AutoNation saw a slight improvement in quarterly revenue but struggled to maintain profitability due to price drops during the January-through-March period.
The dealership group reported first-quarter revenues of $6.5 billion, up 1% year-over-year. Several factors contributed to the increase. Car sales rose throughout the period, gaining 7% in the new segment and 2% in the preowned segment for a total of 127,984 units. AutoNation also attributed its earnings to stronger demand for its fixed-ops and F&I businesses.
Company CEO Mike Manley said the quarterly results “reflected the strength of our business model and the outstanding execution by our associates.” However, while AutoNation’s revenue rose, the gains were offset by a sharp decline in car prices compared to the first quarter of 2023. As a result, the dealership group’s profits fell 34% to roughly $190 million.
AutoNation’s first-quarter earnings echo those of manufacturers, many of whom reported similar discrepancies between rising revenues and falling profits last week. Normalization in car prices has offset, and perhaps even created, gains in sales, underlining the volatility of the current car market. However, dealership profits remain ahead of their pre-pandemic levels, making 2024 a comparatively strong year for the retail automotive sector.
