Sales Reports

AutoWeb’s Q2 revenue and profit figures slide as major revamp continues

IRVINE, Calif. - 

While AutoWeb sustained a net loss of more than $5 million during the second quarter, new president and chief executive officer Jared Rowe insisted the company “made great progress” with regard to a significant revamp of how it operates as a digital marketing platform providing advertising solutions for dealers and OEMs.

On Thursday, AutoWeb reported that its total revenues for the second quarter that ended June 30 came in at $29.3 million, down from $34.6 million a year earlier. The company’s advertising revenues totaled $6.9 million with click revenues constituting $5.8 million.

However, the company posted a net loss of $5.2 million or $0.41 per share. During the second quarter of last year, AutoWeb posted net income of $0.3 million or $0.02 per share.

Nonetheless, Rowe — who arrived at AutoWeb back in April after holding senior positions at FordDirect, Cox Automotive and Cerberus-backed YP Holdings — defended the company’s performance.

The company explained the decline in total revenues was primarily due to lower retail dealer count and lower lead and click volumes. The company attributed the quarterly loss to the decrease driven by investments in new traffic acquisition strategies and testing of new traffic sources.

“During the second quarter, we made great progress in working towards the completion of our operating review and the development of a new strategic plan,” Rowe said in a news release shared by the company. “This included a comprehensive review of our products, traffic acquisition strategies, pricing policies, distribution channels and organizational capabilities and structure.

“Although we are still engaged in our strategic review, we have already begun to redevelop and invest in the key pillars of our business, which will continue to impact short-term profitability, particularly as we invest in new product development and test new traffic acquisition strategies to improve quality and consumer targeting,” he continued.

“In an effort to improve consumer-to-advertiser matching, we are also investing to enhance our click algorithm, which we expect to complete and deploy later this year. Further, we plan to restructure our organization to better align with our revised strategic imperatives,” Rowe went on to say.

While the revenue and net loss figures likely aren’t what the company wants, AutoWeb made improvements in connection with its cash and credit situations.

As of June 30, the company reported its cash and cash equivalents totaled $18.3 million, compared to $15.2 million on March 31 and $25.0 million when 2017 closed, with the reduction from year-end primarily driven by the repayment of AutoWeb’s $8.0 million revolving line of credit.

The company added that total debt was reduced to $1.0 million compared to $9.0 million as of Dec. 31.

What’s the prognosis for AutoWeb’s financial fortunes going forward?

“With just over three months at AutoWeb, I am very encouraged by the progress our team has made to evolve our go-to-market approach. However, there is still work to be done to determine the proper new/used car targeting mix, channel mix and product mix, among other strategic decisions,” Rowe said.

“We look forward to laying this out in greater detail in the coming months as we finalize our revised strategic plan. We continue to expect that the enhancement of our platform and advertising solutions will enable AutoWeb to return to growth and profitability,” he added.

Market strong for used sales, prices

McLEAN, Va., and SANTA MONICA, Calif.  - 

Used-vehicle sales this past month were strong — as were prices, perhaps easing tight margins in the dealership a bit. These stats and more painted a rosy picture for the used industry, even while many are waiting for the shoe to drop in terms of consequences from rising interest rates and an expected wave of off-lease supply. That’s according to the "July 218 Used Car and Light Truck Guidelines Industry Update" from J.D. Power Valuation Services. 

"In terms of full-year expectations, with exceptionally strong performances observed over the past few months, our forecast is improvement for the second month in a row," said David Paris, executive analyst at J.D. Power Valuation Services. "We expect used prices to increase, especially as negative forecast factors hurting used vehicles such as increase in used supply, worsening credit conditions and increase gasoline prices continue to be incentives."

And according to a July prediction from Edmunds.com, an estimated 3.4 million used vehicles will be sold in July 2018, for a SAAR of 39.5 million; this is compared to 3.2 million ― or a SAAR of 39.2 million ― in June. 

