New Car Sales Back in High Gear: Is AutoNation a Buy?
Ockham Research submits: Auto sales experienced strong gains in May as all major US manufacturers posted much better results. Chrysler showed the strongest growth to nearly 105,000 vehicles or 33% better than last year; its first month over 100k in more than two years. Ford (F) and General Motors also posted better numbers, improving 22% and 16.6% respectively. Ford sales would have been even stronger if not for the Mercury brand falling 11%, but Ford plans to phase out that brand in the near future. Demand has begun to return after a significant lull over the last two years as cash strapped customers tried to get extend their vehicle’s life as long as possible. Now, improving consumer confidence and a thawing in the auto loan market has helped fuel the rebound that has now seen sales increase for seven straight months. In addition to solid reports from auto manufacturers, it is not surprising that auto retailers are also reporting better results. AutoNation (AN), one of the largest auto dealers, reported new vehicle unit sales rose 22% to 19,283. Domestic new vehicle sales rose 28% to 5,852, while imported car sales increased 21% to 10,232. Premium luxury sales rose 15% to 3,199. As you might expect, AutoNation’s stock is trading nearly 7% higher in morning trading and has reached a new 52-week high.Complete Story »