The global semiconductor shortage that’s crippling the auto industry could drag on for as long as a year, according to Mike Jackson, chief executive officer of AutoNation Inc., the largest car-dealer chain in the U.S.
AutoNation expects the industry’s vehicle shipments in the second quarter to be double what they were a year ago, but that’s barely enough to keep dealer lots full, Jackson, 72, said in an interview.
“The supply chain is fragile and disrupted because of the chip shortages and still dealing with the pandemic,” he said.
Low interest rates, stimulus checks, and a desire for private transportation during the pandemic are fueling demand for vehicles, while assembly plants are sitting idle because of a lack of chips. AutoNation has been increasing used-car sales to make up for the lack of new supply.
“I see it continuing for at least the next year, the extraordinary demand, and I see no resolution on the microchip side for six to nine months, or a year,” Jackson said.
AutoNation posted adjusted earnings from continuing operations of $2.79 a share in the first quarter, more than triple a year ago and ahead of analysts’ estimates. Revenue from existing stores grew 27% to $5.9 billion, also beating projections.
More than half of AutoNation’s sales now originate online, Jackson said, helping to cut costs and juice profit as vehicle demand has rebounded.
The company’s shares pared an early gain of as much as 2.3%, trading up less than 1% to $97.84 at 9:53 a.m. in New York. The stock is up about 40% so far this year.
–By Gabrielle Coppola (Bloomberg)
