AutoNation Gains as Supply Crunch, Pandemic Boost Used Vehicle Sales
By Dhirendra Tripathi
Investing.com – AutoNation stock (NYSE:AN) rose 2.5% in premarket trading Thursday after multiple tailwinds powered it to another estimate-beating quarter.
The pandemic-induced supply crunch of new vehicles has driven consumers, unwilling to wait for fresh models, to used ones. The fear of the virus has also meant a preference for personal transportation. The company sells both new and used vehicles, one segment insulating it from the upheavals of the other.
“We expect consumer demand for personal vehicle ownership to remain strong for the foreseeable future," CEO Mike Manley said in a statement.
AutoNation is now acquiring 90% of the used vehicles it sells through trade-ins or by buying vehicles from consumers, thus mostly bypassing the price volatility of auto auctions, Reuters quoted Manley as saying. The company said it plans to open 12 more AutoNation U.S. used vehicle stores during the year.
Fourth-quarter revenue rose 14%, to $6.6 billion, with new vehicle revenue declining 7% compared to a 55% rise in sales from used vehicles. The company’s profit from both new and used vehicles rose 132% and 32%, respectively, on a per vehicle basis. However, unit sales of new vehicles fell.
Adjusted profit per share rose 137%, to $5.76, and easily beat estimates.
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