Group 1 announced its Q4 and full-year 2013 financial results on Wednesday, reporting a 19.3-percent increase in revenue and considerable growth in used-vehicle gross profit.

The dealership group president and chief executive officer Earl Hesterberg also noted he expects increasing used supply to contribute to a “more favorable” industry-wide pre-owned market going forward — one that he believes will be as strong or stronger than the new-car industry this year.

Highlighting the full-year results, Group 1’s retail used-vehicle gross profit rose 10.2 percent last year on a 16.1-percent revenue increase.

These spikes were due to the 98,813 used vehicles the dealership group retailed last year.

And Group 1 finished the year off with strong used sales, as well.

During Q4 of last year, used-vehicle gross profit increased 7.8 percent on 18.9 percent higher revenues, and the company retailed 18.3 percent more units.

The average used vehicle selling price also increased in Q4 by $102 to $21,079.

Additional highlights from the full-year 2013 results are, as follows:

— Total gross profit grew 15.7 percent on 19.3 percent higher revenues of $8.9 billion.

—New-vehicle gross profit increased 17.2 percent on 21.8 percent higher revenues, as the company retailed 155,866 new vehicles in 2013.

—Parts and service gross profit rose 15.0 percent on 14.8 percent higher revenues.

— Same store parts and service revenue grew 7.4 percent.

— F&I revenues rose 19.8 percent on 19.1 percent more retail unit sales; gross profit per retail unit was a record-setting $1,223. Same store F&I profit per retail unit grew to a record $1,345, an increase of $111. 

“Overall, 2013 was a great year for Group 1 Automotive with total revenue growth of 19.3 percent and all-time record net income and earnings per diluted share,” said Hesterberg.

“We made significant progress during the year with the completion of multi-year projects to consolidate U.S. transactional accounting and commonize key operating computer systems across all of our U.S. stores.  We continued to deliver sector leading results in our parts and service and F&I operations and added approximately $1 billion in net acquisition revenue during the year.  The combination of all these actions has Group 1 well positioned for another strong year in 2014,” he continued.

During the conference call to highlight Q4 and full-year 2013 results on Wednesday, Hesterberg shared his expectations for 2014, while also highlighting company growth last year.

During 2013, Group 1 acquired a total of 38 franchises that are expected to generate $1.3 billion in estimated annual revenues.

And the company has already started acquiring new stores this year.

On Jan. 21, Group 1 acquired two franchises (Ford and Hyundai) in Escondido, Calif., that are expected to generate $135 million in estimated annual revenues.

Hesterberg also pointed to other company projects completed last year while predicting a rosy 2014.

“We completed several multi-year projects in the US that have allowed us to consolidate transactional accounting and commonize  key computer systems across our U.S. dealerships,” Hesterberg said. “These projects provide a strong foundation to support further expansion of our business.”

Looking ahead, Hesterberg said during the call, “The U.S. market continues to be highly competitive.”

That said, there might not be as much competition for used supply among the country’s dealers, which bodes well for the dealership group’s pre-owned division.

“Used-vehicle conditions are expected to become more favorable with increasing numbers of vehicles coming off lease improve our supply of late-model, lower mileage used cars,” Hesterberg said.

During the Q&A section of the conference call, Hesterberg was asked if the industry could perhaps see double-digit growth in used sales overall in the U.S. this year, given expanding off-lease supply.

Though Hesterberg didn’t go so far as to predict double-digit growth, he said, “I'm not sure about double-digit growth, but it's still a solid business. And I think they'll be a better supply of vehicles as we move through the year because we're starting to get into an off-lease cycle, where more new vehicles released 2 and 3 years ago, as OEMs got back into leasing after the economic downturn.

“So I think it will certainly be at least a strong as a new vehicle business this year. And I think there'll be more lower mileage cars available in inventory across in the market, which will give customers maybe a better selection of used cars this year than they've had in recent years,” he concluded.

The exec is also predicting growth in the parts and service business this year — another good sign for the used side of the business as the service department can serve as a helpful pipeline for quality trade-ins.

“The continued improvement in new-vehicle industry sales over the past four years is expanding the size of the 0- to 6-year-old car park, which when coupled with our initiatives in this area, should continue to support single digit growth in our parts and service business,” Hesterberg concluded.