Dealership giant Group 1 Automotive Inc. said Wednesday that revenue and net income increased in the second quarter in part due to improved new-vehicle profitability and gains from acquisitions.
The Houston-based dealer group said net profit rose 2.6% to $195.9 million and revenue rose 14% to a record $4.15 billion. Net income from continuing operations for the quarter ended June 30 increased 5.6% to $199.3 million. This figure includes Group 1’s US and UK operations, but not its Brazilian unit, which has been reported as discontinued operations. The company had previously announced that it would divest its operations in Brazil, and the sale of these concessions was completed in early July.
Group 1 reported its highest ever revenue and gross margin and attributed its financial performance to the strength of its U.S. business, citing 34% growth in parts and parts revenue. services and an increase of around 20% in finance and insurance revenues. The acquisition of dozens of franchise dealerships, including 28 Prime Automotive Group stores late last year, contributed to Group 1’s revenue gains. On a like-for-like basis, Group 1 revenue in the second quarter fell 4.3%.
“A major contributing factor to our performance has been the extreme speed at which we have been able to integrate a large number of new acquisitions over the past 18 months, which will deliver over $3 billion in incremental annual revenue expected in the year ahead,” Group 1 CEO Earl Hesterberg said in a statement.
New-vehicle supply continues to be limited, with no noticeable change in new-vehicle deliveries to Group 1 dealerships, Hesterberg said.
“In the United States, we continue to see the majority of new vehicles either pre-sold or sold shortly after delivery,” he said in the statement. “In the UK, we continue to maintain a forward order book for new vehicles that extends into 2023.”
Group 1 had an 11-day supply of new vehicles in the United States at the end of June, down from nine at both the end of March and December, but down from a 16-day supply a year earlier. The supply of used vehicles in the United States increased year-on-year to 32 days as of June 30, compared to 29 days a year earlier and 28 days at the end of March.
Second quarter revenue: $4.15 billion, up 14% from the previous year
Second quarter net income: $195.9 million, up 2.6%
Second quarter net income from continuing operations: $199.3 million, up 5.6%
Second quarter vehicle sales: 31,627 new vehicles in the United States, down 7.1% from the previous year; 38,523 used vehicles, up 13%. On a comparable basis, new vehicle sales in the United States fell 26% to 24,684, while used vehicle sales fell 4.2% to 32,071.
Recordings: Revenue, gross profit, diluted earnings per common share from continuing operations
Ranking: Group 1 ranked n°4 in Automotive News’ most recent list of the top 150 U.S.-based dealer groups, with retail sales of 146,072 new vehicles in 2021.