Group 1 Automotive today announced its positive results for the second quarter were due in part to a company-wide focus on used vehicles and “strong cost control.”

The focus on pre-owned paid off for the dealer group in Q2, as it retailed 28,484 used vehicles, up from 25,202 sold during Q2 2017. Retail used-vehicle revenue was on the up, as well, rising by a significant 19.8 percent on what was already 18.8 percent higher unit sales. Retail used vehicle gross profit moved up 14 percent to $51.2 million, while total used-vehicle gross profit was up by 15.2 percent. Group 1 leaders shared the performance was due part to the Val-u-Line initiative it recently launched in the U.S., which saw used retail unit sales spike by 11 percent, with Val-u-Line units growing to 10 percent of the overall mix.

"We delivered a solid quarter, reflecting a relatively strong U.S. vehicle market in June, favorable overall performance in the U.K., a corporate-wide focus on our used vehicle business, and a major cost reduction initiative in both the U.S. and the U.K. early this year that began to pay dividends this quarter," Earl Hesterberg, Group 1's president and chief executive officer, said.  

"These results demonstrate our ability to grow earnings in a flat retail sales environment. In addition, during the quarter, the company has launched a renewed focus on capital deployment, with an emphasis on actions, such as disposal of underperforming assets, more stringent control of capital expenditures, and enhanced share repurchases, targeted at delivering improved shareholder value. Actions taken this quarter include the disposal of a large underperforming dealership and a stepped-up pace of share repurchases,” he continued.

Group 1 reported a second-quarter net income of $56.5 million, and adjusted net income of $50.8 million. Total revenue for the dealer group was up by 10.2 percent year-over-year, coming in at $2.9 billion, while total gross profit grew by 8.2 percent from the second quarter of 2017 to site at $438.2 million.

The company’s parts and service business was on the up and up in Q2, as well, with gross profit increasing by 9.1 percent on review growth of 8 percent year-over-year.

Taking a look at the company’s performance in the U.S. specifically, Group 1’s in-country operations accounted for 73.7 percent of total revenues and 80 percent of total gross profit. Total U.S. revenues came in at $2.2 billion, an increase of 2.1 percent, which Group 1 leadership once again said was driven by increases in used retail sales (up 10.4 percent). 

"We were pleased with our used car performance and cost control in the U.S. in the second quarter. Same-store used vehicle retail unit sales were up 11 percent, and total used vehicle gross profit increased six percent,” said Daryl Kenningham, Group 1's president of U.S. operations. 

"Total same-store gross profit increased one percent, which when coupled with strong cost control, evidenced by adjusted SG&A leverage of 110 basis points, drove improved bottom-line results. Same-store adjusted operating income increased five percent and adjusted operating margin improved 20 basis points to 4.2 percent," Kenningham said.