair of Jaguar-Land Rover dealerships in New Mexico as well as rolling out an Audi rooftop in Fort Worth, Texas.

“That’s the first, best use. And then from there, we basically are opportunistic between share repurchases and dividends,” Rickel added.

Group 1’s Q3 used sales tick 3.3 percent lower

HOUSTON - 

While contending with the ramifications of Hurricane Harvey, Group 1 Automotive watched its used-vehicle retail sales soften by 3.3 percent year-over-year during the third quarter.

According to its financial report released on Thursday, Group 1 stores in the U.S. turned 26,304 used vehicles during Q3. That’s down from the 27,201 used vehicles that the company’s stores during the same quarter a year ago.

While the unit figure ticked lower, Group 1 managed to keep its gross profit per used vehicle retailed nearly identical. In the third quarter, it was $1,443, while it stood at $1,441 a year earlier.

However in the F&I office, Group 1 sustained a slight drop-off there, too. F&I gross profit on all vehicles retailed dipped 1.4 percent to $1,566; that’s $22 less year-over-year.

The used-vehicle and F&I activities helped Group 1 to generate a Q3 net income figure of $29.9 million, diluted earnings per common share of $1.43, adjusted net income (a non-GAAP measure) of $46.6 million and adjusted diluted earnings per common share (a non-GAAP measure) of $2.23.

The company explained that Q3 adjusted net income and diluted earnings per share exclude approximately $16.8 million of net, after-tax adjustments, or $0.80 per share, for non-core items. Group 1 noted these adjustments primarily consist of costs directly associated with Hurricane Harvey of approximately $9.0 million after-tax, or $0.44 per share; and, franchise right impairments of $5.9 million after-tax, or $0.28 per share.

“While the company’s third-quarter results were negatively affected by both the non-recurring costs from Hurricane Harvey, as well as business disruption for more than a week across our largest revenue-generating market, strong demand for replacement vehicles in September provided significant financial recovery,” said Earl Hesterberg, Group 1's president and chief executive officer. “We expect this recovery to continue for a number of months, as the region continues to rebuild from Hurricane Harvey's widespread impact.

“Our overseas businesses were also positive factors in our third quarter results,” Hesterberg continued. “Although the U.K. new-vehicle market declined roughly nine percent in the third quarter, we significantly outperformed the industry with our same-store new vehicle unit sales rising 2.9 percent. Our used-vehicle and F&I businesses were up almost 10 percent driving a total same store revenue increase of 9 percent on a local currency basis.

“In Brazil, our operations delivered another quarter of profitability, with gross profit up 19.4 percent on a same-store constant currency basis, reflecting continued double-digit growth in used, aftersales and F&I,” he went on to say. “Our combined performance in all three markets delivered record revenues, gross profit, and adjusted earnings for the quarter.”

Editor’s note: More details from Group 1’s third-quarter activities will be highlighted in a future report.

CarMax Q2 earnings and retail sales jump by double digits

RICHMOND, Va. - 

CarMax posted double-digit increases in both net earnings and used vehicles retailed during the second quarter of its fiscal year.

And the company highlighted on Friday that CarMax achieved those results even though six stores in Houston were closed for a week because of Hurricane Harvey, creating a “modest adverse effect” on comparable store used-unit sales.

All told, CarMax retailed 186,019 units during the quarter that closed on Aug. 31, representing an 11.1-percent lift year-over-year. Halfway through its current fiscal year, CarMax stores have turned 381,292 units, producing a 12.6-percent improvement.

On a comparable store basis, the CarMax retail improvement wasn’t quite as robust, but still the company posted a healthy 5.3-percent year-over-year gain.

“The comparable store sales performance reflected continued solid improvement in conversion resulting from strong execution by our store teams and our digital initiatives,” the company said in a news release that accompanied its financial statement.

The metal rolling over the curb help CarMax generate a 9.7 percent rise net sales and operating revenues to $4.39 billion. As a result, net earnings increased 11.7 percent to $181.4 million and net earnings per diluted share rose 16.7 percent to $0.98.

The company calculated that its total gross profit increased 10.8 percent versus last year’s second quarter, climbing to $604.0 million. CarMax also highlighted its used-vehicle gross profit rose 12.0 percent, driven by the 11.1-percent increase in total used unit sales.

Used-vehicle gross profit per unit was consistent at $2,178 versus $2,160 in the prior year period.

On the wholesale front, CarMax sold 105,508 units through its auction channel during the second quarter, and halfway through the fiscal year the figure sits at 208,951 units. Both readings are nearly flat on a year-over-year comparison

Executives added wholesale vehicle gross profit increased 9.6 percent versus the prior year’s quarter, primarily due to an increase in wholesale vehicle gross profit per unit to $950 from $870.

