AutoNation's Profit Surges 60% As Car Industry Recovers

By NEAL E. BOUDETTE

AutoNation Inc., the country's largest chain of car dealerships, on Thursday reported a strong rise in profit in the first quarter, the latest sign the auto industry is on the road to recovery.

The Ft. Lauderdale, Fla., company said net income rose 60% to $55.2 million, or 32 cents a share, from $34.6 million, or 20 cents a share. Revenue increased 19% to $2.85 billion.

The company, which operates 204 stores in 15 states across the south and western regions of the U.S., said the rise in sales was helped by a recovery of auto sales in Florida, a large market hurt badly by the housing bust.

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.In Florida, which represents 30% of AutoNation's sales volume, new-vehicle sales increased 29% in the quarter.

"As we look at 2010, we believe that the gradual improvement in new vehicle sales will continue to take place and will ramp up in the second half of 2010," Chairman and Chief Executive Michael J. Jackson said in a statement.

He added the company believes the industry as a whole will sell about 11.5 million new cars and light trucks this year, in line with the estimates of analysts and auto makers.

AutoNation saw significant increases in sales of vehicles made by the three Detroit-based auto makers, especially General Motors Co. and Ford Motor Co., and in sales of import-brand cars from mostly Asian manufacturers such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.

Domestic-brand sales generated income of $32 million, up 23% from a year ago. Income from import brands rose 20% to $50 million. Income from premium and luxury-brand vehicles totaled $47 million, up 9%.

New-vehicle revenue increased 24% to $1.47 billion, while used-vehicle revenue rose 24.4% to $734 million. Revenue from parts and service increased slightly to $540 million, while financing and insurance revenue jumped 24.5% to $95.6 million.

Overall, AutoNation sold 83,211 new and used vehicles in the quarter to retail customers, an increase of 15.3%. Sales of new vehicles rose 18.7% to 45,438 cars and trucks. Used vehicle sales increased 11.5% to 37,773 cars and trucks.

The company said it had $160.8 million in cash and cash equivalents as of March 31, and had capital expenses of $14.1 million in the first quarter.

Write to Neal E. Boudette at neal.boudette@wsj.com

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