The CEO of AutoNation Inc. said Thursday that an automotive recovery is under way as the country's largest dealership chain reported a 60 percent jump in profit during the first three months of the year.
Sales of both new and used vehicles logged double-digit growth during the quarter, and CEO Mike Jackson said he expects the car and truck market to continue to improve. Sales rose "in every category, every segment, every geographic location," Jackson said in an interview with The Associated Press.
Significantly, Fort Lauderdale, Fla.-based AutoNation said revenue spiked 29 percent in its home state — one of the hardest hit by the implosion in the housing market.
"That's a big turning point that consumers in Florida are willing to spend on big-ticket items," Jackson said. "All that means is it's a real recovery."
Jackson stuck to AutoNation's previous forecast for industrywide sales of 11.5 million vehicles this year, up from 10.4 million in 2009.
The results at AutoNation, which owns 249 new vehicle franchises in 15 states, are being watched by car manufacturers trying to gauge the extent of the recovery. Jackson said there is still room for improvement, adding that the company is still waiting for progress in housing construction and employment levels.
"The resumption of new housing construction ... will be crucial for truck sales," he said. "We know the unemployment number is going to remain high. It could even go higher as people return to the work force."
The U.S. unemployment rate has been stuck at 9.7 percent for three months, near its highest levels since the 1980s. Counting people who have given up looking for work and part-timers who would prefer to be working full-time, the so-called underemployment rate is closer to 17 percent.
Sales at the company's Toyota stores in April remained at levels comparable to those in March, when the Japanese automaker rolled out a slate of generous incentives that boosted sales 41 percent, Chief Operating Officer Mike Maroone said.
Toyota has maintained most of its incentives — which include 0 percent financing, discounted leases and free maintenance for two years. The promotions have been designed to jump-start sales in the wake of massive recalls, and Maroone said they have been a big help.
"They've committed to (incentives) for the market for the full year," Maroone said. "I think from a tactical point of view, they'll stop and review their positions ... and probably make some tweaks."
During the first three months of the year, AutoNation made $55.2 million, or 32 cents per share. That's up from $34.6 million, or 20 cents per share, in the same period last year.
Excluding discontinued operations, the company booked a profit of 34 cents per share. Revenue jumped 19 percent to $2.85 billion.
The results topped Wall Street estimates, with analysts calling for 32 cents per share on $2.77 billion in sales. Those estimates typically exclude discontinued operations.
Although the improvements are significant, AutoNation faced relatively easy comparisons. During the first quarter last year sales were at their worst level in decades, the financial crisis was at its peak and automakers General Motors Co. and Chrysler Group LLC were stumbling toward bankruptcy.
Company shares fell 23 cents to $20.54 in afternoon trading.
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