The Asbury Automotive Group’s parts and service revenue rose 4.9 percent to $147.60 million in the first quarter of 2013 as units in operation are growing. Same-store parts and service revenue increased $4.90 million, or 3.5 percent, to $145.60 million.
Chief Operating Officer Mike Kearney told analysts on an April conference call that Asbury is at a point where there are a lot more cars on the road that it has been selling. “They are hitting this 18-month, to 24-month, to 36-month maintenance period, which is usually the peak maintenance period before we get into the heavy repairs,” he explained. “We are going to all benefit from that.”
Kearney went on to say that retail automotive franchise dealers gave away a large piece of the parts and service business decades ago, but they are trying to get that back. “We are putting in retention programs, wiper blades programs, tire programs to bring those customers back to us,” he told analysts on the call. “I think that we will all see the benefit of that, and I think we can continue to benefit from just having a lot more vehicles out there.”
In particular, Kearney said the tire business has been very strong for Asbury. “We’re not quit at our goal. We are very close,” he said. “We are addressing what we need to do get there.”
Parts and service gross profit increased $7.40 million, or 9.2 percent, to $87.70 million over the first three months of 2013. Gross margin for the quarter came in at 59.4 percent — up 230 basis points compared to the prior year.
The year-over-year gross profit improvement was driven by a 19-percent increase in reconditioning work, a 4-percent rise in customer pay business, 10-percent increase in warranty work and 2-percent growth in wholesale parts.
Duluth, GA-based Asbury operates 76 retail auto stores, encompassing 97 franchises for the sale and servicing of 29 different brands of automobiles.
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