Car retailer AutoNation is feeling the pinch from inflation and bracing for subsequent week’s Federal Reserve determination to spice up rates of interest as a lot as a full level, in line with its 2022 second-quarter earnings report launched Thursday (July 21).
The corporate’s income dipped 2% yr over yr from the identical interval in 2021 to $6.9 billion, whereas new automobile income took a 14% tumble from 2021. That drop was partially offset by 13% progress in used automobile gross sales in the course of the three-month interval, pushed by a revised automobile sourcing technique by AutoNation, the report acknowledged.
Nonetheless, CEO Mike Manley remained optimistic about AutoNation’s place out there in the present day and its future, notably after its deliberate acquisition of auto financing firm CIG Monetary, its subsequent step in enhancing the shopper shopping for expertise and increasing its capabilities.
“AutoNation associates delivered excellent efficiency throughout all of our enterprise sectors, leveraging our buyer focus, digital capabilities, value self-discipline, and capital allocation to supply report outcomes,” Manley stated within the report. “I’m notably happy with our after-sales penetration with gross revenue growing 11% in comparison with final yr. It is a key revenue driver that has been a specific space of focus since my arrival and that has been structurally embedded within the group.”
AutoNation is planning to open its twelfth U.S. location in Kennesaw, Georgia, within the third quarter of the yr, and the corporate is focusing on greater than 130 outposts throughout the nation by the tip of 2026, the report acknowledged.
Maybe AutoNation’s dip in new automotive gross sales is not any shock, with greater than 12% of customers financing a automotive with greater than $1,000 in month-to-month funds, up from 7.3% in June 2021.
Learn extra: New Automotive Funds Exceed $1,000 for 12% of Patrons Amid Provide Chain Snarls
“Though there seems to be a gentle stream of prosperous customers prepared to decide to automotive funds that look extra like mortgage funds, for many customers, the brand new automotive market is rising more and more out of attain,” stated Jessica Caldwell, government director of insights at automotive purchasing information Edmunds, including that carmakers are chopping again on the decrease finish of the value vary.
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