Auto retailers struggle to offset new car slump

By Kevin Krolicki

DETROIT (Reuters) - Major U.S. auto retail groups on Tuesday posted quarterly results that underscore their mixed success in offsetting pressure from slumping new vehicle sales through sales of used cars, financing and service operations.

Penske Automotive Group Inc (PAG.N: Quote, Profile, Research, Stock Buzz), the No. 2 dealership group by unit sales, and Group 1 Automotive Inc (GPI.N: Quote, Profile, Research, Stock Buzz), the No. 4 dealership group, both reported earnings above analysts' expectations, sending their shares higher.

Group 1 shares were up 1.5 percent and Penske shares up 3.4 percent on Tuesday afternoon on the New York Stock Exchange.

Sonic Automotive Inc (SAH.N: Quote, Profile, Research, Stock Buzz), the No. 3 U.S. auto retailer, posted an earnings decline and kept intact a previously lowered full-year earnings forecast. Its shares slipped 1 percent.

All three dealership groups reported a drop in new vehicle sales in line with a slumping U.S. auto industry, which was hit hard in the first three months of 2008 by declining consumer confidence, rising gas prices and a slumping housing market.

Bloomfield Hills, Michigan-based Penske, which is most heavily weighted toward BMW, Toyota and Honda sales, posted a decline of 2.3 percent in same-store retail sales revenue.

On an industry-wide basis, car and truck sales were down almost 8 percent in the United States in the first quarter from a year earlier. Analysts and industry executives have said results for April point to the risk of even weaker sales for the current quarter.

Houston-based Group 1 and Charlotte, North Carolina-based Sonic posted same-store sales declines near 4 percent.