Group 1 Automotive reported a revenue of $4.13 billion for the first quarter, beating forecasts and setting a new record for the period.
A Zacks Consensus Estimate had predicted the international dealership group would make roughly $3.92 billion, 5.32% less than the final total. The company’s $4.13 billion revenue is a first-quarter record, and depicts a 7.4% improvement over the $3.84 billion it made in early 2022. Group 1 Automotive also surpassed earnings forecasts, posting $10.93 per share, beating the Zacks average EPS of $9.70 by nearly 13%. Gross profit also gained 0.4% over the prior year, reaching a total of $727.9 million, although net income fell 21.1% from $201.1 million to $158.8 million.
In terms of sales, Group 1 Automotive sold 39,649 new vehicles and 45,437 used vehicles over the first three months of 2023, a combined total of 85,086 units. The two segments saw a year-over-year sales growth of 7.9% and 3.7% respectively. New vehicles sold at a record rate, although the report notes that preowned cars retailed slightly below their 2022 values. The dealership group’s parts and services business also earned $297.3 million, while finance and insurance accrued $165.1 million.
In a written statement, Group 1 Automotive president and CEO Daryl Kenningham highlighted the strength of the retailer’s aftersales operations, saying: “Our teams delivered record aftersales performances in both the U.S. and U.K., as a result of ongoing investment in aftersales in areas such as technician recruitment, innovation, and technology.” While Kenningham noted the company’s new-vehicle revenues represented a first-quarter record, he clairified that the numbers were partially driven by “elevated prices from ongoing inventory shortages.”
The company’s early year results mirror those of many auto trade groups seeing stronger-than-anticipated performances. While the end of 2022 saw dealers keeping their expectations for the future low, the combination of returning inventory, a higher-end vehicle mix and pent-up demand has served to boost both new and used car sales. However, while Group 1 Automotive’s report, and others like it, are encouraging, some analysts warn that the favourable conditions may be temporary, and that the coming quarters will be less stable for retailers.
