By Joseph White and Kannaki Deka
Feb 17 (Reuters) – No. 1 U.S. auto retailer AutoNation Inc (AN.N) beat Wall Street estimates for fourth-quarter profit and revenue on Thursday on robust demand for used vehicles boosted by consumer preference for personal transportation due to the COVID-19 pandemic.
Shares of the company were up as much as 5% in premarket trading.
The results cap off a year of breakneck profit growth for the auto retail industry, with sales surging as consumers, flush with cash, scramble to buy cars at record high prices.
Manley told Reuters that AutoNation’s results reflect structural improvement in the profitability of its finance and insurance and after-sale service operations. The company is also benefiting from its approach to the used vehicle market, he said.
AutoNation also has “an active interest in M&A” to add to its portfolio of new vehicle franchises, Manley said.
Strong consumer demand during the pandemic coinciding with vehicle production cuts forced by shortages of semiconductors sent average vehicle transaction prices to record highs last year, according to auto industry consultants.
AutoNation said incoming new vehicle inventory, for the most part, had already been preordered by customers.
The company said retail gross profit per used vehicle was $2,063 in the quarter, up 32% from the year-ago quarter, while retail gross profit per new vehicle was $6,450, up 132% from last year.
Excluding items, it earned $5.76 per share, beating estimates of $4.96 per share, according to Refinitiv IBES data.
The Fort Lauderdale-based company said revenue from the sale of used vehicles rose 55% from a year earlier.
However, retail unit sales of new vehicles fell 20% in the quarter ended Dec. 31.
Net income rose to $387.1 million, or $5.87 per share, in the quarter, from $151.5 million, or $1.73 share, last year.
AutoNation’s revenue rose 13.8% to $6.58 billion. Estimates came in at $6.37 billion.