Highlighting June numbers in more detail, according to the J.D. Power report, seasonally adjusted used-vehicle prices rose by 1.2 percent when compared to May to reach 118.2. As a result, the J.D. Power index rose 4.1 percent year-over-year last month. Interestingly, the report also noted that wholesale prices took a downturn of 0.9 percent. That said, historically, J.D. Power analysts pointed out that over the past five years, June losses have averaged 2.2 percent, so wholesale prices are still holding relatively strong. 

Incentives were also on the way up in June, even while rising interest rates may make these offers more burdensome for automakers in the near future. Last month, according to the J.D. Power monthly report, incentives grew for the 39th straight month. 

Taking a look at what we can expect for July in the auction lanes, J.D. Power expects wholesale prices of vehicles up to 8 years in age to decline by less than 1 percent. Taking a look at the full-year perspective, with what J.D. Power is calling “exceptionally strong performances” over the past few months, its July forecast has improved for the second month in a row.

New-vehicle sales’ unusually strong showing for June

J.D. Power reported that new-vehicle sales were on the way up in June, as well. According to the J.D. Power report, new-vehicle sales grew by 5.4 percent for a new-vehicle SAAR of 17.38 million vehicles for the year. 

But Edmunds.com pointed out in their forecast for July new-vehicle sales results, that this month may spell out a different story. According to a new Edmunds report, the company expects 1,378,108 new cars and trucks will be sold in the U.S. in July for a SAAR of 16.7 million. According to Edmunds’ data, this number would reflect a 10.7 percent drop in sales from June, and a 2.3-percent drop year-over-year. 

But this may just be your average market correction. Edmunds analysts shared that “unseasonably strong” June new-car sales may have played a role in pulling some July sales away prior. But Edmunds.com analysts stated they do expect to see rising interest rates becoming a factor in the new-car showroom. 

"July sales are looking reasonably strong, but we're starting to see the first signs of speed bumps on the road ahead," said Jeremy Acevedo, manager of industry analysis at Edmunds. "With market factors such as rising interest rates keeping shoppers at bay, we expect to see a continued slowdown of the vigorous sales pace that the industry experienced in the first half of the year."

Survey: Chinese automakers may face uphill battle when entering US market

SAN FRANCISCO - 

Consumers are very familiar with Japanese brands, and they have obviously been very well received. 

But the case might not immediately be the same for Chinese brands eyeing entry in the U.S. 

According to a recent poll by Autolist, Chinese brand vehicles may face difficulties “earning the trust” and attention of U.S. car shoppers. 

According to their poll of 1,565 consumers in July about their awareness of an openness to Chinese brand vehicles, the results were varied. 

According to the poll results, 35 percent of respondents said they wouldn’t consider a Chinese brand, 38 percent said they were unsure, and 27 percent said they would consider one.

So, Chinese automakers may have a bit of an uphill battle, but not surprisingly, the answer depended on what brand the consumer’s current vehicle was – as well as where it was from.

For example, shoppers who owned an Asian vehicle already from Japan or Korea were more likely to consider a Chinese brand than those consumers that owned a European or American vehicle.

Thirty-four percent of owners of Japanese and Korean vehicles would consider a Chinese brand, with European brand owners (29 percent) and American brand owners (22 percent) trailing. 

What’s the hang up?

Apparently, according to the Autolist survey, respondents had concerns about reliability and safety when it comes to Chinese automakers potentially entering the U.S. market. Twenty-three percent of survey respondents said concerns about reliability were the main reason they wouldn’t buy a Chinese brand vehicle, while safety followed closely behind with 21 percent.

IHS Markit pointed out that many Chinese automotive brands have considered entry into the U.S. market for years, but have been stalled by low brand awareness, as well as difficulty meeting U.S. safety standards. 

But, still, Chinese automakers like GAC Motor and Geely’s Lynk & Co., which owns Volvo, are establishing joint ventures with established Western brands, and could potentially enter the American market in coming years. 

In fact, according to IHS Markit research, GAC plans to sell cars in the U.S. by 2019, while Lynk & Co. is shooting for 2020.

