By Joseph White and Kannaki Deka
(Reuters) -Top U.S. auto retailer AutoNation Inc (NYSE:AN) on Thursday missed Wall Street estimates for second-quarter revenue, hit by a steep decline in new vehicle sales as strained global supply chains made it harder to replenish depleted inventories.
While sales and orders for higher-priced new and used vehicles remains strong, AutoNation began to see "some weakening in demand" for used vehicles priced below $20,000 to $25,000, Chief Executive Mike Manley told Reuters in an interview.
"Supply is still going to be constrained in the balance of this year," Manley said. "In used vehicles, in lower price bands, we have some mitigation of demand. There’s more for us to get done there."
AutoNation reported that revenue from new vehicle sales tumbled 14% from a year earlier. Carmakers' production lines remain under pressure from a global semiconductor chip shortage that has crimped their ability to cater to strong demand.
Meanwhile, used vehicle revenue for Auto Nation increased 13% from a year earlier. The company on Thursday also announced it would acquire California-based CIG Financial as it looks to bolster the used-vehicle business. Manley said AutoNation can build on CIG's people and infrastructure to focus on increasing sales of used vehicles and vehicle finance products such as extended warranties.
AutoNation said new vehicle gross profit per unit jumped 47% in the quarter.
Peer Lithia & Driveway on Wednesday also missed on revenue estimates for the second quarter and reported a 16.9% fall in same-store new vehicle revenue.
Auto Nation said net income fell to $376.3 million from $384.8 million a year earlier. On a per share basis, earnings rose to $6.48 from $4.83. The company said it had repurchased 3.7 million shares for about $404 million during the quarter.
Revenue dipped 1.6% to $6.87 billion, below analysts' average estimate of $7 billion, according to Refinitiv data.