AutoNation Q4 net income slips 26% while revenue rises

AutoNation Inc., a US-based automotive retail company, reported a 26% decrease in net income to $286.4 million and a 2% increase in total revenue to $6.7 million for the fourth quarter of 2021. The company attributed the decrease in net income to a drop in the gross profit on both new and used cars, which was offset by controlling costs and boosting its parts and service business. AutoNation also acquired CIG Financial and a stake in TrueCar Inc. to enhance its digital capabilities.

CEO Mike Manley expects the seasonally-adjusted annual rate of light-vehicle sales to be close to 15 million this year, up from 13.7 million in 2022. He also expects leasing to make a comeback this year as automakers seek to make cars more affordable. Manley believes that the US auto industry should eventually return to its pre-pandemic annual sales rate of about 17 million, as cars on the road are aging and owners will want replacements.

AutoNation Inc.’s fourth quarter results have exceeded Wall Street expectations, with the company’s shares rising 4.4 percent to $147.52 in premarket trading. The shares have rallied 32 percent this year, indicating investors’ confidence in the company’s ability to weather the economic downturn caused by the pandemic.

The US automotive retail industry has been significantly impacted by the pandemic, with AutoNation being no exception. The company has had to pivot to selling more used cars than new due to chip shortages sapping inventory. As auto production recovers, the company expects prices for new and used cars to decline this year as manufacturers crank up volumes and offer more incentives to price-sensitive buyers.

AutoNation is taking steps to ensure that it remains competitive in the market. The company has been controlling costs and boosting its parts and service business, while also acquiring CIG Financial and a stake in TrueCar Inc. to enhance its digital capabilities. CEO Mike Manley believes that the US auto industry should eventually return to its pre-pandemic annual sales rate of about 17 million, as cars on the road are aging and owners will want replacements.

In order to remain competitive in the market, AutoNation will need to continue to focus on controlling costs, boosting its parts and service business, and enhancing its digital capabilities. The company should also continue to invest in research and development to ensure that it is up to date with the latest automotive technology. Furthermore, AutoNation should strive to offer the best customer service possible, as this will help to build customer loyalty and trust. Finally, AutoNation should continue to monitor the market and adjust its strategies accordingly in order to remain competitive.

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