Group 1 Automotive’s overall second-quarter figures show a 3.6-percent year-over-year rise in used-vehicle sales and a 6.4-percent lift in new models retailed. But the unusual path company stores in various markets took to those top-line performances is what left president and chief executive officer Earl Hesterberg wondering what happened.

Hesterberg described the used-vehicle market overall as “a little bit softer” in Q2. Investment analysts asked him to elaborate during Group 1’s conference call on Thursday.

“I couldn’t tell you exactly why,” Hesterberg began. “Although in June, I had the impression that there was a lot of new-vehicle volume pressure from a variety of OEMs to hit targets and things, and perhaps new cars sat down on used cars a bit.

“In our case, we had a big variation — the biggest variation I have seen in a long time — among performance from various geographies,” he continued. “And much of our weakness was driven by an actual 20-percent decrease in used-car sales in New Jersey and New York. We also had a couple of markets that were flat.

“Generally, our used-car performance was much better than our total corporate metric would indicate,” Hesterberg went on to say. “So we were depressed a bit by a couple of poor performances in specific geographies, and the same was true on new vehicles. We had a little bigger variation than I'd seen before.”

On the new-vehicle side, Hesterberg pointed out what Group 1 considers to be its core markets — south Texas, California and the Gulf Coast — produced a new-model increase of almost 9 percent.

“We were flat for the first time in the Atlantic Coast, and we were very weak in New Orleans. So we had a huge spread,” Hesterberg said.

Impact of Recalls on Service Drive

With General Motors alone recalling more than 26 million vehicles in the U.S. so far this year, Hesterberg fielded inquiries on whether this repair work boosted the company’s service drive and its performance in that segment. Group 1 reported an 8.8-percent jump in revenue from its service department in the second quarter compared to a year ago.

While the company wants to grow its service department, it’s not expecting that upward movement to come solely because of automaker safety recalls.

“Parts aren't available in many cases, or not sufficient parts,” Hesterberg said. “But for the last year or so, I think it's fair to say that our overall business has had a positive effect from a variety of recalls, but probably not the ones that you're thinking of or that you’ve heard the most about recently.”

And Hesterberg doesn’t expect a flood of Chevrolet Cobalts to arrive for repair. The Cobalt is among the models included in the high-profile ignition recall that’s gotten GM plenty of attention from the National Highway Traffic Administration and lawmakers on Capitol Hill.

“I have to tell you, I don’t think we have as much traffic in the dealerships yet on these old model recalls as you might expect us to,” Hesterberg said. “And I’m not sure yet how many of these customers are going to come in. So we'll have to wait and see about that. Some of these cars are very, very old. In my experience, you get a very low return rate on some of these very old cars.”

If in fact a large amount of recall work ends up at Group 1 dealerships, Hesterberg insisted the company stores have plenty of capacity in terms of bays and infrastructure to handle it. But like other public dealer groups such as AutoNation and Asbury Automotive Group shared in this Auto Remarketing report, Group 1 also is struggling to have enough personnel to complete the work.

“I have to tell you we always struggle with technicians. We could use more technicians, and we’ve been trying to increase our human capacity for quite some time,” Hesterberg said. “We have the physical plant necessary, but we’re going to continue to drive to increase the number of technicians we have.”