BancBoston Gives Outlook on Auto Dealership Businesses
27 April 1999
BancBoston Robertson Stephens Gives Outlook on Auto Dealership Businesses
Increasingly Profitable Business Trends Bode Well for Dealership Stocks
SAN FRANCISCO, April 26 -- The following is being issued by
BancBoston Robertson Stephens, a member of the National Association of
Securities Dealers, CRD number 41271:
BancBoston Robertson Stephens senior automobile services analyst Jordan
Hymowitz today gave his outlook for auto dealership businesses and said he
sees increasing profitability ahead that bodes well for dealership stocks.
"We see an increasingly profitable business trend in the auto dealership
industry and believe all publicly traded vehicle retailers should benefit from
improving dealership trends," said Hymowitz. "Our Buy-rated auto dealership
stocks include Sonic Automotive , Group 1 Automotive
and Lithia Motors .
"Pretax margins are up 33% (50 bp) year-over-year (from 1.5% to 2.0%) in
the first quarter of 1999, and we expect pretax margins (using FIFO not LIFO
accounting on new vehicles) could increase an additional 10% in 1999 to 2.2%,"
said Hymowitz.
"Positive signs include:
1. New vehicles are no longer a loss leader at dealerships.
2. New vehicle sales tracked at the second-best level in history in first
quarter 1999.
3. Dealership operating costs are falling, due to
* Lower rates of sales turnover
* Falling interest rates that reduce floor-plan financing costs
* Better inventory management,"
said Hymowitz.
Clients interested in receiving more information should contact their
salesperson at 415-781-9700.
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