AutoNation Reports $1.4b Q3 Loss

John Horner
by John Horner
autonation reports 1 4b q3 loss
AutoNation’s third quarter 2008 financial release is more grim news. The US’ largest automotive retailer reported “a 2008 third quarter net loss from continuing operations of $1.40 billion or $7.95 per share.” Total sales revenue was down 22%, driven by a new vehicle unit sales decline of 24%. Overall industry unit sales for the period were down 31%, a set of numbers consistent with the observation that smaller dealerships are going belly up. As one of the big boys, AutoNation is doing a little better than the averages. We know that the small, and some not so small (Bill Heard, groan) dealerships are dropping like proverbial flies. AutoNation’s press release provides commendable detail on the domestic brand, import brand and premium luxury business segments. No real surprises there. Domestic brands got whacked with a 57% revenue decline while import brands and “premium luxury” both dropped 23%. The usual suspects of tight credit markets, high fuel costs and scarred silly non-buyers are duly noted. Operations wise, AutoNation squeezed out a $159 million profit for the quarter compared to $226 million in 2007’s equivalent period, a 29% drop off largely inline with the revenue hit. Why then the huge reported loss?: Value of the company’s domestic branded franchises. These dealerships were bought from small groups and owner-operators over the years. When purchased, the amount of the purchase price in excess of the real estate, inventory and any other hard assets of the business was booked as “goodwill and/or franchise” value. Today market value for a domestic branded car dealership is zero, so AutoNation had to write off $1.46 billion in recognition of the new reality. If and when those values ever go back up, AutoNation will be able to book an upside … but let’s not hold our breath.
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  • Bertel Schmitt Bertel Schmitt on Nov 07, 2008

    Two interesting items to watch: One: "Third quarter Domestic retail new vehicle unit sales declined 36%. In comparison, U.S. industry Domestic retail new vehicle unit sales declined 33% according to CNW Research. Third quarter Import retail new vehicle unit sales declined 18%. In comparison, U.S. industry Import new vehicle retail unit sales declined 26% according to CNW Research." Looks like improts are still half alive at Autonation, compared with Domestics that took a much bigger hit (and from the October numbers trickling in, will be on the mat.) Autonation doesn't seem to agree with CNW on the import numbers .... Two: The huge writeoff for goodwill is interesting. Goodwill is an accountant's play-doh. Times are bad. These days, you are suprising nobody with an "Ouch!" to the common question "How's business?" Expect everybody to round up all financial sceletons tucked away in the lateral file cabinets, and write them off. "Hey, times are bad!" We'll have accrued losses for years to come. Tax revenue will go down the tubes. Maybe Obama will change his mind. Who wants that kinda job?

  • Jerseydevil Jerseydevil on Nov 07, 2008

    what of asbury auto? another mega dealer holding company.

  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Ed That has to be a joke.