CARY, N.C. -

“We continue to be bullish on used.”

AutoNation chief executive officer and president Cheryl Miller was answering a question about the AutoNation USA used retail stores from a participant in AutoNation’s quarterly earnings conference call on Oct. 29.

In the third-quarter earnings calls for AutoNation and other publicly traded dealer groups, things were looking bullish for used-vehicle sales, which were strong contributors to those companies’ reported results.

As for AutoNation, Miller said the company’s positive position on used is not just about its AutoNation USA stores but throughout its total portfolio.

AutoNation reported that its same-store Q3 gross profit of $877 million was an increase of 5% compared to the year-ago period. That, according to the company, was a result of growth in customer financial services, customer care and used-vehicle gross profit.

Over at Sonic Automotive, it also shared some of that feeling of bullishness in the area of used.

Among its Q3 highlights on a total Sonic consolidated basis included an all-time quarterly record in pre-owned unit sales of 42,453 units.

Lithia Motors also showed some strong results, reporting the highest adjusted third-quarter earnings in company history at $3.39 per share. That was a 20% increase over last year.

“Our earnings were driven by record revenues of $3.3 billion for the quarter, with same-store revenue growth in all business lines,” said Lithia president and chief executive officer Bryan DeBoer during the company’s earnings call.

Used vehicles is one of those business lines, and revenues for that business line grew 14%, DeBoer reported.

AutoNation USA breaks even, some stores trend upward

Miller reported that the AutoNation USA group broke even for the second consecutive quarter, and she said the company is happy with the improving performance trend at these stores.

Conference call participant Bret Jordan of Jeffries asked her to expand on that as well as expansion plans and inventory sourcing.

Miller answered that although the business broke even, “certainly there are some stores doing even stronger than that within the mix.” The business has not announced any further expansion, she added. From a sourcing perspective, she said the company’s “We’ll Buy Your Car” initiative has been successful.

“But keep in mind also that AutoNation, as a whole, self-sources — between trade-ins, We’ll Buy Your Car and lease returns — over 70% of our inventory,” she said. She described that as a strong competitive advantage.

“So really, volume is the name of the game,” she said. “As we think about those stores, we are focused on increasing that sourcing and driving additional volume through those stores.”

Jordan then asked Miller if the company was taking trades at AutoNation franchise stores and allocating that used inventory to AutoNation USA stores for retail.

“Absolutely. We’ve always done that,” Miller said. “And so, when you think about our system, we take trades at different locations across AutoNation and USA, and we move and share that inventory where it best suits our customers.”

Sonic: Echo Park foresees 2020 ‘nationwide footprint’

Sonic’s used-car chain, EchoPark, continued to build upon its success from the prior quarter, said Sonic and EchoPark CEO David Smith during the company’s conference call on Oct. 24. Sonic believes EchoPark revenues will surpass $1.2 billion for the full year of 2019, he said. That would be a bullish-like increase of 71% over 2018 annual revenues.

But Smith said the story of EchoPark’s growth is not just about the number of traditional bricks-and-mortar locations. He said that through the proprietary EchoPark technology and the Echopark.com website, the company is attracting customers from more than 140 markets across the United States to its eight existing locations.

“Our customers have shown they’re very happy to travel to our EchoPark locations for our industry-leading guest experience,” Smith said.

He continued, “While we believe our existing EchoPark stores have much more revenue and profit growth potential as they mature, we are also very excited to announce we’ll be ramping up our growth strategy as we open EchoPark locations in major metro markets in California, Georgia, and Florida that will give us a nationwide footprint by the end of 2020.”

Sonic’s core franchise stores also had a strong third quarter, Smith said. Those stores benefited during the quarter from overall higher gross profit from used vehicles, fixed operations, and F&I, he said.

Lithia: Modernization and procurement

Chris Holzshu, who is now chief operating officer at Lithia, reported that used retail gross profit per unit increased $52 to $2,257 compared to $2,205 last year.

“Our used-vehicle mix was 27% certified, 59% core or vehicles 3 to 7 years old, and 14% value auto, or vehicles older than 8 years,” Holzshu said.

He added, “Our top-performing used-vehicle operators achieve a used-to-new ratio of two-to-one or greater, with the value auto segment [comprising] nearly 30% of those sales. The recent activation of our proprietary valuation algorithm allows for consumers to receive an instant valuation online and sell us vehicles from the comfort of their own home.”

A high amount of those vehicles fall into the core and value auto segment, Holzshu said. That will be “prime merchandise” as the company further expands the offerings in more of its locations.

“This modernization in our stores expands our reach and our ability to procure more used vehicles, which translates to more sales opportunities in our network,” Holzshu said.

As a result of that, the company continues to target selling at least 85 used units per location per month. The company sold 74 used units per store per month in the quarter, which Holzshu said was an increase of 9% over the prior year.

Companies also bullish on tech

Miller of AutoNation opened her earnings call remarks by noting that AutoNation and mobility company Waymo will continue a multi-year service agreement and will launch an autonomous parts delivery program in Phoenix.

“Waymo, an independent Alphabet subsidiary, is the leader in self-driving technology with a mission to make it safe and easy for people and things to move around,” Miller said. “We’re excited to broaden our partnership with Waymo and support their fleet and operations.”

Sonic and EchoPark president Jeff Dyke said the company recently launched its CarCash app at a location in Charlotte, N.C., on the new-car side, “and we are beginning to work with the app to drive more cars coming to us from off the streets.”

He added that in addition to using the app for the consumer, Sonic is “providing it for a competitive set as well, so other dealers are now beginning to use the app for us to appraise vehicles for them.”

DeBoer of Lithia was bullish about the company’s recent activation of its proprietary sell-from-home technology in the Pittsburgh market, which he said allows customers to sell a vehicle to Lithia in minutes. That activation, DeBoer said, is part of the company’s “holistic and incremental approach to modernization” and expands the company’s reach in procuring used vehicles.

He added that in addition to the company’s buy-from-home technology it launched earlier this year, its sell-from-home technology will help the company improve its 1-1 used-to-new ratio to closer to 2.3-to-1.