Asbury Automotive Group released its second-quarter results Tuesday morning, reflecting a significant increase in used-vehicle retail revenues.
Total revenues were up 12 percent to $1.7 billion while gross profit increased by 9 percent, boosted in part by a 15-percent spike in used vehicle retail revenue.
"Our current quarter results demonstrate, once again, the strength and diversity of our business model," said Asbury's executive vice president and chief operating officer, David Hult. "We increased revenue 12 percent, increased gross profit 9 percent, and controlled our costs to deliver an operating margin of 4.9 percent."
Taking a look at the company’s used-vehicle performance, in particular, used-vehicle retail revenues rose to a high of $507.6 million, up from $445.3 million during Q2 of 2014. Year-to-date, the company has brought in $981.0 million in used-vehicle retail revenue, up from $862.2 during the same period of 2014.
Contributing to these impressive statistics is a ramp up in used-vehicle retail sales.
On a same-store basis, the company sold 19,964 used retail units in Q2, up from 18,840 sold during the second quarter last year, marking a 6-percent year-over-year increase.
Same store revenue per used vehicle retailed was also on the rise. For Q2, Asbury dealers were bringing in revenue of $21,238 per used vehicle retailed, up 9 percent from $20,860 during Q2 or 2015. That said, gross profit was down slightly at $1,653, falling from $1,789 during Q2 2014.
Hult touched on this in more detail during the company’s conference call to discuss second-quarter results, noting, “Our used vehicles performance is critical to the health of our dealerships. During the quarter, we drove our sales volume up 6 percent, while maintaining healthy inventory levels.
“In pushing volume, we sacrificed some margin, but this was more than offset by our incremental F&I opportunity and our robust reconditioning growth,” he continued.
He also shared that the company’s vehicle day supply was at 36 days in Q2, which is just slightly above its targeted range of 30 to 35 days.
Other factors contributing to overall positive Q2 results for Asbury were great performances in the F&I office as well as parts and service.
F&I gross revenues were up by 16 percent, while parts and service gross profit spiked by 14 percent.
Hult said during the call F&I per vehicle retailed for the quarter came in at $1,373, up $42 on a year-over-year basis.
“The lending environment remains favorable,” he added.
Part and service success was due in part to a significant increase in reconditioning and warranty work.
“Our parts and service revenues grew 8 percent and gross profit grew 10 percent compared to the second quarter of 2014. Our customer pay business, which represents approximately 54 percent of our parts and service gross profit, increased 5 percent from the prior year. In addition, reconditioning work was up 15 percent and warranty work was up 26 percent,” Hult said.
The dealer group was also busy during the second quarter on the acquisition front, securing two new stores, on top of repurchasing $54 million of common stock during the second quarter.
The dealer group purchased Mike Davidson Ford in Jacksonville, Fla., which brings with it approximately $90 million of annualized revenues.
And Asbury also expanded its presence in the Atlanta market with the purchase of Capital City Nissan, which rakes in approximately $70 million in revenues each year.
Editor’s note: For more reaction from Asbury executives about their latest quarterly performance, watch for a report in an upcoming edition of Auto Remarketing Today.