AutoNation posts record profits, helped by higher prices for vehicles
By Doreen Hemlock, Sun Sentinel, Fort Lauderdale, Fla.
Jan. 27--Fort Lauderdale-based retailer AutoNation on Thursday reported record profits for the fourth quarter and 2011, stoked by more efficient operations and higher prices on the vehicles it sold.
Consumers can expect to pay even more for new vehicles from all retailers this year, as buyers add more high-tech features to smaller rides and automakers keep new supplies in check, analysts said.
The average price paid for new vehicles nationwide -- after incentives -- rose beyond $30,000 at the end of last year for the first time. That's up nearly 6 percent from a year earlier, said Jesse Toprak, vice president for auto industry trends at TrueCar.com. And prices should rise about 5 percent more this year, he said.
"Manufacturers are now better at predicting consumer demand and not overproducing. So, they're not desperate to give extra incentives" to cut prices, Toprak said. "Lower supply, higher prices."
AutoNation's gains came as U.S. sales of new vehicles from all retailers rose by 7 percent to roughly 12.8 million cars and trucks last year, still trailing pre-recession highs. AutoNation's sales of new vehicles rose by 13 percent for the year, outpacing the industry.
For 2012, AutoNation Chief Executive Mike Jackson said he expects total U.S. sales of new vehicles to reach 14 million. That's spurred by more consumers replacing aging vehicles, automakers releasing new models faster and lenders offering more financing.
Rising U.S. vehicle sales and new technologies that boost AutoNation efficiency bode well for strong revenues and profits in 2012 at the country's largest retailer, Jackson said. The company has nearly 260 stores in 15 states with more than 19,000 employees. It is adding outlets for brands as diverse as Chevrolet, Fiat and Mercedes Benz.
In the quarter ended Dec. 31, AutoNation reported $3.7 billion in revenue, up 13 percent from a year earlier. Profits from continuing operations rose to $69.9 million, up nearly $2 million. Earnings per share from continuing operations hit 51 cents, up 13 percent and beating analysts' estimates of 49 cents per share.
For the year, revenue rose to $13.8 billion, up 11 percent. Profits from continuing operations reached $284.2 million, up 20 percent. Earnings per share from continuing operations were $1.94, up 24 percent.