It's unanimous. CEOs of the nation's six publicly owned dealership chains liked the summer's employee-price incentives so much they want them renewed.
The third quarter, when the employee-price incentives were in effect, brought the megadealers substantially higher sales and profits compared to the same period a year earlier.
AutoNation, Inc. racked up a record performance in the quarter, with Chairman and CEO Mike Jackson declaring, “I fully applaud the manufacturers' programs to rationalize inventory.”
Jackson, whose top-volume AutoNation sold 109,766 new cars in the quarter (up 2%), had criticized the domestic manufacturers in 2004 for “over-supplying” dealer inventories.
UnitedAuto Group (UAG) entered the fourth quarter with inventories in “great shape,” asserts Chairman and CEO Roger Penske. UAG, the second largest megadealer, recorded the 26th straight quarter of rising revenues, Penske says, despite the gasoline-price spikes and higher interest rates.
UAG is buying six Cush group import stores in the San Diego market — two Honda, two Acura, one Jaguar-Aston Martin and one Mazda. UAG sold 51,171 new vehicles in the quarter, up 10.2%.
Third-ranked Sonic Automotive retailed 39,825 new units in the quarter, a jump of 9.6%. President and CEO Jeffrey Rachor says, “We're watching to see if the auto makers resume incentives like those they had in the summer. They were a sales booster.”
Asbury Automotive boosted its new-vehicle sales in the quarter by 13.6%, to 29,256 units. Asbury President and CEO Kenneth Gilman says employee-price discounts had been so effective “we ran out of desirable vehicles.”
Asbury came up with a divestiture surprise, announcing it is seeking a buyer for the former Thomason stores in the Portland, OR market. Asbury offset its decision to divest of the “under-performing” Portland platform by building a new Lexus dealership building in St. Louis and acquiring BMW and Honda stores in Fort Pierce and St. Augustine, FL, respectively.
Lithia Motors' picture is equally upbeat. New-vehicle sales shot up 11.4% in the quarter to 18,926. Lithia President Dick Heimann says new-vehicle sales could be “leveling off in the fourth quarter, but we're preparing our used units for sales if that happens. Used cars are getting a lot of focus at Lithia.”
Group 1 Automotive joined in the segment sales trend despite sustaining the most dealership damage during Hurricanes Katrina and Rita that hit New Orleans and southeast Texas.