DETROIT (AP) — AutoNation's first-quarter net income rose 14 percent as the country's largest auto dealership chain reaped benefits from a U.S. car and truck sales recovery that is gaining strength.
Revenue at the Fort Lauderdale, Fla., company grew 12 percent for the quarter. All of AutoNation's businesses contributed, including new and used car sales, service, financing and insurance.
"It's really an across-the-board performance, within the context of an overall automotive recovery," CEO Mike Jackson said in an interview with the AP.
AutoNation made $83 million, or 67 cents per share, from January through March, up from $73 million, or 55 cents per share, a year earlier. Revenue rose to $4.1 billion from $3.7 billion. The earnings per share figure was a record for the company.
Earnings from continuing operations rose from 56 cents per share last year, to 68 cents per share this year.
The numbers beat Wall Street expectations. Analysts polled by FactSet expected earnings of 64 cents per share on revenue of just over $4 billion.
New cars sold by AutoNation rose 9 percent for the quarter, or 6 percent at stores open at least a year. The sales increase for the 262-dealership chain outpaced growth in total U.S. auto sales, which was 6.4 percent for the quarter, according to Autodata Corp.
Jackson said the growth in U.S. auto sales, which hit 14.5 million last year after bottoming out at 10.4 million in 2009, is no longer fragile.
"This has strong structural underpinnings that are going to drive this market forward for years," Jackson said.
Most people have held on to cars and trucks longer than the usually would since the recession ended in mid-2009. Uncertainty about the job market and home prices have pushed the average age of a vehicle on U.S. roads to more than 11 years. But people have begun buying vehicles in greater numbers, and sales have run at an annual rate above 15 million. AutoNation predicted that by the time 2013 ends, sales will be in the mid-15 million range.
Even if people are not buying new cars, AutoNation has still benefitted as consumers visits its service locations. And now, sales are picking up.
"This is the best environment I've seen for profitability," he said.
The recovery in auto sales has occurred in tandem with the revival of the housing industry.
Some of the hardest-hit states, such as California, Texas and Florida are seeing home values rise, Jackson said, boosting consumer confidence enough that more people are buying cars. Sixty-five percent of AutoNation's business comes from the three states, with Florida alone accounting for 28 percent, the company said.
"To know that the values have stabilized and/or are going up, it's a big psychological shift in people's minds," Jackson said.
The chain also announced that it has signed deals to buy Honda and Hyundai dealerships in Phoenix and Tempe, Ariz., and a Toyota dealership in Dallas. The total annual revenue for all three dealers is about $250 million, the company said.