And if this comes to fruition, the factor most likely to persuade U.S. buyers is affordable price, according to 40 percent of respondents. Technology was up second at 18 percent. 

Brand awareness definitely won’t be the key to entrance into the U.S. market. Seventy-seven percent of respondents said they were not aware of leading Chinese auto brands, including GAC, Lynk & Co, Geely, BYD, Chery or SAIC.

Used-car demand bypasses 'normal softening'

CARY, N.C.  - 

By this time of year, used-vehicle demand (unlike the weather) typically cools down a bit.

Not the case in 2018.

The “steady and strong” retail used-car market keeps chugging along and is likely to reach 39.5 million sales this year, then level out, according to Cox Automotive.

That figure would be an increase from 39 million used-car sales in 2017.

“The used market continues to be strong, powered by availability of off-lease vehicles that offer an alternative to the value-conscious and/or affordability-challenged buyer,” Cox Automotive chief economist Jonathan Smoke said during a conference call with reporters Tuesday.

“At Manheim, we saw weekly prices and dealer purchases increase in the final week of the month, which is typically an indicator of very strong retail demand,” Smoke said, referring to Cox Automotive’s chain of wholesale auto auctions.

“This is usually the time of the year when used vehicle demand softens a bit, following a tax refund-driven spring, but so far this year, we are not seeing signs of a normal softening,” he said.

Plateau at high level

And while there hasn’t been the usual seasonal slowdown in used sales, Smoke and the Cox Automotive team don’t anticipate the annual growth to escalate in the future, given that some of the pressures impact new-car sales have the potential to reach the used market, as well.

While declines are not expected, look for 39.5 million used-car sales to be the upper limit for now, as Cox Automotive analysts say the market is “plateauing” and is likely to reach the same tally next year.

“We basically have been seeing a fairly steady and strong level of used-vehicle demand that has been up substantially relative to the prior year. We saw, effectively, gains that were starting last spring,” Smoke said.

“We’ve reached a point though that it appears that the used-vehicle sales activity is plateauing. As we estimate used-vehicle sales, we’ve been tracking an annualized level of 39.4 million for the past six months,” he said.  

“We do believe that if June comes in as strongly as we’re estimating that we might see that move up slightly to 39.5 million, but that’s likely the level at which we would expect to end the year.”

Despite potential thorns, no decline expected

The used-car market is not immune from some of the pressures on demand that have impacted new-car sales, like issues of affordability and financing, so there likely won’t be “further gains down the road,” in that market, Smoke said.

Additionally, some dealers — specifically independents — are starting to see some inventory challenges.

 “In our Dealer Sentiment Index in the second quarter, independent dealers reported that their used-vehicle inventory was declining,” he said. “And so, of course, if we have declining inventory or declining availability relative to what we’ve been seeing in terms of growth, that will challenge us continuing to see more sales growth.

“But, that said, we are not forecasting a decline. We actually are forecasting 39.5 million used-vehicle sales for the year. And we are currently estimating that same number for next year. So, effectively, we’ve reached a level that we don’t think we can grow much from here, but very likely to remain at this level, given the very strong economic conditions that (Cox Automotive senior economist) Charlie (Chesbrough) mentioned,” Smoke said, referring to comments his colleague made earlier in the call about such factors as strong consumer confidence and strength in the labor market.

To add to Smoke’s point on inventory challenges, Chesbrough said that the used-car market is “having a real constraint of hangover effects from the Great Recession that’s leaving a real gap of supply in the marketplace for those 7- to 10-year-old vehicles, because we had such a massive decline in new-vehicle sales a decade ago and eight, nine years ago.”

He said: “There’s just not a lot of inventory out there and that’s putting a real squeeze on dealers to either buy older vehicles or buy newer vehicles. That supply is leaving a real impression in the marketplace.”

Used-car impact of tariffs

Another potential headwind to the used-car market could be the potential impact of tariffs.

Should new tariffs on imports happen, the actual impact could be quite varied; however, Cox Automotive said it could lead to a 5- to 25-percent gain in new-car prices.

