(Reuters) -Lithia Motors Inc topped Wall Street estimates for first-quarter profit on Wednesday as the auto retailer benefited from strong demand and higher vehicle prices.
A global semiconductor chip shortage has created a supply crunch and forced automakers to raise prices, a move that is aiding earnings for the sector.
Lithia said its total vehicle gross profit per unit increased 18.7% to $4,392 in the quarter.
Sales are also being boosted by low interest rates and a preference for private vehicles during the COVID-19 pandemic.
"Just like AutoNation yesterday, Lithia Motors (NYSE:LAD)' results were stronger than expected on all fronts," J.P.Morgan analyst Rajat Gupta said in a note.
Gupta added Lithia has traditionally maintained a higher level of used supply and the key focus would now be on its ability to maintain growth momentum amid strong demand at lower than historical inventory levels.
Peer AutoNation Inc (NYSE:AN) on Tuesday posted quarterly adjusted profit that almost tripled from last year.
"With a record $6.5 billion of expected annualized revenue acquired in the first nine months of our 5-year plan, we are well ahead of schedule," said Chief Executive Officer Bryan DeBoer.
Earlier this month, Lithia bought Troy-based auto dealer The Suburban Collection, adding its 56 auto dealerships and an expected $2.4 billion in annualized revenue.
Lithia said new vehicle retail sales jumped 59.7% in the quarter ended March 31, while used vehicle retail sales rose 54.6%.
Net income was $156.2 million, or $5.81 per share, in the quarter, compared with $46.2 million, or $1.97 per share, a year earlier.
Total revenue surged 55% to $4.34 billion.
Excluding items, the company earned $5.89 per share, compared with a Refinitiv IBES estimate of $4.76.
Lithia shares were up 3.2% at $386.81 in premarket trade.