In addition to revealing it would be debuting at least 20 more standalone used-car stores in the coming years, AutoNation’s quarterly earnings results announcement this week included data on its overall used-car operations.
And while sales were down, gross profits in used were up.
Here is a look at the retailer’s pre-owned results, starting with revenue.
AutoNation pulled in $1.32 billion in used-vehicle revenue during the second quarter ($62 million of which was wholesale), compared to $1.38 billion a year ago.
Through six months, used-vehicle revenue has reached $2.57 billion ($148.7 million of which was wholesale), compared to $2.72 billion in the first half of 2019.
Retail used-vehicle gross profits for Q2 were at $105.8 million, up 16.9% year-over-year. For the first half, it was at $189.3 million, up 8.3%.
Total used-vehicle gross profits for the quarter (which includes wholesale) came in at $117 million, up 20.9%. Year-to-date, it reached $208 million, up 11.1%.
AutoNation retailed 58,920 used vehicles during the quarter, down 5.5% year-over-year.
In the first half, its retail used sales were at 115,069 units, down 6.8%.
Revenue per used vehicle retailed was $21,427 in Q2 (up 2.2%) and $21,070 year-to-date, up 1.3%.
AutoNation generated $1,796 in gross profits per used retail sale during the quarter, up 23.7%.
For the first half, that figure was at $1,645, a 16.3% uptick.
Pre-owned continues to be a big part of the retailer's operations.
On Thursday morning as part of releasing its second-quarter financial statement, AutoNation shared plans for expansion of AutoNation USA; intentions to build at least 20 additional stores during the next three years.
AutoNation said it will provide more details of the roll-out schedule during the third quarter.
“AutoNation is prioritizing its investment in capital expenditures towards opportunities with the greatest return potential,” the company said in a news release.
In late October 2016, AutoNation first announced its intentions to build a network of standalone pre-owned vehicle sales and service centers called AutoNation USA. The company first opened locations in places such as Phoenix, Las Vegas and Katy, Texas.
On Thursday morning as part of releasing its second-quarter financial statement, AutoNation shared plans for expansion of AutoNation USA; intentions to build at least 20 additional stores during the next three years.
AutoNation said it will provide more details of the roll-out schedule during the third quarter.
“AutoNation is prioritizing its investment in capital expenditures towards opportunities with the greatest return potential,” the company said in a news release.
Nearly four years ago when AutoNation began this project, the company said it had identified 25 AutoNation USA potential sites in its existing markets. Then in late 2018, AutoNation indicated it would not build any new AutoNation USA locations in 2019 in order to “continue to evaluate our initial five stores,” according to Lance Iserman, who was chief operating officer at the time.
Now with used vehicles gaining more interest industry wide because of the coronavirus pandemic, AutoNation is making this move.
“The stores will allow the company to continue providing customers a peerless experience with its ‘One Price’ model and its customer-centric selling processes,” AutoNation said in Thursday’s news release.
“This expansion will also allow the company to leverage its brand, scale, ‘We’ll Buy Your Car’ sourcing initiative, and digital capabilities to capture a larger portion of the used-vehicle market,” the company went on to say.
Editor’s note: More details about AutoNation’s second-quarter performance and results from other dealer groups will be contained in future updates.
Warren Henry Auto Group is grooming future automotive technicians who still are high-school students.
The group that’s been in business since 1976, recently announced the new Warren Henry Technician program in partnership with Miami Dade Public Schools. With this initiative, Warren Henry is hoping to reduce the current shortage of technicians in south Florida and use this platform as a recruiting tool.
The program is designed to welcome 20 students and has a duration of two years. It includes classroom and hands-on instruction reinforced with high-tech computerized learning systems. The content of this program is directly related to the areas of the ASE Certification and includes on-the-job internship training experiences at Jaguar Land Rover North Dade.
Students will also have the benefit of being supervised by some of the best-certified master technicians in south Florida.
This certification program will start on Aug. 24.
“The shortage of automotive service technicians is undeniable, but we want to be part of the solution. That's why we have come up with this incredible initiative that is also going to contribute to the growth and education of technicians in our community,”, Warren Henry Auto Group chief executive officer Warren Zinn said in a news release.
Warren Henry Auto Group retails a variety of vehicle brands such as Jaguar, Land Rover, Infiniti, Audi, Lamborghini, Bugatti, Koenigsegg, Toyota, Ford, Chrysler, Dodge, Jeep and RAM.
For more information, call (305) 690-6006 or visit http://www.warrenhenryauto.com.
