Group 1 Automotive on Thursday reported a profit that beat Wall Street expectations regardless of lower new-vehicle sales as it cut customer discounts dealers manage to help it raise profit per vehicle, stated Earl Hesterberg, CEO of the company.
Shares of Group 1, the third-largest auto dealership group in the U.S., had given back earlier gains by Thursday afternoon, and were trading at $78.71 per share, down 0.6 percent. Shares are increased by 1 percent since the start of the year.
Group 1 reported a 2.4 percent increase of gross profit even as earnings from brand-new vehicle sales dropped 1.7 percent in the quarter. Net revenue was $30.8 million, or $1.44 per diluted share, versus a loss of $33.4 million, or $1.41 per diluted share, a year ago.
Consumer discounts, some moneyed by the manufacturer, and some by the dealership, are used to attract customers to purchase new automobiles, especially as a market deteriorates. While U.S. industry automobile sales set a record high of 17.55 million brand-new vehicles last year, Group 1’s U.S. new vehicles sold dropped 8 percent.
In the fourth quarter, same-store automobile sales in Texas dropped 8 percent and 17 percent in Oklahoma, mainly since the economy there has been struck by lower energy costs.
Of Group 1’s yearly new automobiles sold in the fourth quarter, 75 percent remained in the United States market, 19 percent in Britain, and 6 percent in Brazil. And of the U.S. sales, 49 percent in Texas and 8 percent were made in Oklahoma.
The outlook is far better for oil rates and energy-related employment than it was a year back, said Hesterberg, and a bottom for work in the region appears to have been found.
“However the fact is … I don’t believe anyone has hired back any significant varieties of individuals in that sector yet, and that’s the real issue for vehicle sales,” he stated.