Demand for new and used cars set to stay hot through 2022: AutoNation CEO

Growing demand for new and used cars during the COVID-19 pandemic – which has skyrocketed prices for each – continues to seriously inflate the results of auto dealership giant AutoNation (AN).

And its top leader doesn’t see this dynamic changing any time soon.

“Demand continues to exceed the supply of new vehicles. We expect this to continue through 2022 due to consumer preference for personal transportation coupled with lower interest rates, ”said AutoNation CEO Mike Jackson.

AutoNation – which operates 315 retail outlets across the country – crushed analysts’ second-quarter sales and profit forecasts on Monday. The company saw strong unit growth in import and premium luxury vehicles, with consumers seeking improved vehicles. Domestic auto volumes fell year over year as the Big Three (Ford, General Motors and Fiat Chrysler) battled plant closures due to the chip supply shortage.

Here is how AutoNation performed against Wall Street estimates.

AutoNation stock was down slightly in pre-market trading on Monday. The stock has climbed 130% in the past year amid a series of erupting quarters.

For the second quarter, the company saw same-store sales jump 54% (up 33% from the second quarter of 2019, aka pre-pandemic numbers).

Highlighting strong consumer demand, AutoNation said its gross margin on new and used vehicles increased 89% and 24%, respectively, from a year ago. These respective gains were 130% and 53%, compared to the second quarter of 2019.

The company said it repurchased 9% of its outstanding shares during the quarter for $ 736 million. So far this year, AutoNation has bought 15% of the company by spending $ 1.2 billion on share buybacks.

Programming note: AutoNation CEO Mike Jackson will be in attendance Yahoo Finance Live Monday at 9:00 a.m.ET, find out more about the quarter and the company’s outlook.

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Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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