Despite not having a sales boost from last year’s Cash for Clunkers, three of the largest dealer groups in the nation reported year-over-year increases in third-quarter revenues.
Revenues at Sonic Automotive Inc. and Asbury Automotive Group were up approximately 9 percent from last year, while Penske Automotive Group realized a 6.5 percent gain in revenue from the year-ago period.
Used-vehicle sales continued to drive results for the three companies, with Sonic reporting a 20 percent increase in used-vehicle retail revenue. Asbury reported a 19 percent increase in used-vehicle revenue, while Penske reported a 20.6 percent increase in the U.S. market and 16.5 percent overall.
“The new-vehicle retail environment was challenging during the third quarter, however, our performance at our premium-luxury franchises and our focus on increasing used-vehicle sales drover our same-store retail growth,” said Roger Penske, chairman of Penske Automotive Group.
Total retail unit sales for Penske were up 4.7 percent, while total new units declined 2.6 percent, which company officials attributed to the lack of government incentives this year in the United States and United Kingdom.
Total same-store retail revenue, however, increased 3.8 percent during the quarter, including growth of 4.2 percent and 3.2 percent in Penske’s U.S. and international operations, respectively. The company’s total same-store retail revenue increased 6 percent.
Sonic officials, which are hosting an investor call today to report the company’s quarterly results, attributed the group’s increase in used-vehicle retail revenue to companywide efforts to reach a monthly goal of 100 used vehicles sold per dealership. The company has so far reached the monthly mark of 30 vehicles sold per dealership and hopes to increase that by another 25. Doing so would add more than $600 million in annual revenue, officials said. Despite the push on the used side, Sonic’s new-vehicle retail revenue jumped 4 percent compared to the year-ago quarter.
“We are pleased with the growth in our new-vehicle revenue given that our strong import and luxury brand mix benefited in such a big way from the Cash for Clunkers program last year,” said company executive Jeff Dyke, who also reported a 6 percent increase in service, parts and body shop revenue. “Our 20 percent growth in used-vehicle revenues was fueled by 15 percent volume growth along with a 5 percent increase in the average selling price.”
Sonic also announced that it completed the redemption of $20 million of its senior subordinate notes and said it will redeem another $16 million worth of senior notes this year. In total, the company expects to complete $49 million in debt repurchases, which officials said will save the company $3.5 million in annual cash interest expense. The savings will allow the company to reduce non-mortgage debt and replace leased dealerships with mortgaged properties.
Third-quarter revenues for Asbury, which will host an investor call today, totaled $1.1 billion, an increase of 9 percent from last year. Aside from its jump in used-vehicle revenues, the company reported a 6 percent increase in new-vehicle revenues, a 2 percent increase in parts and service and a 21 percent increase in F&I revenue.
“The increased third-quarter profitability was notable for the strong performance of our used-vehicle, parts-and-service and F&I business in spite of a relatively flat, quarter-over-quarter, new-vehicle industry sales market,” said Charles Oglesby, president and CEO of the dealer group.
For the first nine months ending in September, Asbury reported income from continuing operations of $34.7 million, up from $19.2 million in the year-ago period. Net income for the first nine months of this year increased from $13.2 million last year to $32.7 million. Revenues totaled $3.1 billion, a 13 percent increase from the year-ago period.
Oglesby reported that the company repurchased $25 million of its convertible notes. He also said the company’s dealer-management-system conversion is going well and that its first four stores will go live with the new system in September.
“We continue to deliver improving performance each quarter despite a difficult economic recovery,” Oglesby said. “We believe the actions we have been taking will produce long-term benefits for our various stakeholders as the market improves.”