FORT LAUDERDALE, Fla. -

In discussing the retailer’s first-quarter performance during a conference call last week, AutoNation chairman and chief executive officer Mike Jackson continued to be “frank” about how the company’s used-vehicle operation has performed.

Listeners were reminded of quarterly calls in 2012, when management stressed the need for used-vehicle improvement.

Fresh off the first quarter of 2013, though, AutoNation’s performance in this area has taken “a step forward.”

“I think you’ll recall, over the last several quarters of last year, we called out that we were dissatisfied with our used-vehicle point-of-view and thought we had an operational opportunity,” Jackson said during Thursday’s call.

“We’ve worked very hard to improve our capabilities around used cars, and have made changes and they seem to be working. It’s still a tough environment out there on the supply-and-demand side, but we definitely consider the first quarter a step forward.”

President and chief operating officer Mike Maroone echoed that sentiment and emphasized the progress made from bringing in Steve Strader and the efforts from the new senior vice president of retail operations and his used-car team.

“He and the used-car folks really focused on wholesaling less, retailing more; moving units appropriately; and pricing to market, controlling our discounting; there’s a whole series of executive issues that I think they’ve done an excellent job of working through, and we think there’s even more opportunity in that business in the recovery,” Maroone said.

He later noted how additional training resources and people in the field, along with the effort to acquire the right vehicles at the right time have helped.

“It’s a comprehensive effort and that’s what gives us confidence that we think, going forward, we’ll be able to continue to perform in a good way,” Maroone shared.

Earlier in the call, Maroone pointed out that in the first quarter, same-store gross profit per used vehicle retailed was $1,646.  He said this was down $56 from the same period of 2012, “attributable in part to the increased cost to acquire vehicles for certified pre-owned programs and our desire to retail higher-mileage vehicles we would have previously wholesaled.”

But, as one questioner pointed out, the company did see a sequential improvement in used-vehicle margin. During the Q&A, management was asked role improving used supply has played.

“I don’t think the (used) supply has yet changed, although we’re anticipating that it will get better; especially for the certified pre-owned units, they’re still very tight,” Maroone explained. “The supply is very limited, so we’re having to pay a lot of money to get those vehicles, and that’s a growing part of the segment. The other factor is, the used vehicles that are out there are coming in with very high mileage, and we’re really working hard to retail those, so it’s putting enough pressure on the margins.

“As it loosens up going forward, and there is more supply, I think there is more opportunity on the margin side,  but we are pleased that sequentially our margins are up and we’re looking for more.”
 

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.