Along with projecting how third-quarter results might land for a trio of the large publicly traded dealer groups, KeyBanc Capital Markets recently shared its latest dealer survey that offered more clarity on how much Hurricane Harvey impacted used-vehicle sales in August.
The survey results showed just a third of dealers who participated had used-vehicle sales increases in August. And if they did, it was for 5 percent or less.
Meanwhile, another third posted a used-vehicle sales decrease of 5 percent or less while the remaining third sustained a more significant used-metal slowdown, with sales softening anywhere from 5 percent to 10 percent.
While used vehicles might not have been rolling over the curb at the frequency surveyed dealers likely wanted, KeyBanc’s report indicated 70 percent of stores kept their used-car gross margins either intact or managed an increase below $50.
In the finance office, F&I performance continues to be strong part of dealership activity. KeyBanc highlighted that over the past three months, an average of 72 percent of respondents reported intact or increasing F&I gross profit per unit.
“However, we caution upside appears limited from these record highs, which is also reflected in more mixed responses in latter months,” analysts said.
Over in parts and service, KeyBanc noticed the dealer survey showed the weather impacted sales in that store segment, too. A third of participants said P&S sales dipped by 5 percent or less and another third added that service drive sales activity decreased by 5 percent to 10 percent in August.
But like used-vehicle deliveries, nearly 70 percent of dealers surveyed said that P&S gross per unit remained intact in August.
Moving on to a discussion about some specific dealer groups, KeyBanc’s report touched on estimates for how AutoNation, Sonic Automotive and Group 1 Automotive might fare when they release their third-quarter financial statements.
For AutoNation, KeyBanc pointed out that the company does not adjust earnings for nonrecurring items, and “we believe, in addition to the deleverage effect of temporary store closings, earnings results will likely be impacted by insurance deductibles,” analysts said.
Over at Sonic, KeyBanc mentioned the company will likely adjust for nonrecurring items. “However, the deleverage effect of temporary store closings will likely weigh on adjusted earnings in Q3,” analysts said.
Finally for Group 1 which had the most stores impacted by Harvey, KeyBank recapped what company officials recently shared “immaterial” new- and used-vehicle volume impact on full Q3 results as volumes picked up “substantially in September, and management agrees replacement demand will likely remain a tailwind to volume in the near future.”