Discussing tariffs in general, but tailoring it more to potential tariffs on imports, Smoke said: “We do think that an increase in new-vehicle prices brought on by tariffs is going to trickle into the used-vehicle market. It’s going to likely take several months and it’ll be reflected primarily in lower depreciation rates, rather than an immediate adjustment in used-vehicle prices.

“But there is a natural balance that the market, essentially, likes to see in between ages of vehicles. And so, if suddenly the new vehicle has a higher price, the used market will adjust to that,” Smoke said.

And the industry does not really gain from having higher prices on used cars, he said.

“The only constituency that really benefits from higher used-vehicle prices are finance companies, because they basically end up with higher residuals on lease vehicles, they end up with … lower losses on vehicles that go into collection mode,” Smoke said.

“But for a dealer and for a consumer, higher prices in both new and used vehicles is going to be a bad thing and will inevitably lead to fewer transactions. And fewer transactions inevitably lead to a smaller market, and a smaller market takes a dent out of the economy,” he said. “And so, it’s something that we don’t see a lot of positive silver linings in down the road.”

Manheim index hits highest point since November as May used sales wobble

ATLANTA - 

Cox Automotive discovered two trends originating in May that might frustrate some dealerships, especially stores that might have landed a bit short of monthly goals. In May, wholesales prices moved higher as used-vehicle sales softened.

Before used-car managers reach for their stress balls, here are the specifics.

Cox Automotive determined wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.25 percent month-over-month in May. This rise brought the Manheim Used Vehicle Value Index to 134.2, which marks a 4.9-percent increase from a year ago and the highest level since last November.

Prices for each of the six vehicle segments Cox Automotive tracks for its index update moved higher in May, with vans leading the way via a 10.2-percent climb.

Coming in roughly at half of that upward price pace were compact cars at 5.7 percent SUVs and CUVs at 5.0 percent. Midsize car prices jumped 4.0 percent, and prices for pickups rose by 2.0 percent.

Even luxury cars squeezed in with a 0.2-percent uptick.

Meanwhile, that slightly more expensive used metal didn’t roll over the curb quite as frequently in May.

According to Cox Automotive estimates, used-vehicle sales volume decreased by 1 percent year-over-year in May. However, analysts contend the annualized pace of used-vehicle sales is up 1 percent over last year.

Analysts also estimated the May used SAAR to be 39.7 million, flat on a month-over-month basis.

So what does all of the May data mean? Cox Automotive offered this clarity with the index update.

“Looking at trends in the weekly Manheim Market Report (MMR) prices, the traditional spring bounce this year started three weeks later than it did in 2016 and earlier years and peaked in April in week 15,” analysts said.

“Used-vehicle prices are now moving down but remain higher now compared to where they were at the beginning of the year than any of the last three years,” they continued. “Price comparisons to last year are starting to get tougher as 2017 saw very low depreciation starting in May and lasting throughout the summer.”

One other note about the wholesale market: Cox Automotive also noticed rental risk pricing strengthened.

Analysts indicated the average price for rental risk units sold at auction in May moved up 8 percent year-over-year. But rental risk prices softened 1 percent compared to April.

Cox Automotive added that the average mileage for rental risk units in May (at 43,000 miles) climbed 11 percent above year-ago readings but dipped 1 percent month-over-month.

Turning the page from the used-vehicle space, Cox Automotive also touched on May new-vehicle sales, which increased 5 percent year-over-year, triggered in part by one more selling day compared to May of last year.

Analysts pegged the May SAAR at 16.8 million, up from last year’s 16.7 million. However, the reading broke the streak of eight straight months of new SAAR coming in at or above 17.0 million.

Cox Automotive stated cars continue to see sharp declines as new sales in May fell 9 percent compared to last year. Light trucks outperformed cars in May and were up 14 percent year-over-year.

Combined rental, commercial and government purchases of new vehicles were up 18 percent year-over-year in May, led by increases in commercial (up 2 percent) and rental (up 30 percent) fleet channels, according to Cox Automotive.

