Reuters (Detroit) - Auto dealership group Penske Automotive Group (PAG.N) posted a stronger-than-expected quarterly profit on Thursday as rising used-car sales and stronger profit margins offset a decline in demand for new vehicles.
The No. 2 U.S. auto dealership group also said it continues to expect supply challenges with some of its Japanese brands hurt by the March earthquake, but the automakers have been able to increase production earlier than expected.
For Penske, sales from Toyota Motor Corp (7203.T), Honda Motor Co (7267.T) and Nissan Motor Co (7201.T) brands represent about a third of revenue. Parts shortages in the wake of the March 11 earthquake caused all three Japanese automakers to cut production.
Penske said in April it expected the disruption from the shortfall in output by Japanese automakers to be limited. It also said it expected profit margins to rise as discounts on new cars waned over the summer because of the limited supply of vehicles from the Japanese manufacturers.
Bloomfield Hills, Michigan-based Penske operates 327 auto retail franchises selling new and used vehicles, financing and insurance products, parts and services. Unit sales of new cars in the three months ended June 30 fell compared with a year earlier while unit sales of used cars rose on the same basis.
The company's total gross profit increased to 16.1 percent from 15.9 percent in the year earlier period.
Net income in the second quarter rose to $39.56 million or 43 cents a share compared with $29.44 million or 32 cents a share a year earlier.
Analysts had expected 38 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 10.5 percent to $2.9 billion, short of the $2.96 billion analysts had expected. New car unit sales fell 1.1 percent, but the volume of used car sales jumped 16.1 percent.
