AutoNation Inc., the nation's largest auto dealership chain, said Thursday that its third-quarter profit rose 24 percent as the short supply of new and used vehicles helped drive prices higher.
The Fort Lauderdale, Fla., company said its net income rose to $70.7 million, or 48 cents per share, for the period that ended Sept. 30. That compares with $56.9 million, or 38 cents per share, a year earlier.
AutoNation, which owns 257 new-vehicle franchises in 15 states, said revenue increased 7 percent to $3.5 billion from $3.27 billion a year ago.
Analysts polled by FactSet expected earnings of 47 cents a share on revenue of $3.4 billion.
Its shares rose 86 cents to close at $37.95 Thursday.
AutoNation said new-vehicle sales at dealerships open at least a year fell 2 percent and were flat overall, due primarily to model shortages from Japanese automakers caused by the March earthquake. Total U.S. industry new-vehicle sales increased 1 percent for the quarter.
Across the industry, prices of Japanese vehicles were higher during the quarter because supply was short, and used-car prices remained high because of strong demand and short supplies. The company said the average price per new vehicle climbed by $1,818, or about 6 percent, during the quarter, while the average price per used vehicle rose by $575, or more than 3 percent.
"There's no question that with the dramatic shortages from the Japanese, we had to adjust prices - the whole market did - and it was the key to a successful record third quarter for us. And if you consider the difficulties in the economy, and the difficulties in managing that situation, it's a very strong result," CEO Mike Jackson said in an interview with The Associated Press.
As the supply of Japanese vehicles returns, Jackson said there will likely be some downward adjustment to prices coupled with manufacturer incentives.
Auto sales continued a modest recovery from the recession during the quarter even as the overall economy sputtered with wild stock market swings, high unemployment and low consumer confidence. Also, Americans are holding onto their cars longer for fear of taking on more debt. The average age of a car in the U.S. remains at a record 10.6 years, according to the Polk research firm.
Despite a "detour with extraordinary circumstances," Jackson said he expects the U.S. auto industry's recovery to continue into the fourth quarter and beyond.
"We are fundamentally on a journey back to 15-16 million units. I can't tell you exactly how long it will take but an automotive recovery is under way," he said.
Jackson cited three drivers in the auto industry's recovery: a genuine replacement need as consumers postponed vehicle purchases over the last few years, new products and features from manufacturers, and "exceptional credit available at attractive rates."
AutoNation said its used-vehicle revenue rose 7 percent. Revenue from parts and service was up 2 percent, and finance and insurance revenue rose 9 percent, the company said. Its gross profit per new vehicle rose 23 percent in the quarter.
The company said income from sales of cars and trucks from Detroit automakers was $47 million compared with $43 million last year, with a 12 percent increase in new-vehicle sales. Income from foreign brand sales rose to $65 million from $51 million a year earlier. But foreign brand retail sales dropped 10 percent.
Premium luxury income was up $2 million to $50 million. Third-quarter premium luxury retail sales were up 11 percent.
AutoNation also announced Thursday that its board has added $250 million to the company's stock repurchase program. From July 1 through Wednesday, the company bought 7.2 million shares for a total of $247.7 million. With the board's addition, AutoNation has $316 million left to repurchase more shares, the company's statement said.
AP Auto Writer Tom Krisher contributed from Detroit.