U.S. Largest Auto Dealer Group Profit Spurs Spending on Store Upgrades, Acquisitions

Washington DC October 29, 2009; AutoNation Inc., the largest U.S. dealership group, posted its biggest profit of the year and said it would boost spending by 65 percent next year to update and buy stores.

According to Automotive News, the net income of $65 million compares with a $1.4 billion net loss in the previous third quarter. AutoNation said its board of directors had approved $150 million in capital expenditures in 2010, a 65 percent increase, along with $250 million for repurchasing company stock.

To start, AutoNation said earlier this week it has signed agreements to buy a Honda store and an Acura store in Spokane, Wash. AutoNation stores already sell Toyota, Chevrolet, Subaru, Volkswagen, Audi, Mazda, Scion, and Mitsubishi vehicles in Spokane.

The company also repurchased 3.7 million shares of its stock last quarter at an average of $17.81. The shares fell 3.7 percent Wednesday to $18.09. Third-quarter revenues fell to $2.9 billion from $3.4 billion in the same period in 2008.

Revenue declined in every category, including new and used vehicles, parts and service, and finance and insurance.

AutoNation said U.S. new-vehicle sales remain at depression levels. CEO Mike Jackson forecast a challenging fourth quarter and a gradual recovery beginning in 2010.