(Reuters) - U.S. auto retailer AutoNation Inc AN.N announced a multi-year partnership on Thursday to support Alphabet Inc's GOOGL.O Waymo self-driving car unit, including vehicle maintenance and repairs as the company adds new brands into its fleet, sending its shares up 13 percent to a high for the year.
That news was accompanied by a better-than expected third-quarter profit as AutoNation performed well despite the impact of hurricanes during the quarter.
There is fierce competition between large automakers to bring self-driving cars to market first. The pact between Waymo and Ft. Lauderdale, Florida-based AutoNation is the latest in a series of recent partnerships the self-driving unit has formed.
Fully self-driving vehicles are expected to hit the market in a limited form by around 2020, in vehicle fleets rather than owned by individuals until the price of the technology involved becomes more affordable for consumers.
AutoNation said its stores will maintain and repair Waymo’s self-driving Chrysler Pacifica hybrid vehicle fleet, plus additional brands as Waymo expands.
“The ambition is to grow with Waymo,” AutoNation Chief Executive Mike Jackson told Reuters. “The only way to get a return on a truly autonomous system is on a shared vehicle, where there is an extended life cycle.”
That requires service through the manufacturer’s warranty period and beyond, Jackson said.
Fiat Chrysler Automobiles NV FCHA.MI is part of an alliance with Waymo to develop self-driving cars based on a test fleet of Chrysler Pacifica hybrid minivans in Phoenix, Arizona.
In June, Waymo signed a multi-year agreement with Avis Budget Group Inc CAR.O for the car rental firm to manage its growing autonomous vehicle fleet.
Jackson said he was open to acquisitions, but not necessarily of new car dealerships.
“We are focused on building our USA” used-vehicle stores, he said. “We are expanding our collision business.”
Profit in the quarter was better than expected, as the impact of recent storms wasn’t as bad as feared. The company said Hurricane Irma negatively impacted its aftertax earnings by 8 cents per share.
Net income from continuing operations fell to $97.6 million or $1.00 per share in the quarter ended Sept. 30, from $107.8 million or $1.05 per share, a year earlier.
Total revenue fell 2.4 percent to $5.43 billion.
Analysts on average had expected third-quarter profit of 84 cents per share on revenue of $5.58 billion, according to Thomson Reuters I/B/E/S.
In morning trading, AutoNation shares were up 13 percent at $53.81.
Reporting by Ankit Ajmera in Bengaluru; Editing by Sai Sachin Ravikumar and Bernadette Baum
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