AutoNation Inc., the country's largest chain of car dealerships, on Thursday reported a strong rise in first-quarter profit amid higher new-vehicle sales and lower costs, the latest sign the auto industry is on the road to recovery, The Wall Street Journal reported.
The Fort Lauderdale, Fla., company said profit rose 60 percent to $55.2 million, or 32 cents a share, from $34.6 million, or 20 cents a share, a year earlier. Revenue increased 19 percent to $2.85 billion. Sales of new vehicles also rose 19 percent.
The report by AutoNation, which operates 204 stores in 15 states across the southern and western regions of the United States, suggests the auto-retailing business could see more positive news next week when when several other publicly traded dealership groups issue earnings reports. They include Sonic Automotive Inc., Group 1 Automotive Inc., Asbury Automotive Group Inc. and Penske Automotive Group Inc.
Michael J. Jackson, AutoNation's chairman and chief executive, said the auto industry's recovery is moving forward after a disastrous 2009, when vehicle sales plunged and both General Motors Co. and Chrysler Group LLC were reorganized in bankruptcy court.
Total industry vehicle sales rose about 15 percent in the first quarter, prices were firm and incentives remained at reasonable levels, Jackson said.
Jackson also said stronger first-quarter auto sales in Florida—a state hit hard during the recession—are a further indication of an upward trend.
"To have Florida consumers feel confident enough to spend $30,000 on a new car is quite a statement," he said, adding that AutoNation's new-vehicle sales in the Sunshine State rose 29% in the first quarter. "Florida is a very good indicator for the auto industry and the U.S. economy as a whole."
Jackson declined to offer a precise forecast for future earnings. But he said AutoNation's efforts to cut costs and increase productivity during the auto industry's downturn left the company with a lower cost structure that is contributing to significant earnings gains now that sales are on the rise.