“We believe this year’s second quarter wholesale gross profit per unit benefited from a favorable depreciation environment, relative to historical trends,” CarMax executive said. “Other gross profit increased 6.9 percent, primarily reflecting the changes in other sales and revenues.”

Also of note from the company’s latest financial performance, the company said CarMax Auto Finance (CAF) income increased 12.5 percent to $107.9 million. Average managed receivables grew 10.6 percent to $11.11 billion.

CAF indicated the total interest margin — which reflects the spread between interest and fees charged to consumers and the company’s funding costs, was 5.8 percent of average managed receivables compared with 5.9 percent in last year’s second quarter.

The provision for loan losses declined 7.8 percent to $32.9 million, compared with $35.7 million in the prior year quarter. The prior year’s provision was affected by unfavorable loss experience, while in the current year’s quarter, losses were generally consistent with expectations.

CAF went on to mention the allowance for contract losses as a percentage of ending managed receivables was 1.15 percent as of Aug. 31, compared with 1.18 percent reported as of May 31, and up from the 1.08 percnet reported as of Aug. 31,  of las year, “reflecting higher loss experience over the course of the last year,” according to the company.

2017 shows a pricier, fast-selling used-car market

CARY, N.C.  - 

Make it four straight months of record-high readings for the Manheim Used Vehicle Value Index.  

In August, wholesale vehicle prices — adjusted for mix, mileage and seasonality — were up 0.75 percent from July, according to the latest report on the index compiled by Cox Automotive chief economist Jonathan Smoke.

The resulting measure of Manheim’s index was 131.3, a 3.4-percent year-over-year increase and, once again, the highest ever reading for this index.

“Wholesale market values continue to show strength as a result of growing retail demand,” Smoke said in the report. “Most of the increase in used-vehicle sales is coming from double-digit year-over-year growth in sales of vehicles less than 4 years old.”

While Cox Automotive estimates that the seasonally adjusted annualized rate for used-car retail sales in August (38.1 million) was down from July (40.1 million), used-car sales have actually climbed 1.2 percent so far this year.

That includes what was best second quarter ever for the used-car market and the first time there was more than 10 million used-car sales in Q2, according to Edmunds.

Overall, there were 10.05 million used-vehicle retail sales in the second quarter, Edmunds said. That’s a 1.7-percent year-over-year uptick  and up 7.9 percent from five years ago.

What’s also up significantly are used-car transaction prices on the retail side.

Edmunds said that consumers paid an average of $19,227 for a used vehicle in the second quarter, the highest ever for Q2.  And it’s the older vehicles where the wallet wallop is happening.

Edmunds noted that vehicles 6 years and older have improved their retention, which is driving this surge. For instance, the retention of original MSRP on a 10-year-car in 2012 was 21.1 percent, on average.

It was at 26.4 percent in the second quarter, Edmunds said.

A 10-year-old midsize SUV had 16 percent retention in 2012; it’s now 32.5 percent.

“Vehicle sales reached historic lows during the recession, and now fewer consumers have an older trade-in when they buy a new vehicle,” said Ivan Drury, Edmunds senior manager of industry analysis, in a news release.

“It’s the basic law of supply and demand. People still want to buy affordable older cars, but there simply aren't as many out there,” he said.

Conversely, deprecation has escalated among later-model vehicles. Retention on 1-year-old used vehicles has slid from 76.6 percent in Q2 2012 to 70.9 percent in the second quarter of this year, Edmunds said, with the impact being felt the most in car segments. 

This late-model decline largely has been driven by heavy off-lease supply and incentive hikes. And, Drury said, an uptick in leasing.

“The surge in popularity of leasing has led to a more disposable mentality about personal vehicles, which has taken a toll on the values of newer used cars,” he said.

The difference in price on a 1- and 10-year-old car has gone from 55.5 percent to 44.4 percent over the past five years, meaning a less affordable used-car market overall, Edmunds said.

But again, the company emphasizes that retail sales are still strong.

In fact, shifting back to the Cox Automotive analysis, analysts are expecting a 3-percent lift in full-year used-car sales thanks in part to demand for replacement vehicles in southeast Texas following Hurricane Harvey.

“The dynamics of the used market are completely different now than they were five years ago, and we don't see this trend reversing anytime soon,” said Drury, the Edmunds analyst.

“Leasing grew steadily until late last year, so the near-new vehicle stock will continue to grow, and it's going to take time to replenish the supply of older used models,” he said. “It’s good news for those who can afford it, but for shoppers who need to find reliable transportation on a budget, this is a challenging scenario.”

