AutoNation quarterly profit beats on higher earnings per vehicle

(Reuters) - AutoNation Inc, the largest U.S. auto dealership chain, on Friday reported a better-than-expected quarterly profit, as it earned more per vehicle sold.

The company said its same-store gross profit per vehicle retailed across its 325 U.S. locations was up 6 percent to $3,559 during the quarter.

AutoNation Chief Executive Carl Liebert told Reuters there remains room to improve gross profit per vehicle, including by increasing the use of AutoNation vehicle financing.

“We want to make sure we are managing price and volume,” Liebert said. “There are good deals and bad deals.”

AutoNation’s profits have been under pressure as overall new vehicle sales in the country have weakened after a long bull run since the end of the financial crisis of 2008. The company’s shares are up 10 percent for the year, but are well below their peak.

Liebert said the Federal Reserve’s decision to pause interest rate hikes should stabilize the U.S. auto market. “That’s a really strong statement to the consumer. We don’t see the end of the earth. The industry will be high 16 million plus numbers” for the year, he said.

Over the past year, the company has focused on expanding offerings such as branded car parts and services and finance and insurance products to boost profitability.

AutoNation plans to open a seventh parts distribution center in May as part of a broader plan to cut the time it takes to deliver parts to its collision repair shops and dealerships, Liebert said.

“A typical collison repair averages 12 to 16 days,” he said. “If we can have the highest service levels, we can take out two to three days,” increasing the number of vehicles that a shop can repair.

Net income from continuing operations fell to $92.1 million in the first quarter ended March 31, from $93.3 million a year earlier.

Earnings per share from continuing operations rose to $1.02 from $1.01, beating the average analyst estimate of 91 cents, according to IBES data from Refinitiv.

Revenue fell 5.3 percent to $4.98 billion, and was below the Wall Street’s expectation of $5.21 billion.

Reporting by Ankit Ajmera in Bengaluru and Joseph White in Detroit; Editing by Shinjini Ganguli and Chizu Nomiyama