AutoNation Inc.’s net income slipped in the second quarter as sales of new and used vehicles dropped, and the dealership giant said Thursday it struck a deal to acquire auto finance company CIG Financial for $85 million.
Thursday’s acquisition announcement follows CEO Mike Manley’s previously announced vision to create a captive finance company for AutoNation. In February, Manley said the company was “aggressively looking” into restarting a finance company in part to help AutoNation as it expands its standalone used-vehicle business. In May, Manley said he would prefer to create a captive finance company out of an organization it acquired. AutoNation said the purchase of CIG Financial is expected to close within 90 days.
“This acquisition addresses a key strategic next step in the evolution and expansion of our customer relationships, particularly for our used vehicle business,” Manley, who became AutoNation’s CEO in November, said in a statement Thursday.
The retail giant also said that net income for the second quarter dropped 2.2 percent, falling to $376.3 million. Revenue fell 1.6 percent to $6.87 billion.
AutoNation said its supply of new vehicles stood at 11 days at the end of June, up three days from the end of March. At the end of 2021’s second quarter, the retailer had a 14-day supply of new vehicles.
The company said it plans to open its 12th AutoNation USA used-only store in Kennesaw, Ga., just outside of Atlanta, by the end of September. AutoNation has said it aims to have more than 130 AutoNation USA stores by the end of 2026.
Shares of AutoNation were down 1.96 percent to $122.18 in early morning trading on Thursday.
Q2 revenue: $6.87 billion, down 1.6 percent from a year earlier
Q2 net income: $376.3 million, down 2.2 percent
Q2 vehicle sales: 134,970 combined new and used vehicles sold, down 14 percent. On a same-store basis, 129,100 combined new and used vehicles sold, down 18 percent.
Record: Second-quarter operating income of $558.1 million
Ranking: AutoNation, of Fort Lauderdale, Fla., ranked No. 1 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., with retail sales of 262,403 new vehicles in 2021.