Group 1 Q2 net income slips 13% despite record revenue

Group 1 Automotive’s net income dropped in the second quarter though it continued to break quarterly revenue records due to higher new-vehicle sales and prices and an ongoing focus on acquisitions and service business growth.

Net income for the Houston dealership group dropped 13 percent to $170.5 million from a year earlier and a more moderate decline than in the first quarter. Second-quarter revenue jumped 10 percent to a record $4.6 billion, Group 1 reported Wednesday.

Investment in aftersales services in the U.S. and U.K., along with new technician hiring in the U.K. and “prudent capital investments” in acquisitions helped produce the positive results, CEO Daryl Kenningham said in a statement.

New-vehicle sales grew by double-digit percentages during the quarter, though used-vehicle sales declined. Per vehicle gross profits declined for both new and used vehicles.

Service and parts gross profit reached a record $304.1 million, a 9.5 percent increase from the previous year results.

In May, Group 1 purchased three Buick-GMC dealerships in Texas and in June added a Kia dealership in Texas, all from the Beck & Masten group.

Group 1 also disposed of “some smaller underperforming stores,” Kenningham said. During the second quarter, the company said it sold three dealerships that together generated about $145 million in annual revenues. The stores were Bohn Ford in Harvey La., which it sold in May to Mills Automotive Group, a New York Buick-GMC store that it sold in April and a Chevrolet dealership in Oklahoma that it sold in June.

Shares in Group 1 rose about 3 percent to $255.24 in morning trading on Wall Street.

Q1 net income: $170.5 million, down 13 percent from a year earlier

Q1 revenue: $4.6 billion, up 10 percent from a year earlier

Q1 adjusted net income from continuing operations: $166.1 million, down 16 percent

Vehicle sales: 44,740 total new vehicles, up 15 percent; 36,695 new vehicles in the U.S., up 16 percent; 46,764 total used vehicles, down 4.4 percent; 36,306 used vehicles in the U.S., down 5.8 percent.

Records: Quarterly total revenue and total gross profit of $775.5 million

Ranking: Group 1 ranks No. 4 on Automotive News‘ list of the top 150 dealership groups based in the U.S., retailing 154,714 new vehicles in 2022.