Sheehy Auto Stores is again looking to support the American Heart Association through a program happening at all of its dealerships.
On Friday, the company announced the beginning of the 23rd annual Sheehy 8000 Sales Race, a community-wide initiative in which all 29 Sheehy dealerships sell vehicles while raising awareness and funds to benefit the American Heart Association.
The campaign is set to run through Sept. 8.
“The Sheehy 8000 is one of our most significant annual sales events and fundraising partnerships,” Sheehy Auto Stores president Vince Sheehy said in a news release. “As we all navigate living through the COVID-19 pandemic and our new reality, it is important now more than ever to stay well through heart healthy diets and exercise.
“We are proud to once again partner with the American Heart Association and their ‘Healthy for Good’ initiative to provide homebound and socially distant support and guidance,” Sheehy continued.
Last year, the Sheehy 8000 campaign raised $300,000 for the charity. To date, Sheehy’s fundraising efforts have raised more than $40 million for community and non-profit organizations, and over $1.6 million raised for the American Heart Association.
Each of Sheehy’s 29 dealerships throughout Washington, D.C., Richmond, Va., Hagerstown, Md., and Baltimore will lead various initiatives in support of the Sheehy 8000 to include virtual events to engage the community with ways to stay heart healthy and safe while maintaining social distance during the COVID-19 pandemic.
The mission of the American Heart Association is to build healthier lives, free of cardiovascular diseases and stroke.
“All of us at the American Heart Association are grateful for Sheehy’s unwavering loyalty during these unprecedented times. COVID-19 disproportionately affects heart and stroke patients, making their support more important and life-saving than ever,” American Heart Association executive director Soula Antoniou said.
“The Sheehy 8000 is a phenomenal sales race and truly a team effort! The commitment of Sheehy’s employees, vendors and customers can be seen in funds raised and the lives impacted — in Sheehy dealerships and in our communities,” Antoniou added. “With over $1.6 million raised to date, this campaign has made much of our work around blood pressure management, healthy food access, and CPR training possible. From the bottom of our hearts, thank you.”
For more information visit www.sheehy.com.
Lithia Motors has added a Subaru dealership in Southern California to its store count, launching what management calls a “series of acquisitions planned for the second half of the year.”
The retailer said Tuesday it has brought DCH Subaru of Thousand Oaks, Calif., into the fold, bringing Lithia’s physical footprint up to 189 locations across the U.S.
The retailer anticipates DCH Subaru will add $60 million to Lithia’s annual revenue.
“We’re excited to welcome another high-performing team to the Lithia family,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“This addition kicks off a series of acquisitions planned for the second half of the year, accelerating our plan to reach five percent national market share,” DeBoer said.
He later added in the release: “This store received the 2020 Subaru Love Promise Community Commitment Award. It recognizes Subaru retailers who are making the world a better place, while demonstrating an outstanding commitment to supporting causes in local communities. We couldn’t be more excited to have a team with this much passion for their communities join the Lithia family.”
Just last week, Lithia announced it acquired Smolich Chrysler Jeep Dodge Ram and Nissan dealerships in Bend, Ore.
Lithia, which is headquartered some three hours away in Medford, Ore., said the acquired stores are likely to pull in steady state annualized revenues of $100 million.
“As the automotive retail environment continues to show significant sequential improvements, we have restarted acquisitions, completing the first two pending acquisitions,” DeBoer said in a news release on the Smolich transaction.
“Growth of our network is the foundation to the fulfillment of our current and future brand promises, regional logistics plan and ability to provide competitive customer offerings through all six business lines.”
For the past 40 years, the Jerry Seiner Dealerships have operated in Utah. This week, the dealer group made its entrance into Arizona.
According to a news release distributed on Tuesday, the Jerry Seiner organization has purchased Henry Brown Chevrolet and Henry Brown Chrysler Dodge Jeep Ram in Casa Grande, Ariz. The group said these dealerships will be rebranded to Jerry Seiner Chevrolet and Jerry Seiner Chrysler Dodge Jeep Ram.
“The Jerry Seiner Dealerships have been providing quality transportation solutions and service to Utahns for 40 years,” said Chris Hemmersmeier, owner and chief executive officer of the Jerry Seiner Dealerships. “We are thrilled to introduce the Seiner brand and our incredible level of service to the residents and businesses of the Casa Grande and greater Phoenix areas.”
Both dealerships will be led by Tom Hemmersmeier as general manager. He will be relocating with his family to Casa Grande.
