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How used-car operations fared for Group 1 in Q2

Continuing our reports on how used-car operations fared for the publicly traded dealer groups during the second quarter, next up we have Group 1 Automotive.

Looking specifically at the retailer’s U.S. operations, Group 1 reported total revenues of $1.8 billion during the quarter, which was down 19.6% year-over-year.

Group 1 pulled in total gross profits of $324.5 million, a 13.9% decrease.

Total same-store gross profits in the U.S. for Group 1 was $317.9 million, a 15.1% drop.

Moving to pre-owned in the U.S., Group 1 had a 16% decline in same-store total used-car revenue. Same-store used sales were off 16.5% amid late-quarter inventory shortages, the company said.

There was a 5.4% decline in same-store total used gross profit for Group 1, while same-store used retail gross profit per unit was $1,557, a $129 increase. Group 1 said this uptick “partially offset the volume decline.”

“The rapid action by our dealership operating teams to significantly cut costs in late March and the strong new- and used-vehicle margins in late May and June, helped deliver an exceptional quarter for our U.S. operations,” Daryl Kenningham, Group 1’s president of U.S. and Brazilian operations, said in a news release.

Offering some overall commentary, Group 1 president and chief executive Earl Hesterberg said: “Our ability to react quickly to uncertain, dramatically lower levels of business activity resulting from the pandemic was completely due to the hard work and commitment of our employees and I must sincerely thank them for that. Rapid and deep cost cuts, combined with a quicker-than-expected U.S. auto market recovery, enabled us to achieve very strong operating results in the second quarter.

“Beginning in late March, we experienced sudden and dramatic shutdowns in all three of our markets.  By early April, our U.S. sales and service business had dropped by 50% and we were completely closed in the U.K., except for a small volume of emergency service work,” Hesterberg said.

“Due to this severe decline in customer traffic, we had no choice but to execute a comprehensive cost reduction plan across our entire company that touched all areas of the business. Our U.S. business recovered steadily in May and June led by our used vehicle and service businesses. We benefited greatly during this time period from the effectiveness of our online vehicle purchasing platform, Acceleride, as online shopping increased in popularity. 

“As business improved, we began to call back some of our furloughed employees and have currently returned to approximately 70% of our pre-COVID employment levels in both the U.S. and U.K. Our U.S. and U.K. businesses are operating at their highest efficiency levels ever and we expect this to carry forward.”

CarMax shares wide array of updates for used-car retailer

CarMax plans on finishing the rollout of its omni-channel experience — which allows consumers to tailor their car-buying and delivery experience — by the end of next month.

This was among a range of updates shared via email by the nation’s largest used-car retailer, which this spring also added a CarMax Curbside option to its expanding business model.

Separately, in a news release last month outlining its Q1 fiscal 2021 results, CarMax said curbside pickup is available at 200 locations.

And it seems many customers are leaning that way. In a recent survey conducted on the retailer’s website, CarMax found that over 40% of customers were interested in curbside pickup or home delivery.

That aligns with an uptick the company said it is seeing in customers finishing more of the car-buying online.

What’s more, CarMax said it has seen year-over-year gains in online traffic, which is hitting records.

In addition to the online preference among many consumers, the retailer has also found through a survey on its site that safety is top priority for shoppers (and perhaps those two findings also align).

At the top of the list of what consumers prioritize, 88% of those surveyed indicated that stores thoroughly disinfecting vehicles was important to them, with 83% saying the same about dealership facilities.

Also, 69% said dealers requiring employee face masks was important, according to CarMax.

In the emailed update, the company said of its own measures: “CarMax associates wear masks and keep six feet of distance when working with others, and the company sanitizes its locations regularly and the high-touch areas of vehicles, including during appraisals and before and after test drives and vehicle repairs. Customers also conduct test drives alone.”

On the sales side, CarMax is seeing some recovery.

In the news release on its latest earnings, the company said that through the first two weeks of the month, June’s comparable-store used-vehicle sales had gotten back to within 10% of where they were a year ago.

Offering some overall context on the quarter, CarMax president and chief executive Bill Nash said in the release: “We accomplished a lot this quarter, despite the challenges the pandemic posed.

“We continued our omni-channel rollout and launched new initiatives, such as contactless curbside pickup, a temporary extension of our 90-day warranty and CAF payment assistance to meet the near-term needs of our customers; we introduced social distancing and enhanced sanitation procedures; and we shifted our entire wholesale business from in-person to online auctions,” Nash said.

“In addition, we continued to keep our appraisal lanes open where possible for customers who wanted or needed to sell their cars.”