AutoNation’s Profit Increases As Auto Prices Rise


Spherical shortage of computer chips It has hurt auto production, but it’s also helping to increase the profitability of auto retailers.

The most recent example came Thursday when AutoNation, a chain of more than 350 new-vehicle dealerships, reported doubling its third-quarter profits to $362 million. As a result, the company’s sixth consecutive record quarter per share was driven primarily by higher prices and increased used-car sales.

Due to the shortage of sawdust, automakers had to leave factories idle for weeks at a time, leaving consumers with fewer new cars to choose from. The lack of inventory has driven up prices and has allowed both manufacturers and dealers to reduce the profit-oriented discounts and incentives they once had to offer to pull cars off the market.

“This is a result of the pandemic and then the chip shortage,” said Mike Jackson, CEO of AutoNation. “There is not enough supply to meet demand. Vehicles enter and exit immediately.”

At the end of September, AutoNation had about 5,000 new vehicles in its inventory. It was 56,000 at the same point in 2019.

Mr. Jackson estimates that about 60 percent of the vehicles AutoNation orders from manufacturers leave as sold out before they even reach their dealership. This is far from the past, when cars were sometimes not sold for six months or more.

The limited supply of new vehicles has caused many consumers to turn to used models. In the third quarter, AutoNation sold more than 77,000 used cars and trucks, up 20 percent from the same period in 2020.

NS rush for used cars it also increased prices and rushed dealers to buy used cars and trucks. AutoNation has even begun to approach owners who post sales announcements on eBay, AutoTrader, and other websites. “If you put a car up for sale, you will hear from us,” said Mr Jackson.

Mr Jackson added that dealer stocks will likely remain tight through 2022, even as chip shortages subside. “There is tremendous pent-up demand, so it will take time for manufacturers to build dealer inventory,” he said.

But Mr. Jackson, 72, won’t be at the helm to see that. He is about to retire as CEO of AutoNation, after holding that position for most of the last 22 years. Mike Manley, former CEO of Fiat Chrysler, will replace him on November 1.



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