By Mridhula Raghavan
Oct 22 U.S. auto dealer Asbury Automotive Group
Inc said sales slowed "significantly" in October, after
demand for used cars helped it report a better-than-expected
The company's shares fell as much as 9 percent.
Traffic at the company's stores and websites slowed
significantly in the first two weeks of October, Chief Executive
Craig Monaghan told analysts in a conference call.
Asbury gets most of its revenue from the sale of luxury and
foreign cars made by BMW, Mercedes-Benz, Honda and
Nissan, among others.
Monaghan said the slowdown could not be attributed entirely
to the U.S. government shutdown and that there has been some
recent improvement in business.
"I think the big question is - was (the fall in sales) the
result of the uncertainty in Washington?" Monaghan said. "Or are
we, as an industry, moving back to what we've seen historically,
where there is a significant seasonality factor?"
Auto sales are typically much slower in the first and fourth
quarters than in the second and third, he said.
Asbury's used-vehicle sales jumped 33 percent in the third
quarter ended Sept. 30, while demand for luxury cars drove up
new-vehicle sales by 13 percent.
Like rival Sonic Automotive Inc, Asbury is
considering setting up showrooms to sell only used cars.
"...In this lending environment, used cars are financed at
very favorable rates and terms," Chief Operating Officer Michael
Kearney told Reuters. "(Used cars) will be a big part of our
strategy process as we go forward."
Auto sales been boosted by increased bank lending to
subprime borrowers - those with poor credit profiles.
Lending to such borrowers dried up after the start of the
credit crisis in 2008.
U.S. banks made 36 percent of their car loans to subprime
borrowers in the second quarter, up from 34 percent a year
earlier, according to data released in September by Experian Plc
, which tracks credit information and data on nearly 700
million vehicles in North America.
Asbury earned 91 cents per share from continuing operations
on an adjusted basis in the third quarter. Analysts had expected
87 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 17 percent to $1.39 billion, topping the
average analyst estimate of $1.33 billion.
Net income rose to $22.7 million, or 73 cents per share,
from $20.7 million, or 66 cents per share, a year earlier.
Asbury shares were down 4.5 percent at $51.76.