 

Used-car sales picture for August, July

CARY, N.C. - 

There are likely to be fewer used-car sales this month than there were in July, but the seasonally adjusted annualized rate should stay in the neighborhood of 39 million units.

Edmunds released a forecast Thursday projecting 3.3 million used-car sales for August, which would be down from 3.4 million in July. The resulting used-car SAAR for August would be 39.0 million, down from 39.2 million in July, Edmunds said.

In a separate analysis on the used-car market, CompetitorPro found that average used-car sales per store at franchised dealerships in its database for July was 58.4 vehicles, with average days to sell at 35.3. The company had total used sales for franchised dealerships in July at 1.13 million.

For independent dealerships, the firm found that average used-car sales per store within its database was 185.3 in July, with average days to sell at 16.7.  Total used sales among independents was 166,400.

The data is based on internal VIN analysis on dealership websites (which are publicly accessible) by CompetitorPro. There were 19,307 franchised dealers in July’s data set and 898 independent dealers.

CompetitorPro counts individual franchises as separate dealerships.

Lithia extends record performance streak to 27 straight quarters

MEDFORD, Ore. - 

Fueled in part by its used-vehicle performance, Lithia Motors posted its 27th consecutive quarter of record results, including the highest second quarter revenue and earnings per share in company history.

Helping Lithia to those achievements were used-vehicle retail same-store sales increasing by 4 percent. All told, the dealer group retailed a total of 32,171 used vehicles, up from 27,716 units in Q2 of last year.

While Lithia moved much more used metal, its average gross profit per unit on those used-vehicle deliveries softened by $109 year-over-year as the Q2 figure settled at $2,316.

Also providing support to Lithia’s overall performance was how the dealer group’s F&I gross profit per unit nearly reached $1,300. A $27 lift from last year’s second quarter left the metric at $1,298.

The company’s Q2 net income per diluted share increased 5 percent to $2.12 from $2.01 in the year-ago span. Adjusted net income per diluted share increased 16 percent to $2.28 from $1.96 for the same period in 2016.

Second quarter net income increased 3 percent year-over-year to $53.2 million from $51.4 million. Adjusted net income rose 14 percent to $57.2 million, up from $50.2 million.

Lithia pointed out that the Q2 adjusted results exclude $0.16 per share in non-core charges related to acquisition expenses and a hail storm insurance reserve. The 2016 Q2 non-core adjustments exclude a $0.05 benefit associated with an equity investment.

The dealer group added that Q2 revenue increased 16 percent to $2.5 billion from $2.1 billion.

At the halfway point of the year, Lithia highlighted its revenues have increased 14 percent to $4.7 billion. Net income for the first six months of the year came in at $4.13 per diluted share, compared to $3.56 per diluted share for the similar period in 2016.

“We continue to execute our strategy of acquiring strong franchises that underperform their potential and improving earnings as they season,” Lithia president and chief executive officer Bryan DeBoer said when the company released its results on Friday. “We increased quarterly revenues 16 percent and adjusted earnings 14 percent over last year, driven by our significant acquisition cadence.

“On a same-store basis, we grew new-vehicle sales slightly, increased used-vehicle sales over 4 percent, and grew service and parts over 7 percent,” DeBoer continued. “We recently raised $300 million in senior notes and anticipate deploying the capital for acquisition growth in the future.

“As we integrate acquisitions and seek to improve their earnings, we increase future cash flow and produce greenfield-like returns,” he went on to say.

Looking ahead, Lithia is projecting full-year earnings of $8.35 to $8.50 per diluted share. This projection is based on the following annual assumptions:

—Total revenue of $9.6 billion to $9.9 billion

—New-vehicle same store sales increasing 1.0 percent

—New-vehicle gross margin of 5.6 percent to 5.8 percent

—Used-vehicle same store sales increasing 5.0 percent

—Used vehicle gross margin of 11.5 percent to 11.7 percent

—Service body and parts same store sales increasing 7.0 percent

—Service body and parts gross margin of 48.5 percent to 49.0 percent

—Finance and insurance same store gross profit of $1,325 to $1,350 per unit

—Tax rate of 39.5 percent

—Average diluted shares outstanding of 25.1 million

Sonic sets used retail record, turning nearly 31K units

CHARLOTTE, N.C. - 

As Asbury Automotive Group chose to leave its standalone used-car store business, Sonic Automotive’s dedicated used-vehicle rooftops are adding so much to its performance that the company is expanding the segment.

Sonic highlighted on Friday that it retailed a record number of used vehicles during the second quarter, turning 30,536 units that contributed $40.0 million in gross profit.