“I am excited to join the teams in Casa Grande,” said Tom Hemmersmeier, who is the current director of sales operations, training and used vehicles for the Seiner organization. “We have a great team in Casa Grande and I am looking forward to helping them continue to serve this community, grow the business and show what the Seiner difference is all about here in Arizona.”
The Seiner Dealerships currently represent the Chevrolet, Cadillac, Buick, GMC, Kia, Isuzu and Mazda brands in Utah.
“In our 40-year history, we have changed and grown our organization by seizing opportunities before us and creating more along the way,” Chris Hemmersmeier said. “Over the past several years we have been creating our future; from purchasing and consolidating Cutrubus Cadillac in Layton, Utah, expanding our wholesale parts efforts in the Mountain West, and launching a new Kia showroom in Salt Lake City.
“This transaction will allow us to strategically focus on future business opportunities that are aligned with our values and strengths as a company,” Hemmersmeier went on to say.
Lithia Motors generated double-digit gains in same-store used-vehicle retail sales during both the fourth quarter and all of 2019 at 17% and 14%, respectively.
Dealer group management is eyeing even more growth this year and not just through what top Lithia executives called the “easy entrance point” of the used-vehicle space. Bottom line: Lithia wants each of its rooftops to turn 100 vehicles monthly, which would represent an 18% increase over its previous target of 85 units.
During the fourth quarter, Lithia stores turned 77 units per month on their way to 42,740 retailed used vehicles. The dealer group turned 170,423 used vehicles in 2019, up from 151,234 units a year earlier.
“Our experienced used-car managers remain focused on leveraging innovation to expand procurement of more used vehicles, which is the primary path to improving volumes,” Lithia executive vice president and chief operating officer Chris Holzshu said during the company’s fourth-quarter conference call.
“In addition, we’re looking closely at the 50,000 used vehicles we wholesale annually to ensure we capitalize on every opportunity we have to retail those vehicles,” Holzshu continued.
“Given the confidence we are gaining in the digital solutions that enable us to buy and sell more used vehicles, we have increased our target to sell at least 100 used units per location per month,” he went on to say while mentioning later in the call that some Lithia stores already are surpassing that goal.
Along with leveraging its wholesale strategy and relationships with more than 200 auto finance companies, Lithia highlighted that each segment of its used business produced gains in 2019. The company said sales in its value auto segment rose 12% while its core used vehicles climbed 21%. Lithia added that its certified pre-owned sales moved 8% higher.
It’s in that value segment — older, high-mileage vehicles that often are trades — where Lithia believes it can generate the most activity to reach its sales target. Lithia president and chief executive officer Bryan DeBoer explained.
“Getting into scarcer vehicles has lots of risk and without massive expertise in reconditioning, in sales, in guarantees and promises to our consumer. It’s not something that most people want to get into, because it’s messier. It also requires deeper financing sources, more specific and more unique financing sources,” DeBoer said.
“What you’re starting to see is the new entrants are pretty good at the 1- to 5-year-old vehicles, which is something that is attractive and there’s a plentiful supply of vehicles. And many of those (vehicles) don’t necessarily come from a new-car dealership. It comes after new-car dealerships decide they don’t want the car and they’re able to buy those cars at auction.
“So it’s the easy entrance point, whereas we believe that the profitability in both reconditioning, as well as in having people enter the Lithia family earlier, comes from those lower price vehicles,” DeBoer went on to say. “And our people are excellent at being able to recondition those vehicles and find those vehicles.”
“We’re more aggressive in terms of procurement of those vehicles,” he added. We believe that core and value are part of the promise of Lithia Motors gives to our customers when they’re at a new-car store. There are tendencies that consumers believe that they can’t buy cars that are a value or within their price range. What we provide is this is a great experience for them to be able to buy at a professional facility and be serviced in a professional manner.”
When asked again about retailing older used vehicles when late models are plentiful, Holzshu elaborated about why Lithia is leveraging this strategy to strive toward 100 retail sales per rooftop.
“As Bryan mentioned, there’s a lot of work that goes with it where our used car managers have to in some ways roll up their sleeves, get out and buy vehicles,” Holzshu said. “Right now, only a third of the used cars in the U.S. are sold through new-car dealers, and there’s no reason that number shouldn’t be much higher.
“Our whole focus right now is just to educate our stores on what the opportunity is, make sure that they have the resources, the capital, the expertise, the technicians, the reconditioning to be able to get those vehicles through the shops on the front lines and get them financed,” Holzshu continued. “There’s a lot of pieces that go into that, but it’s really about the people and the talent.”
