By Mridhula Raghavan
Feb 4 U.S. auto dealer Asbury Automotive Group
Inc posted a better-than-expected quarterly profit as
easier availability of loans amid an improving economy
encouraged more people to buy cars.
Asbury's shares jumped as much as 13 percent after the
company reported an increase in sales of both new and used cars
during the fourth quarter.
Last year was the auto industry's best since the boom times
before 2008, and several executives and analysts expect the
industry's growth to continue outpacing the overall U.S. economy
as it has since the recession.
Sales rose to their best month in six and a half years in
November due to aggressive discounting, helping Asbury post a 13
percent jump in fourth-quarter revenue.
The company, which gets most of its revenue from sales of
luxury cars made by BMW, Mercedes-Benz, Honda and
Nissan, said it sold 10 percent more new cars in the
But growth in new car sales has been bumpy over the last few
months across the industry, forcing retailers to focus more on
their used cars business.
Asbury's used cars business will grow faster than new car
sales in 2014, Asbury Chief Executive Craig Monaghan told
Reuters in an interview.
Asbury's used-car sales jumped 24 percent in the quarter
ended Dec. 31. ()
Much of that growth was driven by eased lending norms for
subprime borrowers. Lending to such borrowers had dried up since
The number of loans given to subprime buyers to buy both
used and new cars rose in the third quarter, according to
Experian Plc, which tracks credit information and data on
vehicles in North America.
"We believe the automotive retail environment will remain
healthy in 2014 as more customers take advantage of the
extremely attractive financing options to replace their aging
vehicles with the many exciting new vehicles available today,"
Monaghan said in a statement.
Asbury earned 88 cents per share from continuing operations
on an adjusted basis in the quarter. Analysts on average had
expected 82 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 13 percent to $1.37 billion, topping the
average analyst estimate of $1.33 billion.
Net income rose to $26.9 million, or 87 cents per share, in
the fourth quarter, from $22.8 million, or 73 cents per share, a
Asbury's shares were up 7.7 percent at $48.95 in afternoon
trading on the New York Stock Exchange on Tuesday.