“New vehicle inventories came in under 4 million units for the first time in three months, and inventories are at their lowest levels since January,” analysts said.

Cox Automotive closed its Manheim Index report by highlighting how strong economic momentum continues.

Analysts acknowledged the employment report for May was much stronger than expected as job creation increased to 223,000 when experts had expected 190,000. The prior two monthly numbers were also revised up for a net increase of 15,000 more jobs than originally estimated.

Consumer confidence, as measured by the Conference Board, increased in May to 128, the second highest level for the year and the third best level in more than 17 years.

Used-car SAAR at highest rate of 2018

CARY, N.C.  - 

Thanks mostly to two fewer selling days, used-car retail sales last month declined an estimated 2 percent from April 2017 — but they’re pacing ahead of year-ago figures and reached the highest SAAR yet in 2018, according to Cox Automotive.

The seasonally adjusted annualized rate of used-car sales was at 39.7 million, company analysts estimate in the latest Manheim Used Vehicle Value Index report from Cox.

 Late last month, Edmunds was forecasting used-car sales to decline modestly from March, but with the SAAR expected to remain steady.

It projected April used-car sales of approximately 3.5 million units, compared to 3.7 million in March. The SAAR for both months, Edmunds said, was said to be at 39.2 million, Edmunds said in the April forecast. 

Within the certified pre-owned slice of the used-car market, a few automakers have shared results for the month, as well.

There were 1,602 Volvo CPO sales in April, down 1.4 percent year-over-year. Through four months, sales are up 7.7 percent at 6,585 units.

At Kia, dealers moved 6,078 certified units for the month, down 12.6 percent year-over-year. Year-to-date sales are at 25,589 units, down 3.1 percent.

Volkswagen CPO sales were up 40 percent in April, with 7,770 vehicles sold.

Porsche increased certified sales to 1,807 units, an 11.9-percent gain.

Mazda had a 14.7-percent increase with 4,090 CPO sales.

Cox Automotive sees April used sales soften as wholesale prices tick higher

ATLANTA - 

Along with pinpointing what the Manheim Used Vehicle Value Index did in April, Cox Automotive experts also projected how much and why used-vehicle sales softened a bit last month.

According to Cox Automotive estimates, used-vehicle sales decreased by 2 percent year-over-year in April versus the same month last year. Analysts said the dip primarily stemmed as a result of having two fewer selling days.

Cox Automotive highlighted the annualized pace of used vehicle sales is up 1 percent over last year.

“We estimate the April used SAAR to be 39.7 million, the highest level in four months,” analysts said.

Cox Automotive mentioned April new-vehicle sales decreased, sliding by 5 percent year-over-year with two fewer selling days compared to April 2017. The April SAAR came in at 17.1 million, up from last year’s 17.0 million; it is the eighth straight month of more than 17 million SAAR and the fifth-best April SAAR on record.

Analysts added that cars continue to see sharp declines as sales in April fell 21 percent compared to last year, with major car segments’ having sales declines. They pointed out light trucks outperformed cars in April and were up 5 percent year-over-year.

Cox Automotive went on to note that the combined rental, commercial and government purchases of new vehicles climbed 7 percent year-over-year in April, led by increases in commercial (up 9 percent) and rental (up 7 percent) channels.

Analysts closed the discussion by saying new-vehicle inventories came in higher than 4 million units for the second straight month, and inventories are at their highest levels since June of last year.

Wholesale-price movements

Looking now at the wholesale space, Cox Automotive found that used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.33 percent month-over-month in April. This movement brought the Manheim Used Vehicle Value Index to 132.5, which was a 6.3 percent increase from a year ago and the highest level since last November.

“Looking at trends in weekly Manheim Market Report (MMR) prices, the traditional spring bounce this year started three weeks later than it did in 2016 and earlier years and peaked in April in week 15,” analysts said.

“Used-vehicle prices are now moving down but remain higher now compared to where they were at the beginning of the year than any of the last three years,” they continued.

