Group 1 Automotive CEO Discusses Q3 2010 Results - Earnings Call Transcript
The one area of our performance which is below our targets relates to vehicle sales margins. Both new and used vehicle retail margins are lower than we would like to see. New vehicle margins were 5.7% for the quarter, equivalent with second quarter levels, but down 100 basis points from last year's strong third quarter results.
Biggest factors currently affecting these margin levels are the overall competitiveness of the market and extremely low vehicle margins for several volume brands.
Our used vehicle retail margin of 9.1% was also a bit soft due to the continuing need to supplement our inventory with outside purchases as well as our focus on volume increases. We would anticipate retail vehicle margins to return to more normal levels as new vehicle sales rebound.
The strong new and used vehicle retail sales performance was complemented by a nice increase in our finance and insurance penetration to $1,037 per retail vehicle profit. This is an $83 per unit improvement from the same period last year and reflects significantly improved penetration rates for both financing and service contracts.And perhaps the most impressive facet of our sales performance in the third quarter was our same-store parts and service growth of more than 7%. In a market where any year-over-year growth is a decent accomplishment given declining units in operation, we are very pleased with the performance of our operating teams in this key area of our business.Additionally, our parts and service margins increased on both a year-over-year and sequential basis, coming in at 54.3%. This increase in parts and service sales was driven across all categories, including higher sales in customer pay, warranty, collision, and wholesale parts sales.Read the rest of this transcript for free on seekingalpha.com
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