AutoNation’s Mike Maroone on How Used Car Performance Increased Profits

Auto­Na­tion Inc. saw fourth-quar­ter earn­ings rise 31% as the com­pa­ny had stronger used vehi­cle sales that pushed up over­all rev­enue. The retail­er oper­ates the largest net­work of US deal­er­ships. Dur­ing the past two years, Auto­Na­tion has seen earn­ings climb, much to do with high used car prices and a pick­up in new vehi­cle sales.

Here’s some per­spec­tives from Mike Maroone, pres­i­dent and chief oper­at­ing offi­cer, on how used cars did in the fourth quar­ter…….

  • Cer­ti­fied pre-owned vehi­cle sales went very well for Auto­Na­tion. About 32% of its used vehi­cles sold were CPO, ver­sus about 29% a year ear­li­er.
  • The com­pa­ny worked aggres­sive­ly to acquire used vehi­cle inven­to­ry; that took place inter­nal­ly through increas­ing appraisals and win­ning more trades. They’ve worked aggres­sive­ly on get­ting the right inven­to­ry at the right time and right price.
  • Exter­nal­ly, the company’s “We Buy Your Car” guar­an­teed offer pro­gram, and third par­ty part­ner­ships, saw strong per­for­mance.
  • The com­pa­ny is work­ing on stay­ing dis­ci­plined about inven­to­ry and being well-posi­tioned for the spring sell­ing sea­son. AutoNation’s used vehi­cle days’ sup­ply has been at 35 days.
  • Deal­er staff has been win­ning trades in the show­rooms and using oth­er meth­ods to acquire vehi­cles as part of its aggres­sive buy­er strat­e­gy.
  • Off-lease returns have worked well for the com­pa­ny – they’re com­ing in at a sweet spot of age and mileage.
  • Maroone couldn’t think of any real neg­a­tives about the mar­ket; it is very com­pet­i­tive try­ing to buy old­er vehi­cles and com­pet­ing to win trade ins. But that’s the way it is – a very com­pet­i­tive busi­ness.  “We’re very opti­mistic about the used busi­ness and real­ly are con­tin­u­ing to work to make sure that we’re oper­at­ing at an opti­mal lev­el,” Maroone said.
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