On a year-over-year basis, Cox Automotive noticed all major market segments saw price gains in April. Compact cars and vans outperformed the overall market, climbing by 6.6 percent and 13.3 percent respectively.

Meanwhile, the latest index update showed SUV/CUVs and pickups underperformed the overall market, rising by 5.8 percent and 4.8 percent, respectively.

“Collectively, nonluxury vehicles outperformed the market, while luxury vehicles underperformed,” analysts said. “This is not unusual for the spring, as the observed bounce occurs only in nonluxury vehicles.

Also in the wholesale space, Cox Automotive determined that rental risk pricing strengthened.

Analysts found that the average price for rental risk units sold at auction in April jumped 9 percent year-over-year. Rental risk prices moved 2 percent higher compared to March.

The report mentioned average mileage for rental risk units in April (at 43,500 miles) came in 10 percent above a year ago but 3 percent lower month-over-month. 

General economic update

Cox Automotive closed its latest analysis by highlighting the continued strong economic momentum on display in the U.S.

Analysts recapped that the economy grew 2.3 percent in the first quarter, a decline from last year’s overall growth of 2.5 percent, but much better than the first quarter of last year’s “lackluster” 1.2-percent growth.

Cox Automotive said the second quarter should see growth rebound in keeping with the expected 2.8 percent to 3.0 percent likely GDP growth for 2018.

Analysts added that consumer confidence rebounded in April after declining in March. The April index level was the second-best level going back to November 2000.

Sonic establishes 6 new records during Q1

CHARLOTTE, N.C. - 

Sonic Automotive sure enjoyed a record-setting first quarter as the dealer group reported six different new milestones as a part of its latest financial statement released earlier this week.

Sonic said it posted new highs within six different metrics, including a trio related to its used-vehicle and F&I departments.

Starting from the top, the dealer group reported record first quarter revenue and gross profit of $2.4 billion and $352.5 million, respectively.

Next, Sonic set an all-time record quarterly pre-owned retail unit sales high, turning 33,739 units.

Then, the company highlighted an all-time record for quarterly F&I gross profit per retail unit of $1,490. That pace led to a record first quarter F&I gross of $93.7 million.

Furthermore, Sonic said it generated record first-quarter fixed operations gross profit of $169.6 million.

While all the high marks made for a great headline, Sonic did experience some challenges during Q1.

The dealer group watched gross profit per used vehicle retailed softened by $254 year-over-year to settle at $1,090.

On the new-model side, retail sales dipped by 3.3 percent to 29,500 vehicles. Sonic managed to keep its gross on those new-car turns nearly steady year-over-year as that figure softened by just $14 to $1,925.

When Sonic had to wholesale a vehicle during the first quarter, the company sustained some significant year-over-year setback.

Sonic deployed 9,680 vehicles to its wholesale channels in Q1, a 16.5-percent jump from a year earlier. The losses the company took on those units spiked 224 percent from $141 in Q1 of last year to $457 this past quarter.

“We shifted our strategy during the quarter related to the number of used vehicle inventory we are carrying,” Sonic chief financial officer Heath Byrd said in a news release.

“The decline in used gross per unit and the increase in wholesale loss resulted from us aggressively disposing of units to reduce our overall days’ supply of used vehicles,” Byrd continued.

“Additionally, we believe we found a good compromise between volume and gross for new vehicles and we were able to grow both fixed operations and F&I gross profit compared to the first quarter of 2017,” he added.

Byrd also touched on Sonic’s overall performance as well as the ongoing initiative in the used-vehicle space — EchoPark.

“The first quarter met our internal earnings expectations and we remain confident with our full year earnings guidance,” Byrd said.

“We remain committed to growing our franchise store operations and our EchoPark brand,” he continued.

“In addition to our dividend of $0.06 per share distributed during the first quarter, we continue to honor our commitment to return capital to shareholders as we repurchased approximately 1.2 million shares of our common stock for approximately $23.4 million,” Byrd went on to say.

3.5 million used-car sales likely for April

CARY, N.C.  - 

Used-car sales this month are likely to decline modestly from March, but the seasonally adjusted annualized rate should remain steady.

