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AutoNation to sell its own parts, add used car centres

Oct 28, 2016 | 7:30 AM

DETROIT — The largest auto dealership chain in the U.S. is expanding into stand-alone used car sales centres and will even sell its own automotive replacement parts.

Fort Lauderdale, Florida-based AutoNation announced the changes Friday. It’s looking for growth opportunities now that U.S. new-car sales have flattened and prices are starting to fall.

The company said it has identified 25 sites in its existing markets to set up the free-standing used car stores. The sites will compete directly with the CarMax used car chain. Five will open next year.

AutoNation started selling its own maintenance and repair parts during the summer with the introduction of AutoNation-brand batteries.

The company also plans to run regional vehicle auctions and add 18 collision repair centres nationwide.

Also during the summer, the chain launched a one price sales strategy that includes centralized pricing and used-car appraisals. The single-price strategy will give buyers a transparent and stress-free experience, the company says.

The news came Friday as the 371-store chain reported third-quarter earnings of $107.3 million, missing Wall Street’s expectations.

The company said it had net income of $1.05 per share. Earnings, adjusted for non-recurring costs and to account for discontinued operations, came to $1.11 per share.

The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of $1.14 per share.

The auto retailer posted revenue of $5.57 billion in the period, also missing Street forecasts. Fourteen analysts surveyed by Zacks expected $5.62 billion.

AutoNation shares have fallen 23 per cent since the beginning of the year, while the Standard & Poor’s 500 index has increased slightly more than 4 per cent. The stock has decreased 25 per cent in the last 12 months.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AN at https://www.zacks.com/ap/AN

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Keywords: AutoNation, Earnings Report

The Associated Press