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AutoNation Believes 2012 Was The Trough For Service, Parts, Collision Unit

AutoNation Inc.’s Customer Care business — its service, parts and collision operations — saw revenue grow 4.7 percent to $600 million in the fourth quarter of 2012. Segment gross profit increased 5.9 percent to $252.50 million. As a percent of revenue, Customer Care gross profit improved 50 basis points to 42.1 percent over the final three months of 2012. That’s the business’ best performance in many years, according to management.

President and Chief Operating Officer Michael Maroone told analysts on a Jan. 31 conference call that strong contributors were internal warranty work, driven by increased vehicle sales, and customer-pay gross, which increased for the tenth consecutive quarter. “We’re very pleased with the momentum of our Customer Care business and believe we’re well-positioned to capitalize as the units in operation base begins to grow again this year,” Maroone said on the call.

The management of AutoNation has high hopes for the years ahead when it comes to its Customer Care unit. Here’s why. Vehicle sales collapsed in 2008, 2009 and 2010. AutoNation’s service base is vehicles from brand-new through five or six years old. With sales recovering in 2010, 2011 and 2012, the units in operation now begin a recovery for Customer Care that management thinks will last for years.

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