Asbury Automotive Group Inc.'s second-quarter net income dropped 13 percent to $31.9 million on lower profit margins per new and used vehicles sold. Asbury mitigated some of those losses with strong revenue in service and parts and finance and insurance.
Asbury's total revenue inched up to $1.631 billion compared with $1.627 billion, the retailer said in a statement Tuesday. On a same-store basis, total revenue rose 2 percent to $1.58 billion.
For the six-month period ending June 30, Asbury's total revenue of $3.2 billion was flat with the prior-year period. Net income was down at $65.9 million compared with $67.7 million.
"In a softening automotive retail environment, we are pleased to have increased our same-store revenue and gross profit by 2 percent this quarter compared to the prior year," said CEO Craig Monaghan in a statement.
Despite pressure on profit margins, Monaghan said Asbury can deliver low- to mid-single-digit earnings per share growth in the remaining quarters.
"Even though we experienced margin pressure, our ability to drive incremental used sales, enhance F&I [per vehicle revenue], and grow parts and service enable us to deliver industry leading operating margins," said David Hult, Asbury's COO, in a statement. "Our investments in digital technologies and lead management initiatives are yielding solid results and we will continue to invest in this area in the future."
Asbury sold 25,131 new vehicles in the quarter, a 2 percent decline from the year-earlier period. The average gross profit per new unit sold was down 12 percent to $1,631. But it saw gains in used vehicle sales, selling 20,263, up 3 percent. There too, average gross profits per used vehicle sold fell by 10 percent to $1,604.
New-vehicle sales comprised 54.1 percent of Asbury's revenue mix; used-vehicle retail sales made up 26.4 percent.
On a same-store basis, new-vehicle sales declined 1 percent from the year-earlier period to 24,369 vehicles, beating the new light-vehicle sales industrywide drop of 2.7 percent in the second quarter, according to the Automotive News Data Center. Asbury's used sales rose 6 percent to 19,531 vehicles.
Its average gross profit per new vehicle sold declined 13 percent to $1,625; on used cars, it was down 11 percent to $1,592.
Again, on a same-store basis, the F&I average gross profit per unit increased 6 percent to $1,522.
Asbury's new-vehicle revenue was flat at $857 million in the second quarter. Used-vehicle revenue rose 4 percent to $463.8 million.
Wholesale used-vehicle revenue dropped 5 percent to $47.4 million in the second quarter.
Parts and service revenue was up 6 percent to $197.1 million.
Asbury is headquartered in Duluth, Ga. It ranks No. 7 on Automotive News' list of top 150 dealership groups in the U.S. with retail sales of 102,360 in 2016. It operates 79 dealerships across the U.S.