As manufacturers increase volume and provide more incentives to price-conscious shoppers, AutoNation, one of the largest car dealership chains in the U.S., anticipates a reduction in new and used car prices this year.
The company’s Q4 profit revealed adjusted earnings of $6.37 per share, the highest ever for a fourth quarter which beats the fastest-tracked consensus estimate of $5.83 a share. Because of the higher average selling prices of vehicles, revenue increased by 2% to $6.7 billion.
According to CEO Mike Manley, the number of small vehicle sales will be close to 15 million this year, up from 13.7 million in 2022. He said, “You are going to see improved balance and level of inventories” after the company revealed financial data. After the first quarter is finished, “you’ll progressively see it more.”
In the fourth quarter, AutoNation’s gross profit decreased 10% for each used car sold while it decreased 13% for each new car sold. According to Manley, controlling expenses and growing AutoNation’s parts and service division, which saw its gross increase by 12%, helped to offset the decline.
Manley anticipates that leasing will return this year as manufacturers work to lower the cost of vehicles. As automobiles on the road age and owners need replacements, the US auto industry should eventually return to its pre-pandemic annual sales rate of roughly 17 million, he added.
Without a doubt, he claims, “you’ll return to a 17 million industry.” Yet, “it definitely isn’t going to be this year.”
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