Also of note from its latest financial statement, Lithia shared how several other portions of its business performed well as the company set a new record for quarterly revenue at $3.3 billion and for the full year at $12.7 billion.
Lithia reported used-vehicle gross profit per unit finished this year at $2,157 while F&I gross per unit came in at $1,478.
The group pointed out service, body and parts same-store sales increased 7% year-over-year.
“Our stores and their phenomenal teams continue to be focused on creating convenient and transparent consumer experiences to generate our strong results,” DeBoer said.
And soon after releasing its financials, Lithia acquired a pair of Lexus stores in California.
“With over $1 billion in liquidity through our cash, availability on our credit facility, and unfinanced real estate, we remain well positioned to take advantage of the robust acquisition market in 2020,” DeBoer said.
Admittedly, Asbury Automotive Group didn’t start 2019 as strong as it would have liked on the used-car side.
But it was a different story in the fourth quarter, with same-store used-vehicle sales climbing 10% year-over-year. The big driver?
Certified pre-owned, where sales jumped 16% year-over-year in Q4, president and chief executive officer David Hult said in the retailer’s latest quarterly earnings call.
“The first half of the year we underperformed in pre-owned and weren’t as focused on it as we should have been. And we’ve really been more focused on it in the fourth quarter,” Hult said. “There’s a lot to selling more vehicles. Inventory aging, wholesale losses, reconditioning dollars, finance dollars — there’s a lot to think about when doing it. So that growth, what we’re most proud about, really came through CPO vehicles.
“We’re not out buying a lot of cars, we’re keeping a lot of cars internally, getting a lot from our OEM partners. Our CPO sales in the quarter, alone, on a same-store basis were up 16%,” Hult said. “We’re up 10% overall but 16% on CPO, so we see CPO as a really valuable option for our guests and something that we’re going to continue to take advantage of.
“And we also think it’s a differentiator between us and the independents that can’t offer these same CPO products.”
Digging further into Asbury’s same-store Q4 results, used-vehicle retail revenue was up 10% year-over-year at $465.5 million. Same-store used retail gross profit was up 1% at $29.3 million.
Asbury retailed 20,905 used vehicles in the fourth quarter, up 10% on a same-store basis.
Gross margins on used retail were 6.3% (down from 6.9%), with a gross profit per unit of $1,402.
The latter is down from $1,522 in Q4 2018.
“Though our gross profit per unit was down, it is important to remember that used-car volume growth also drives increases in reconditioning, parts and service gross profit, as well as F&I business,” senior vice president of operations Dan Clara said during the call. “On average, we generate approximately $4,000 of gross profit when a used vehicle is sold. This includes the used-vehicle gross profit per unit, the F&I per vehicle and reconditioning gross profit per used vehicle.”
One part of Asbury’s pre-owned strategy has been to acquire more vehicles from the consumer. Going out and purchasing used inventory can ultimately pinch margins, Hult said.
“Your only dip in pre-owed when SAAR comes down is acquiring vehicles. Most dealers get their (used) vehicles from customers trading in their vehicles,” Hult said. “And when you purchase cars, or have to purchase cars for your sole inventory, so to speak, your margins are going to be a lot more compressed.
“We’re very focused on this and really trying to connect more directly with the customers, whether they’re buying or not buying, to acquire their trade-in.”
Moving to full-year results, Asbury’s used retail unit sales were up 4% on a same-store basis, with 83,822 units sold.
Used-vehicle retail revenue of $1.85 billion was up 5% on same-store basis; used retail gross profit was essentially flat at $126 million.
Gross margins on used retail was 6.8% (down from 7.2%), with gross profit per unit down 4% at $1,503.
Asbury Automotive Group has agreed to buy Park Place Dealerships for $1 billion cash, excluding inventory, the public retailer announced Thursday.
The deal gives Asbury a boost both in Texas and within the luxury market.
Park Place’s operating assets include17 franchises, including 15 in the Dallas-Fort Worth market. One of those 17 franchises is an open-point Jaguar/Land Rover dealership set to open in the first quarter in Austin, Texas.
All told, the portfolio includes three Mercedes-Benz, two Lexus, two Jaguar and two Land Rover franchises, plus one franchise each of Porsche, Volvo, Bentley, Rolls Royce, McLaren, Maserati, Karma and Sprinter.
Texas would represent 36% of revenue for Asbury following the deal and luxury brands would represent 50% of the dealer group’s revenue.
“Park Place is highly regarded as one of the best and most efficient operators of luxury stores in the industry,” Asbury president and chief executive officer David Hult said in a news release.