That’s according to an analysis released this week by Edmunds, which projects April used-car sales of approximately 3.5 million units.

That would be down from 3.7 million in March. The SAAR for both months, however, is at 39.2 million, Edmunds said.

The pre-owned market is bringing “growing competition” to the new-car market, according to an analysis released Thursday from Cox Automotive.  

Millions of off-lease vehicles are being pumped into the retail market for consumers, thanks to high leasing rates in recent years, the report notes.

Seperately, in its  2018 Used Car Market Report & Outlook released in March,  Cox Automotive forecasted 39.5 million used-car sales this year, up from 39.3 million a year ago.  New-car sales are likely to dip to 16.7 million for the year.

“Although buying conditions are strong for all vehicle markets, growth in used supply from off-lease vehicles, coupled with record prices for new products ad a modest pull-back in fleet activity, is steering new and used products in different directions,” Cox Automotive senior economist Charlie Chesbrough wrote in the used-car sales section of that report.

As for April, the company is projecting new-car sales to dip 3.6 percent year-over-year. But Cox Automotive called April’s pace “strong,” with a 17.3 million SAAR, beating the April 2017 pace of 17.0 million.

 

Lithia manages Q1 used-sales lift despite challenging weather conditions

MEDFORD, Ore. - 

The challenging winter weather experienced in much of the dealership footprint held by Lithia Motors left its mark on the first-quarter performance the dealer group reported on Wednesday.

Despite the Northeast getting especially pounded by snow and other elements preventing potential buyers coming to showrooms, Lithia managed a 4.2-percent improvement in used-vehicle retail sales during Q1, turning 31,677 units. That’s up from 30,404 used vehicles retailed in Q1 of 2017.

Lithia’s fortunes moving new metal were not so fruitful, as the dealer group watched new-model sales soften by a similar pace. Lithia retailed 33,886 new vehicles in Q1; a figure 4.3 percent lower than the 35,415 turned in the year-ago quarter.

“Vehicle sales improved sequentially each month of the quarter,” Lithia president and chief executive officer Bryan DeBoer said in a news release. “January and February were softer than expected and we experienced more severe weather than typical in the Northeast throughout the quarter.

“Despite the slower start, we finished strong with a record March, generating over 70 percent of our earnings,” DeBoer continued. “We expect this momentum to continue throughout 2018 and beyond.

“While fixed operations remains strong, sales shortfalls in January and February created an urgent call to action for our leaders to more aggressively pursue the over $200 million in unrealized earnings potential available to us,” he went on to say.

As DeBoer referenced, Lithia reported that its service, body and parts same-store sales increased 3 percent.

And whether group stores retailed a used or new vehicle, Lithia generated an extra 5.4 percent per unit in gross within the F&I department, collecting $1,380 with each vehicle rolling over the curb with financed packages included.

All told, company-wide Q1 revenue increased 19 percent to $2.7 billion. As a result, Lithia tabulated that its Q1 net income per diluted share came in at $2.07, a 3-percent increase over $2.01 per diluted share reported in the first quarter of 2017, and a 16-percent increase compared to adjusted net income of $1.78 per diluted share in the same period of 2017.

The company said its Q1 net income was $52 million, a 3-percent increase over $51 million reported in the first quarter of 2017, and a 16-percent increase compared to adjusted net income of $45 million for the same period of 2017.

Lithia also reaffirmed its outlook of full year revenues of $12.0 to $12.5 billion and earnings per share of $10.60.

The group’s board of directors approved a 7-percent increase in Lithia’s dividend to $0.29 per share related to Q1 financial results. Lithia expects to pay the dividend on May 25 to shareholders of record on May 11.

Year to date, Lithia has repurchased 90,000 shares at a weighted average price of $98.02 per share. Under its existing $250 million share repurchase authorization, approximately $154 million remains available.

Editor’s note: Watch for an upcoming report that will contain more insights from Lithia executives about the company’s Q1 performance and future expectations.

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