Medford, OR-based Lithia Motors continues to make progress in its efforts to build the service, body and parts business. In the third quarter of 2011, the business came through with $87.67 million in revenue (up 15.1 percent) and $42.64 million in gross profit (up 14.2 percent). On a same-store basis, service body and parts sales were up 3 percent over the third quarter of last year.
Customer-pay revenue rose 16 percent to $50.32 million in the quarter — up 2.5 percent in same-store sales (SSS). Management attributed the increase to its efforts to retain customers through competitively priced routine maintenance offerings and increased marketing efforts. Warranty revenue increased 8.3 percent to $14.23 million but declined on a same-store basis by 5.3 percent. Lithia points out that warranty work continues to be negatively impacted by the decline in units in operation, as well as increased vehicle reliability.
Wholesale parts revenue grew 21.7 percent to $15.19 million in the third quarter (SSS up 9.5 percent), while body shop revenue increased 10.8 percent to $7.93 million (SSS up 10.3 percent). This is reflective of the company’s initiatives to grow wholesale parts and body shop sales. However, Lithia warns that, as both wholesale parts and body shop margins are lower than service work, gross margins may modestly decline as these areas of the business comprise a larger portion of the total.
Looking ahead, management expects service, body and parts SSS to increase 2 percent in 2012 with gross margin ranging from 48.4 percent to 48.7 percent.
Lithia Motors is the ninth largest automotive retailer in the United States, selling 28 brands of new and all brands of used vehicles at 86 stores, which are located in 11 states.