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post #1 of 2 (permalink) Old 04-30-2008, 07:35 PM Thread Starter
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Dealer groups struggle to offset new car slump

From Automotive News:

Dealer groups struggle to offset new car slump

Reuters
April 29, 2008 - 3:10 pm ET


DETROIT (Reuters) -- Major U.S. auto retail groups on Tuesday posted quarterly results that underscore their mixed success in offsetting pressure from slumping new vehicle sales through sales of used cars, financing and service operations.

Penske Automotive Group Inc., the No. 2 U.S. dealership group by unit sales, and Group 1 Automotive Inc., the No. 4 dealership group, both reported earnings above analysts' expectations, sending their shares higher.
Group 1 shares were up 1.5 percent and Penske shares up 3.4 percent on Tuesday afternoon on the New York Stock Exchange.

Sonic Automotive Inc., the No. 3 U.S. auto retailer, posted an earnings decline and kept intact a previously lowered full-year earnings forecast. Its shares slipped 1 percent.

All three dealership groups reported a drop in new vehicle sales in line with a slumping U.S. auto industry, which was hit hard in the first three months of 2008 by declining consumer confidence, rising gas prices and a slumping housing market.

Suburban Detroit's Penske, which is most heavily weighted toward BMW, Toyota and Honda sales, posted a decline of 2.3 percent in same-store retail sales revenue.

On an industry-wide basis, car and truck sales were down almost 8 percent in the United States in the first quarter from a year earlier. Analysts and industry executives have said results for April point to the risk of even weaker sales for the current quarter.

Houston-based Group 1 and Charlotte, N.C.-based Sonic posted same-store sales declines near 4 percent.

All three auto retailers said they were focused on offsetting weak demand for new vehicles by stepping up sales of higher-margin used cars, providing financing and offering repairs and service.

Penske said it had been able to increase its gross margin to 15.4 percent in the first quarter from 14.9 percent a year earlier by focusing on used-car and parts operations.

The company reported net earnings that more than doubled to $33.9 million from $14.6 million in the same quarter a year ago.
"While the new vehicle sales environment was difficult, particularly in the United States, our business continued to perform well," Chairman Roger Penske said in a statement.

MARKET GETTING 'NOTICEABLY WEAKER'
Group 1 CEO Earl Hesterberg cautioned that the key California market had weakened surprisingly in the first quarter, which he said appeared to be tied to declines in the housing market.

Hesterberg also said economic weakness had spilled over to luxury and import car sales, while declining values for pickup trucks and large SUVs had left many consumers unable to use their current vehicles as trade-ins for new vehicles.

"Each successive month this year the new vehicle market has gotten noticeably weaker," Hesterberg told analysts on a conference call.
Group 1 posted lower first-quarter net earnings of $16.4 million, including after-tax charges of $2.5 million for lease terminations. That was down from $17.4 million a year earlier.

Calyon Securities analyst Mark Warnsman said the key for investors in both Group 1 and Penske was the companies' ability to deliver on the full-year earnings forecast "despite adverse economic conditions."
"We are relatively positive on Penske's ability to deliver," Warnsman said in a note for clients.

Group 1, Warnsman said, also appeared to be on track to make its full-year forecast "even as the selling environment in the second quarter appears to be shaping up as worse than the first."

Sonic, which posted a fall in quarterly net income to $14.2 million from $20 million a year earlier, said its results were in line with its previous forecast of a weak first half for auto sales.
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post #2 of 2 (permalink) Old 05-01-2008, 08:54 AM
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so the news today is dodge dropping prices to the sweet sppot of 20 g for a new car

hmmmm reminds me of the early 80's when car companies like chrysler really tried to make the customer happy ...... dodge lost that loving feeling round the mid 80's and then totally later as they returned to the slash and burn "the customer" philospy later ...

they used to make easy to maintaine easy on gas and good price vehicles

yah I can have an opinion
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