AutoNation’s (NYSE:AN) profit climbed 24% in the third quarter as strong demand for used vehicles and higher prices continued to offset weak new car sales and Japanese production delays.
The Fort Lauderdale, Fla.-based automotive retailer posted net income of $70.7 million, or 48 cents a share, compared with $56.9 million, or 39 cents a share, in the same quarter last year.
Revenue for the three-month period was $3.5 billion, up 7% from $3.3 billion a year ago, just beating the Street’s view of $3.43 billion. The company attributed the sales growth to higher new and used vehicle average selling prices.
New vehicle unit sales fell 2% at its more established stores and were flat overall, as production remained impacted from the March earthquake in Japan. Offsetting that decline was a 7% increase in used vehicles, 2% growth in parts and service, and a 9% jump in insurance revenue.
"While shipments from the Japanese manufacturers improved in the third quarter, inventory levels of these vehicles remained constrained,” AutoNation CEO Mike Jackson said in a statement.
The chief executive predicts the improving supply environment will lead to lower margins on its vehicles shipped from Japan in the current quarter.