AutoNation 4Q profit up 20 pct; plans rebranding
DETROIT (AP) — AutoNation Inc., the country's largest auto dealership chain, said Thursday that its fourth-quarter net income rose almost 20 percent as the U.S. auto sales rebound continued to gain momentum.
The Fort Lauderdale, Fla., company also announced that its 210 U.S. domestic and import dealers will be branded as AutoNation stores this year. Currently they have local names and are not identified as belonging to the company. Dealers selling premium luxury brands will keep their current local city names.
AutoNation said it made $83.2 million, or 67 cents per share, in the September- through-December period. That compared with $69.4 million, or 49 cents per share, in the final three months of 2011. It was the highest earnings-per-share figure in the company's 16-year history.
Revenue rose 13.5 percent to $4.17 billion as the chain's car and truck sales grew 18 percent for the quarter.
The dealership group beat Wall Street estimates for the quarter. Analysts surveyed by data provider FactSet, on average, expected earnings of 64 cents per share on revenue of $4 billion.
CEO Mike Jackson said in an interview that in 2012, people decided to take their lives off hold and replace aging vehicles that they had kept since the recession in 2008, driving up sales nationwide and leading to stronger sales for the chain.
U.S. auto sales overall rose 13.4 percent for the year to almost 14.5 million. That's nowhere close to the recent peak of about 17 million in 2005, but it's far better than the trough of 10.4 million in 2009.
Jackson said consumers were not affected by turmoil in Washington over tax increases and the fiscal cliff, and that helped his chain's sales. Many people decided to buy after putting their lives on hold since the recession in 2008 and hanging onto their older cars, he said. Consumers said "I'm moving ahead with my life. I'm getting a new vehicle," Jackson said.
AutoNation has sold 9 million cars and trucks by operating dealers under local names, the CEO said. But unifying all the dealers under one corporate name will help the company sell more vehicles in a business that's becoming more and more reliant on the Internet for sales.
"It's such a powerful and unique position. Nobody else can do it," Jackson said.
He conceded there is risk with getting rid of local names because people have grown loyal to their dealers. But the benefits far outweigh the risk, as auto sales continue to move farther into the digital era with customers doing research and finding cars on the Internet.
Dealers in South Florida will be the first to see the switch to AutoNation signs starting Friday, Jackson said. The company plans to spend nearly $20 million to tell people about the change in the market, he said.
Dealers selling domestic and import brands account for 82 percent of AutoNation's new vehicle sales, the company said.
For the quarter, AutoNation's income from Detroit-based manufacturers rose almost 23 percent in the fourth quarter, while income from foreign-based automakers was up 22 percent. Premium luxury income rose almost 10 percent.
For the full year, AutoNation's net income rose 12.4 percent to $316.4 million, or $2.52 per share. That's compared with $281.4 million, or $1.91 per share, a year earlier. Full-year revenue rose 13.3 percent to $15.67 billion.
In morning trading, AutoNation shares rose $1.32, or 3 percent, to $46.10. The stock started the session up about 13 percent since the beginning of the year.