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Friday, November 26, 2021

AutoNation’s profits soar as car prices rise.

While the global shortage of computer chips has wreaked havoc on auto manufacturing, it is also helping to drive up the bottom line for auto retailers.

The latest example came on Thursday when AutoNation, a network of more than 350 new car franchises, reported that its third-quarter profit doubled to $ 362 million. The result was the company’s sixth consecutive quarter of record per share performance, driven mainly by higher prices and higher used car sales.

Due to a shortage of chips, carmakers had to shut down factories for weeks, leaving consumers with fewer new cars to choose from. Inventory shortages have driven prices up and allowed manufacturers and dealers to cut profit-related discounts and incentives they once offered to remove cars from parking.

“This is the result of a pandemic and then a shortage of chips,” said Mike Jackson, CEO of AutoNation. “There is not enough supply to meet demand. Cars enter and leave immediately. “

As of the end of September, AutoNation had about 5,000 new vehicles in stock. At the same time in 2019, there were 56,000 of them.

Jackson estimates that about 60 percent of AutoNation’s vehicle orders from manufacturers are counted as sold before they reach its dealerships. This is very far from the past, when cars sometimes remained unsold for six months or more.

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The shortage of new cars has forced many consumers to turn to used models. In the third quarter, AutoNation sold over 77,000 used cars and trucks, up 20 percent from the same period in 2020.

The rush for used cars has also driven up prices and made dealers rush to buy used cars and trucks. AutoNation has even started reaching out to owners who post listings for sale on eBay, AutoTrader, and other websites. “If you put a car up for sale, you will hear from us,” said Mr. Jackson.

Jackson added that dealer stocks are likely to remain low even in 2022, even if chip shortages decrease. “There is tremendous pent-up demand, so it will take time for manufacturers to build up dealer inventory,” he said.

However, 72-year-old Mr. Jackson will not be here. He is set to step down as CEO of AutoNation after holding that position for most of the past 22 years. He will be succeeded on November 1 by Mike Manley, former CEO of Fiat Chrysler.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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