AutoNation’s long-time CEO Mike Jackson thinks the semiconductor shortage that is sending prices higher on new and used cars and causing Ford and GM to halt some production won’t end in 2021.
“So no question the chip supply is disruptive to the manufacturing of new vehicles. Nothing like closing the plants down in the second quarter. Our shipments will be double this year than they were when the plants were closed for six weeks. But demand far exceeds supply, and it’s going to be that way for some time,” Jackson tells Yahoo Finance Live.
Jackson added, “We performed despite the disruption from the shortages created by the chip disruption, which we expect to fully continue for the rest of this year.”
The large imbalance between supply and demand — in large part fueled by people sidestepping public transportation during the pandemic and buying a new vehicle for travel — helped AutoNation again blow away first quarter sales and profit estimates on Tuesday. Jackson said AutoNation was able to successfully raise prices (due to the chip shortage) on its vehicles at the same time consumers continued to trade up to high-priced autos.
Here is how AutoNation performed compared to Wall Street estimates.
The company saw same-store sales surge 27%, led by a 28% pop in used vehicle sales.
Given the strong consumer demand, AutoNation said its new vehicle and used vehicle gross profit rose 61% and 17%, respectively, from the prior year.
The company delivered sales gains in each vehicle segment: domestic (up 24.5%); import (up 29.9%) and premium luxury (up 30.1%). Operating profits in each vehicle segment also increased, paced by a 119% gain in domestic autos.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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