AutoNation names new CEO as slowing auto sales hit results
(Reuters) - AutoNation Inc said on Friday it has chosen insurance and financial services executive Carl Liebert to succeed longtime Chief Executive Officer Mike Jackson and lead the largest U.S. auto dealership chain at a challenging time, when the domestic vehicle market has been slowing.
AutoNation reported lower-than-expected quarterly profit and revenue as it sold fewer new vehicles and gross profits on new vehicle sales declined. The company’s shares were down 3.9 percent in early afternoon trading.
AutoNation’s profits have been under pressure as overall new vehicle sales have weakened. The company’s shares have fallen roughly 25 percent over the past year, and Jackson has launched restructuring actions to cut $50 million from annual costs.
Liebert will take charge on March 11. He comes from USAA, where he was executive vice president for operations at the company, which provides insurance and financial services for members of the U.S. armed forces and veterans.
While Liebert’s career has been outside the auto industry, he said his interest in the car business was fueled by working at a southern Indiana drag racing strip owned by his family.
He told Reuters one focus will be to develop AutoNation’s ability to use customer data to expand services beyond selling a vehicle. “We can do that digitally, and through data,” Liebert said.
AutoNation’s results illustrate the challenges facing the U.S. auto industry as the long recovery from the 2008-2009 financial crisis tops out. Rival publicly held dealership chains Group 1 Automotive, Penske Automotive and Sonic Automotive Inc all have suffered steep share price declines over the past year, though the three smaller chains have outperformed AutoNation since the beginning of this year.
AutoNation, which has 325 U.S. locations, said net income from continuing operations fell to $92.9 million, or $1.02 per share, for the fourth quarter ended Dec. 31, from $151.5 million, or $1.64 per share, a year earlier, when it had a $41 million benefit related to U.S. tax reform.
Analysts on average expected the company to earn $1.14 per share, according to IBES data from Refinitiv.
Revenue fell to $5.41 billion from $5.68 billion, missing analysts’ estimates of $5.63 billion.
Quarterly revenue per vehicle rose 2 percent, but gross profit per vehicle fell nearly 6 percent. Sales in California fell 9 percent, and sales of premium vehicles fell 13 percent.
Jackson, who will stay on as executive chairman, told Reuters that when service and other after-sale profits are factored in, “our yield per vehicle is up. We continue to work on it diligently. It is a difficult challenge.”
Tesla Inc and its electric vehicles are a challenge to established luxury vehicle brands like those AutoNation sells, Jackson said. But by 2021 and beyond, Jackson said he expects a “juggernaut” of premium electric vehicles from established automakers.
“I see the pipeline from the traditional manufacturers. It’s very exciting. We will be in the electric vehicle game in a very meaningful way - 2020 is the tipping point.”
For an interactive graphic on annual percentage rates (APRs) on car loans over ten years in the U.S., click: tmsnrt.rs/2V4im3M
Reporting by Rama Venkat in Bengaluru and Joe White in Detroit; Editing by Sriraj Kalluvila, David Gregorio and Dan Grebler
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