AutoNation Inc., the country’s largest auto-dealer chain, expects U.S. sales of new cars and trucks to hit 16 million vehicles this year, rebounding on a pandemic-fueled increase in demand for personal transportation.
Chief Executive Officer Mike Jackson is predicting growth despite disruptions to vehicle production caused by a global semidconductor shortage and lingering inventory issues from pandemic-related shutdowns last year. He expects the seasonally-adjusted rate of U.S. new-car sales to grow 7% this year, up from 14.5 million vehicles in 2020, which was the lowest since 2012.
“The demand is higher than that, but I think it’ll be constrained by production,” Jackson said in a phone interview. “The situation is very opaque, no one knows exactly how this is going to unfold, production is definitely unpredictable.”
Vehicle production at carmakers ranging from General Motors Co. to Tesla Inc. has been pinched by the shortfall in supplies of chips this year as semiconductor makers have allocated more capacity to consumer products than cars. Now snowstorms are adding to carmakers’ woes by forcing plant shutdowns in Texas and other states in the central part of the country.
Shares of the company pared an early gain of as much as 5.8% to trade up 4.2% to $81.65 as of 12:41 p.m. in New York.
Online Sales Surge
Auto dealers have benefited from tight vehicle inventory by charging more for cars, and the shift to online sales triggered by the pandemic has lowered their cost of doing business. Jackson said 50% of AutoNation’s sales originated online in the fourth quarter, up from about 30% two years ago.
The Fort Lauderdale, Florida-based dealer chain handily exceeded analysts’ consensus profit forecasts on strong sales of new and used cars.
Fueled by low interest rates that made financing easier and higher consumer demand, AutoNation reported record fourth-quarter adjusted earnings per share of $2.43, above analysts’ estimates for $2.01. Same-store gross profit per vehicle for new cars and trucks hit an all-time high of $2,775, a 50% gain from a year ago, the auto retailer said.
AutoNation’s sales rose 4.3% to $5.8 billion in the latest quarter, beating the consensus projection for $5.6 billion.
CEO Search
Jackson, who has served as Chairman of AutoNation’s board for 18 years, said he’s stepping aside so that longtime director Rick Burdick can take over the role. Burdick will lead the search for Jackson’s successor starting this spring, Jackson said.
Jackson, who’s held the CEO title for much of the past 20 years, has entered into a contract to lead AutoNation until April 2022.
He has twice attempted to step aside in recent years. AutoNation’s board named Carl Liebert, a financial-services executive with little auto industry experience, to take over in February 2019, only to oust him five months later and replace him with AutoNation’s chief financial officer, Cheryl Miller. Miller left in July 2020, citing health reasons.
