(Reuters) -U.S. auto retailer Lithia Motors Inc on Wednesday followed larger rival AutoNation in reporting a record quarterly profit, boosted by strong demand for personal transportation amid low availability of vehicles.
Consumers’ preference for personal vehicles and low interest rates have lifted demand for auto retailers at a time when supplies have been hit by an unrelenting semiconductor crunch. This has pushed customers to pay higher prices and boosted profits for manufacturers and retailers.
The company’s sales and average gross profit for new vehicles surged 130% and 58%, respectively. Sales from used vehicles nearly doubled, with average gross profit jumping 47%.
Earlier this week, its rival and top U.S. auto retailer AutoNation Inc forecast strong demand for new vehicles to continue into 2022 and said consumers were buying vehicles before they even arrived at stores.
Lithia reported that average selling price for used cars in the quarter rose 21% to $25,691.
Demand for used cars and trucks have also risen in recent months, with production at auto plants declining 6.6% in June due to supply constraints.
Industry consultant J.D. Power had said average price of a new vehicle set a first-half record of $38,041, an increase of 10% from 2020.
“With 40% of our targeted $20 billion revenue acquired in the first year of our 5-year plan, we are well ahead of schedule and are only getting started,” CEO Bryan DeBoer said.
The company also said there were 23 days of supply for new vehicles during the quarter, compared with 61 days last year.
For the quarter, its net income rose nearly four-fold to $304.9 million. On an adjusted basis, it earned $11.12 per share, beating analysts’ estimate of $6.17, according to Refinitiv data, while its record revenue of $6.01 billion also surpassed estimates.
Lithia’s shares were up 4% in premarket trade.
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