“Their portfolio of stores comes with a strong base of loyal clients and 2,100 long-term team members throughout the high growth Dallas/Fort Worth market,” he said.
“We are also excited to grow our presence in Austin, Texas with a Jaguar/Land Rover open point, which is another high growth luxury market. This acquisition will transform our total portfolio to 50% luxury stores and add approximately $2 billion in expected annualized revenues.”
Included in the price is $785 million in goodwill, roughly $215 million for real estate and leasehold improvements, plus about $30 million for parts and fixed assets. The company anticipate the deal will close in the first quarter.
AutoNation says a report issued by a consumer group about recalled used cars at the nation’s largest vehicle retailer is “inaccurate” and does not provide the full set of facts as to how such vehicles are handled at its stores.
The United States Public Interest Research Group, a consumer group also known as U.S. PIRG, alleges the dealer group is “selling recalled, used vehicles that contain dangerous safety effects.”
Auto Remarketing became aware of the report Tuesday after a segment on “CBS This Morning.”
In the report, which was put together by the U.S. PIRG Education Fund, Frontier Group and the Consumers for Auto Reliability and Safety Foundation, U.S. PIRG said it surveyed 2,400 used cars at AutoNation dealerships in 16 markets. The group said one in nine cars in this survey had unrepaired safety recalls.
“Of the vehicles surveyed, 47 (16% of recalled vehicles) had an unrepaired safety recall for which a remedy wasn’t available at the time of the analysis. Consumers who purchase such a vehicle may have to wait for months or longer before their unsafe, recalled vehicle can be repaired,” U.S. PIRG said in the report.
It added: “All states prohibit licensed dealers, including those that sell used vehicles, from engaging in practices such as bait and switch, false advertising, unfair and deceptive acts and practices, fraud, violating express or implied warranties and the common law duty of care, negligence or causing wrongful death. AutoNation’s failure to repair recalled cars, despite promising that it is selling vehicles that are of high quality, may violate these provisions.”
However, the vehicle retailer said in a statement provided to Auto Remarketing that the company “is in full compliance with all laws and regulations regarding recalls and with all recall directives provided by the vehicle manufacturers,” and that the U.S. PIRG report does not provide context into the sales process at its stores.
In a statement, AutoNation said the report “does not accurately depict the buying process at AutoNation dealerships. The groups responsible for the report did not attempt to thoroughly review the purchasing process at any of AutoNation’s 200+ locations across the country. Nor did they reach out to AutoNation to obtain information about our policies and procedures surrounding recalls.
“Had they done so, they would be aware of AutoNation’s robust policies and procedures that are designed to provide a transparent buying process for our customers,” the statement said. “No new vehicle is sold with an open recall. No CPO vehicle is sold with an open recall unless permitted by the OEM.
“If the OEM issues a ‘stop sale’ for certain vehicles AutoNation will not retail those vehicles at same brand stores prior to completion of the recall,” the company said.
Additionally, all used-car buyers at AutoNation stores have to sign a recall disclosure acknowledgment before they buy the car.
“By signing the form, buyers acknowledge that prior to signing the vehicle contract the dealer provided documentation of any open recalls, and where possible the dealer gave buyers the opportunity to schedule or complete recall repairs prior to the purchase,” AutoNation said.
The dealer group also said all of its websites provide means by which consumers can check for open recalls on used cars.
“The suggestion, therefore, that AutoNation is knowingly or deliberately seeking to mislead consumers is entirely unfounded,” the company said. “AutoNation continues to have an industry-leading policy in place. We address every recall.
“If the parts are on hand, we repair the vehicle. If there are no parts available for the foreseeable future, contingent on manufacturer instructions we either hold the vehicle or sell it with full disclosure,” it added.
The U.S. PIRG report also lists recommendations for the U.S. District Court in Washington, D.C., Federal Trade Commission and state attorneys general.
AutoNation said, however, these auto retail industry policy recommendations go against directives of U.S vehicle safety regulators.
“The report issued by US PIRG recommends automotive retail industry policies that contradict the laws, regulations and guidance implemented by the U.S. Department of Transportation and the National Highway Traffic Safety Administration (NHTSA), the agencies charged with overseeing vehicle safety and the recall process,” the retailer said.
In September 2015, AutoNation made a major procedure change, announcing a policy not to sell, lease or wholesale any new or used vehicle that has an open safety recall.
Automotive News reported in December 2016 that AutoNation had ended this policy the previous month.
