AutoNation Inc. (NYSE: AN) shares slipped more than 2% in intra-day trading on Thursday despite the company reporting third-quarter earnings and revenue above Wall Street expectations, as investors focused on tightening new vehicle margins.
The auto retailer posted adjusted earnings per share of $5.01, ahead of analyst estimates of $4.84. Revenue climbed 7% year-over-year to $7.04 billion, beating expectations of $6.8 billion. However, new vehicle gross profit fell by $27 million as per-unit profitability dropped to $2,290 from $2,820 a year earlier, offsetting a 4% increase in sales volume.
Total same-store revenue rose 6% to $6.9 billion, with new vehicle sales up 7% to $3.4 billion and used vehicle revenue rising 5% to $2.0 billion. Customer Financial Services revenue increased 11% to $368 million, while After-Sales revenue advanced 6% to $1.2 billion.
AutoNation’s After-Sales unit delivered particularly strong results, with gross profit up 7% to $589 million and gross margin expanding 100 basis points to 48.7%. Customer Financial Services achieved a record $375 million in gross profit, a 12% increase from the prior year.