Of that Q2 figure, Sonic’s standalone used stores — EchoPark — retailed 2,049 units, up 80.4 percent over the prior year quarter. As a result, Sonic announced that it is accelerating an expansion of an additional 15 EchoPark stores by the end of 2018.

“Given our performance at EchoPark, we are accelerating our expansion into the Carolinas, Florida, Georgia and Texas markets. Our Colorado stores were cash flow positive in the quarter. Currently, we have more than 15 locations in the aforementioned markets that will break ground in 2017 and 2018,” Sonic executive vice president of operations Jeff Dyke said in a news release.

Sonic shared plenty of other noteworthy accomplishments, including:

—All-time record quarterly fixed operations gross profit of $173.1 million, up 2.9 percent over the prior year quarter

—Record Q2 F&I gross profit and gross profit per retail unit of $86.9 million and $1,379, respectively

—Record Q2 total gross profit of $360.6 million, up 2.1 percent over the prior year quarter

On the new-car side, Sonic retailed 32,466 units during the second quarter, down from 33,229 units a year earlier.

“The new-vehicle retail sales environment continues to be challenging in Houston and across certain brands,” Dyke said. “Our exposure to BMW, coupled with economic conditions in Houston's energy corridor, pressured sales and profitability in the second quarter. 

“On a same-store basis, our new vehicle unit sales declined 3.0 percent compared to the prior year quarter,” he continued. “This decline was slightly higher than the overall SAAR decline of 2.9 percent.”

Dyke then turned back to where Sonic thrived during the second quarter.

“Other parts of the business, however, continue to experience growth. We were able to grow used vehicle, fixed operations and F&I (finance and insurance) gross profit during the quarter, which is a testament to the dealer operating model,” Dyke said. 

“In addition, our operations and financial management teams have been busy during the quarter adjusting our cost structure in various areas to compensate for increased competition that has pressured margins,” he went on to say. “We expect this highly competitive retail landscape to continue and possibly intensify over the next several quarters as dealers balance volume and gross per unit expectations.”

Sonic also reported that net income from continuing operations for the second quarter came in at $12.3 million, or $0.27 per diluted share. These results include charges related to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores. 

“Our activities in the quarter continue to support our long-term growth strategies,” Sonic chief executive officer Scott Smith said. “During the second quarter, we opened our new open point Audi store in Pensacola, Fla., and our sixth EchoPark store in Colorado. We believe these investments will offer strong earning streams as the underlying businesses mature. 

“Year to date, we also invested approximately $30 million returning capital to stockholders through dividends and share repurchases,” Smith continued. “Our facilities teams have been extremely busy as well, evidenced by the $121 million invested in capital expenditures during the first half of 2017. 

“We are committed to offering the best customer buying experience in the industry, which includes state-of-the-art facilities at both our franchised dealerships and EchoPark stores,” he went on to say.

25% jump in used sales helps Penske to income record

BLOOMFIELD HILLS, Mich. - 

Paced by a 25.1 percent jump in used-vehicle retail sales, Penske Automotive Group reported on Thursday that the company posted the highest quarterly income from continuing operations and earnings per share in company history during the second quarter.

Penske highlighted Q2 income from continuing operations attributable to common shareholders increased 11.9 percent to $106.0 million, and related earnings per share increased 10.8 percent to $1.23 when compared to the same period last year.

Through its international operations, Penske indicated that it retailed 66,208 units during the second quarter, up from 52,936 units a year earlier. While the company turned many more used vehicles, Penske acknowledged its gross profit per unit softened to $1,416, off from $1,697 in the second quarter of last year.

Meanwhile, Penske also improved its F&I gross profit per unit performance as the Q2 figure came in at $1,131, representing a rise of $39 year-over-year.

 “I am pleased to report another quarter of record results, highlighting the diversity of our transportation services business model, driven by the solid performance of our U.S. and U.K. automotive markets, contribution from our used car super centers, and the benefit from the investment in Penske Truck Leasing,” Penske Automotive Group chairman Roger Penske said.

“Further, I was particularly pleased to see the 130 basis-point improvement in our automotive retail service and parts gross margin to 59.5 percent,”  Penske continued, “Our performance continues to demonstrate and reinforce the adaptability of our business to market conditions.”

As a result, Penske’s board of directors approved an increase in the cash dividend to $0.32 per share for the second quarter.

Commenting on the dividend, Penske Automotive Group president Robert Kurnick Jr., said, "For the 25th consecutive quarter, the board of directors is pleased to offer an increase in the quarterly dividend for PAG's shareholders. This increase continues to demonstrate the confidence we have in our diversified business model."

The dividend is payable on Sept. 1 to shareholders of record on Aug. 10.