Despite a drop in new-vehicle sales, Lithia Motors Inc.’s second-quarter net income increased.
The growing dealership group profited with higher used-vehicle sales and double-digit percentage gains in gross profit per new vehicle sold, finance and insurance revenue and climbing average vehicle selling prices on new and used vehicles.
Net income jumped 11 percent to $337.6 million, as revenue increased 20 percent to $7.2 billion, a second-quarter record, the Medford, Ore., retailer said on Wednesday.
“The second quarter results demonstrate the diversity and strength across our business lines as we have delivered the highest quarterly revenues in our history,” Lithia CEO Bryan DeBoer said in a statement.
Even as Lithia has expanded its dealership network through a brisk acquisition pace, new-vehicles sales fell 8.5 percent to 68,752. Used-vehicle sales, however, rose 15 percent to 81,026.
Lithia, the nation’s second-largest new-vehicle retailer, said the average selling price for each new vehicle jumped 13 percent to $47,281,while the average selling price per used vehicle rose 21 percent to $30,976.
The average gross profit per new vehicle soared 43 percent to $5,970 in the second quarter, while the average gross profit per used vehicle fell 11 percent to $2,955.
Lithia also remained active in the dealership buy-sell market in the second quarter.
In April, Lithia sold a Honda store in Texas. In May, the retailer bought a Honda dealership near Toronto and divested a Montana Subaru store.
At the end of June, Lithia bought 10 dealerships in three transactions across Southern Florida and Nevada.
And last week, in the third quarter, Lithia bought a Ford store in Northern California.
Lithia’s second-quarter dealership acquisitions, along with the July acquisition, are expected to generate combined annual revenue of $1.2 billion, the company said.
The annual revenue from dealerships it has acquired so far this year reached $2.3 billion, Lithia said.
The retailer said it has acquired dealerships representing $12.7 billion in annualized revenue since July 2020, when it revealed its five-year plan to reach $50 billion in annual revenue by 2025 — nearly quadruple 2019’s revenue of $12.7 billion.
Lithia shares were trading down about 3 percent midmorning to $286.27.
Q2 revenue: $7.2 billion, up 20 percent from a year earlier
Q2 net income: $337.6 million, up 11 percent from a year earlier
Q2 adjusted income: $355 million, up 12 percent from a year earlier
Vehicle sales: Lithia sold 149,778 vehicles, new and used, in the second quarter, up 3 percent. On a same-store basis, Lithia sold 119,023 new and used vehicles in the second quarter, down 14 percent.
Records: Second-quarter revenue and earnings per share
Ranking: Lithia ranks No. 2 on Automotive News‘ list of the top 150 dealership groups based in the U.S., retailing 260,738 new vehicles in 2021.