AutoNation Inc. reported an 88 percent surge in quarterly adjusted profit on Tuesday as the largest U.S. auto dealership chain earned more per vehicle thanks to tight inventories and robust demand for SUVs, crossovers and trucks.
AutoNation CEO Mike Jackson said on Tuesday the shortage in supplies of semiconductors "is significant, and manufacturers can't give us too much visibility" on how vehicle shipments will be affected. For now, Jackson said, "retailers are managing the situation through price."
Meanwhile, the company said Jackson gave up his 18-year role as chairman. AutoNation named Rick Burdick as chair to succeed Jackson, who remains CEO -- a job he’s held for much of the past 20 years. Burdick has been a director since 1991 and served as a partner for law firm Akin, Gump, Strauss, Hauer and Feld until 2019.
Global auto sales have rebounded from the pandemic lows hit early last year as consumers increasingly prefer buying vehicles that provide more safety than public transportation during the health crisis.
Jackson said he's optimistic about U.S. car and truck demand given the combination of low interest rates, stable fuel prices and the prospect of a significant new federal stimulus package.
"You can’t ask for a better environment," he said.
Fort Lauderdale, Fla.-based AutoNation's gross profit per new vehicle jumped 50 percent to $2,775 in the fourth quarter, while it rose 9 percent to $1,565 for used vehicles.
The company set a long-term goal of increasing combined new and used unit sales to more than 1 million vehicles annually, more than double the number sold in 2020.
AutoNation also said it expects to open five new stores by the end of this year and 10 additional stores in 2022. Phoenix and the Texas cities of Austin and San Antonio will each get a new store this year, while Denver will get two new locations.
"We will do acquisitions in new vehicle franchises," Jackson said.
The company's quarterly adjusted net income from continuing operations was $213.1 million, or $2.43 share, compared with $113.2 million, or $1.25 per share, a year earlier.
Revenue rose 4 percent to $5.79 billion, and the company said it had $2.3 billion of liquidity as of Dec. 31, 2020.
AutoNation shares gained 1.9 percent to $79.85 in premarket trading.
Bloomberg contributed to this report.