Group 1 Automotive established a new record gross profit per unit through its F&I department during the second quarter. But softened used- and new-vehicle sales in areas where the bulk of its dealerships are located — Texas and Oklahoma — left a significant impact on the dealer group’s top-line performance.
According to its latest financial statement released on Thursday, on a same-store basis, the company’s U.S. revenues came in at $2.1 billion in Q2, a year-over-year decrease of 2.7 percent. Total same-store gross profit was essentially flat. Group 1 explained the revenue decrease reflects 5.7 percent and 4.9 percent declines in same-store retail new and used unit sales, respectively.
Group 1 stores retailed a 25,202 used vehicles in Q2, down from 26,856 units during the same quarter a year earlier. The dealer group wholesaled 2.4 percent more vehicles in Q2, sending 9,701 units through those channels. That’s up from 9,476 units in the year-ago period.
As mentioned, Group 1 stores generated a 5.4 percent or $86 increase in F&I gross profit per unit to post a new company record at $1,688.
And while U.S. same-store parts and service revenue increased 5.6 percent, “these factors were not enough to offset ongoing weakness in vehicle sales in our energy-price-impacted markets. Combined new and used sales dropped 7 percent in the quarter for our Texas and Oklahoma stores,” said Earl Hesterberg, Group 1’s president and chief executive officer.
“Our single largest market of Houston was extremely volatile in the second quarter, with Houston total industry auto sales dropping 24 percent in June after an increase in May,” Hesterberg continued. “Group 1's Houston sales only decreased 12 percent in June, but this is indicative of the headwinds we continue to face in much of Texas and Oklahoma.”
In other company news, Group 1 also announced it has acquired its first Jaguar and Land Rover dealerships in the U.S., which are located in Albuquerque and Santa Fe, N.M. Management indicated the stores have projected annualized revenues of $40 million.
The addition of these two stores expands the company's global network to seven Land Rover and seven Jaguar franchises. The dealerships, which operate as Jaguar Land Rover Albuquerque and Land Rover Santa Fe, are the only Jaguar and Land Rover dealerships in the state of New Mexico, and expand the company’s presence to 15 states in the U.S.