By Joseph White and Priyamvada C
(Reuters) -Top U.S. auto retailer AutoNation Inc reported a better-than-expected quarterly profit on Friday, sending its shares up 9%, as demand for new vehicles, spare parts and services offset a poor performance in the used-vehicle segment.
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 said new-vehicle sales will remain below pre-pandemic levels this year.
“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.
While some buyers are apprehensive about spending, analysts said vehicle demand could outperform other sectors of the economy.
“I think U.S. auto sales (will) go up even in a recession this year because autos have already had some severe recessionary sales levels due to the pandemic and chip shortage,” Morningstar analyst David Whiston said.
Meanwhile, rival vehicle dealers have reported mixed results for the fourth quarter due to volatile used-vehicle prices.
Used-car retailer CarMax Inc in December reported an 86% slump in third-quarter profit, 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)