AutoNation, Inc., despite tanking new-vehicle sales and the disposal of eight dealerships, managed to show a net profit for 2008's fourth quarter.
The No. 1 volume dealership group attributed that to “cost reduction opportunities” amounting to $200 million and resulting in the elimination of 3,650 jobs, or 17% of the total workforce, at 232 stores.
“I've been in auto retail all my life and I've never seen the industry in such a dire situation,” says Chief Operating Officer Mike Maroone.
AutoNation stores are cutting back on vehicle orders to pare an 84-day inventory of new vehicles.
“The factories won't like it, but we're shooting for a 55-day supply,” says CEO Mike Jackson.
He decries Chrysler LLC's offer of incentives for its dealers to buy additional inventory units.
“We're not playing that game,” Jackson declares.
Net income for the publicly owned firm rose in the fourth quarter to $67.1 million from $51.7 million a year earlier, on revenues that fell 34% to $2.74 billion.
The company's full-year revenue of $14.1 billion declined 19% from $17.3 billion in 2007 an all-time low far below the $19 billion-plus years AutoNation enjoyed in the late 1990s and early 2000s.
It reported a net loss for the full year of $1.42 million. AutoNation retailers sold 45,405 vehicles in the last quarter.