By Joseph White and Priyamvada C
(Reuters) -Top U.S. auto retailer AutoNation Inc reported a better-than-expected quarterly profit on Friday as demand for new vehicles, spare parts and services offset a poor performance in the used-vehicle segment.
Shares of the company rose about 5% to $148.14 in premarket trading.
The automotive industry is starting to show signs of a gradual recovery from a global supply-chain crisis that had curtailed production, enabling dealers such as AutoNation to boost their new-vehicle deliveries to customers.
New vehicle prices are trending down from record-high levels as supply chain bottlenecks ease and inventory rebuilds, AutoNation Chief Executive Mike Manley told Reuters.
Revenue from new vehicles and after-sales rose 8% and 7%, while used-vehicle sales fell 8%.
Still, Manley does not expect the new-vehicle momentum to last.
“The peak we had post-pandemic was an unsustainable peak,” Manley said. Consumer interest in buying new vehicles is strong, but high prices and high interest rates mean “that interest is not translating through to sales,” he added.
Used-car retailer CarMax Inc had also reported an 86% slump in third-quarter profit in December, along with pausing some hiring, halting certain share buybacks and cutting expenses.
Excluding items, AutoNation earned $6.37 per share, ahead of analysts’ average estimate of $5.83 per share, according to Refinitiv IBES data.
Its overall fourth-quarter revenue rose 2% to $6.7 billion, compared with estimates of $6.52 billion.
(Reporting by Priyamvada C in Bengaluru and Joseph White in Detroit; Editing by Devika Syamnath)
