Used-car sales on rise for Lithia, Penske

CARY, N.C. – 

In a quarter where the retailer notched an earnings record, Lithia Motors also reported strong results in its used-car operations as it released second-quarter fiscal results on Wednesday.

Offering some overall commentary on the quarter, Lithia president and chief executive Bryan DeBoer said in a news release: “The strong sequential improvements throughout the quarter, coupled with our stores’ responsiveness to the current environment, led us to the highest quarterly adjusted earnings per share in our company’s history.

“This record performance illustrates the massive opportunity that exists within our $2 trillion industry that we are unlocking through continued growth and the activation of our ecommerce digital home solutions,” DeBoer said.

Getting into some used-car specifics, Lithia generated $922.2 million in used retail revenue in Q2, up 3.8% year-over-over. For the first half of 2020, used retail revenue reached nearly $1.8 billion, a 4.7% gain.

Used-vehicle wholesale revenue was down 37.2% at $51.3 million in Q2, while first half wholesale revenue fell 25.8% at $118 million.

Turning to gross margins, Lithia’s used-vehicle retail gross margins in the second quarter were at 10.7%, up from 10.5% a year ago.

First-half retail gross margins in used retail were 10.5%, up from 10.4%.

Lithia retailed 43,505 used vehicles during the quarter, a 1.5% year-over-year increase. The group retailed 86,136 used vehicles in the first half for a 3.1% gain.

Average selling prices on used retail vehicles for Lithia was up 2.3% at $21,196 for Q2. For the first half, it was up 1.5% at $20,857.

Lithia pulled in average gross profit per unit of $2,259 for used retail sales in Q2, a 3.9% gain.  Year-to-date, that figure was $2,185, a 2.7% hike.

Retail used vehicles comprised 33.4% of the revenue mix at Lithia in Q2, up from 27.6% a year ago.

Through six months, used retail has a 32.3% share of revenue mix, up from 28.3% in the first half of 2019.

For used wholesale, the revenue mix shares for the quarter and half were 1.9% (down from 2.5%) and 2.1% (down from 2.6%), respectively. 

Next up, used retail had a 21.2% share of gross profit mix for Lithia during the quarter, up from 18.9% a year ago. Through six months, that share is at 20.3%, compared to 18.8% in the year-ago period.

Used-vehicle wholesale share of gross profit mix was 0.5% for the quarter (up from 0.4%) and 0.3% year-to-date (no change).

Elsewhere among the publicly traded retailers, Penske Automotive Group shared an overall operational update last week, including some details on how its used-car sales have progressed.

All of the group’s retail dealerships in the U.S. are open, the retailer said, indicating that they saw a month-over-month uptick in new- and used-vehicle unit sales for June.

As for Penske’s U.K. dealerships, those closed on March 24 per government mandates, but most showrooms opened back up on June 1, with parts and service having re-opened in mid-May.

“Since re-opening, sales of new and used vehicles, vehicle grosses and service operations have been strong, with new vehicle unit sales for our business significantly outperforming the overall market in June,” the company said of its U.K. operations in a news release.

Penske also operates several used-vehicle supercenters in the U.S. and U.K., and those opened back up last month.

“Sales of used units were strong with combined U.S. and U.K. operations generating profit from operations that more than doubled when compared to June of last year,” the company said in the update.

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