Like some dealers of all sizes are experiencing, Group 1 Automotive turned more used metal during the second quarter but watched its gross profit per vehicle soften year-over-year.
According to its Q2 report released on Thursday morning, Group 1 stores in the U.S. retailed 22,707 used vehicles in the quarter, marking a 3.3-percent rise from the same span last year when company dealerships moved 21,928 units.
However, the gross profit per unit in the used department dipped slightly — 1.9 percent, to be exact — from $1,748 to $1,714. That gross softened even though the average retail price for those used vehicles moved up 2.1 percent in Q2 from $20,457 to $20,878.
Looking at its figures halfway through the year, the trends shook out the same within Group 1’s used department.
The company retailed 5.6 percent more vehicles at the midpoint of 2014 compared to a year earlier (45,450 units versus 43,044 units). The average retail price was also 1 percent higher this year versus 2013 ($20,342 versus $20,140).
But that gross profit on those used units was off by 4.8 percent halfway through this year compared to the same point a year ago. Group 1 reported the figure at $1,680, down from $1,765 after the first two quarters of 2013.
The headwinds in the company’s U.S. used operation wasn’t the only factor that impacted Group 1’s top line performance, which included adjusted net income of $40.0 million that equates to adjusted earnings per share of $1.47. Group 1 president and chief executive officer Earl Hesterberg pointed to the company’s results in Brazil, which he said produces a significant drag on the overall results.
“The Brazilian market deteriorated significantly during the quarter due to political and economic uncertainty, as well as major business disruption from the World Cup event,” said Hesterberg, whose company operates 19 stores in the South American country.
“Our Brazilian revenue declined 18.8 percent on a new-vehicle unit sales decrease of 22.3 percent. The deterioration in our Brazilian business represents a 15 cent reduction in our total adjusted EPS profit performance versus the comparable period last year,” he added.