The longtime CEO of AutoNation Mike Jackson thinks about the semiconductor shortage that is sending prices higher on new and used cars and causing Ford and GM to stop some production will not end in 2021.
So no question the chip supply is disruptive to the manufacturing of new vehicles. Nothing like closing the plants in the second quarter. Our shipments will be double this year than when they were closed for six weeks. But demand far exceeds supply, and it's going to be that way for some time, Jackson tells Yahoo Finance Live.
Jackson added: We performed despite the disruption caused by the chip disruption that we expect to fully continue for the rest of the year.
The large imbalance between supply and demand, which was again destroyed on Tuesday by people sidestepping public transportation during the pandemic and buying a new vehicle for traveling- has helped AutoNation blow away first quarter sales and profit estimates. Jackson said AutoNation was able to raise the price of its cars at the same time consumers continued to trade up to high-priced autos.
Here is how Wall Street performed compared to AutoNation estimates.
The company saw used store sales jump 27%, driven by a 28% drop in the same vehicle sales.
Given the strong consumer demand, AutoNation said its gross profit from the year prior increased from 61% and 17%.
The company delivered sales gains in each segment: premium import and domestic luxury. Operating profits in each vehicle segment also increased, driven by a 119% increase in domestic autos.
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