AutoNation posted a 5 percent jump in first-quarter profit Wednesday as the nation's largest dealership chain sold more new and used vehicles.
The company, based in Fort Lauderdale, Fla., said its net income rose to $73 million, or 55 cents per share, compared with $69.4 million, or 46 cents per share, a year earlier. It said net income from continuing operations at 56 cents per share is a record for the quarter.
AutoNation Inc., which owns 260 new-vehicle franchises in 15 states, said revenue increased 10 percent to $3.66 billion, driven by stronger new vehicle sales.
Analysts polled by FactSet expected earnings of 53 cents per share on revenue of $3.59 billion.
AutoNation said sales of new vehicle units, AutoNation's largest division, increased 10 percent in the quarter and were up 8 percent in stores open at least a year. That's a key retail metric that excludes newly opened or closed stores. The company's used vehicle revenue rose more than 10 percent.
Total industry new vehicle unit sales increased 7 percent in the first quarter, according to data compiled by CNW Research that was cited by AutoNation.
"The renaissance in auto retail is well under way," CEO Mike Jackson said. "The American consumer has more choices than ever with improved fuel efficiency, better technology, and accelerated product offerings."
Based on "continued momentum" in U.S. auto sales, Jackson said the company increased annual industry new vehicle sales forecast to mid-14 million units, in part citing improving credit availability and better inventories from Japanese automakers who struggled last year after the March earthquake and tsunami shut down production and cut off supplies of key parts, dramatically reducing their inventories.
While that's still below the 17 million of the booming mid-2000s, it's a far cry from the industry's downturn in 2009, when 10.6 million vehicles were sold.
One reason car sales are improving is that buyers need to replace aging vehicles after holding on to their cars and trucks during the recession. The average age of a vehicle in the U.S. is a record 10.8 years, nearly two years older than a decade ago. But concerns about the weak economy continue to hang over the industry.
"I think the overall economy remains a question mark," Jackson said in an interview with The Associated Press. "Consumers really postponed for several years ... and they have enough confidence combined with replacement need. But it's the replacement need that underpins the automotive recovery and causes us to be a bright spot in an overall fragile recovery for the economy."
Sales of domestic and luxury autos were particularly strong. AutoNation considers autos made by General Motors Co., Ford Motor Co. and Chrysler Group LLC to be domestic. They notched a 16 percent unit sales increase. Mercedes-Benz, BMW AG and Lexus are the primary luxury brands, and those sales climbed 14 percent.
Germany's Daimler AG makes Mercedes, while Japan's Toyota Motor Corp. makes Lexus.
Toyota, Honda Motor Co. and Nissan Motor Co. make up AutoNation's import segment, which posted a 6 percent unit sales increase.
Shares of Autonation slipped 35 cents to close at $33.23 Wednesday.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.
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