A leaner Lithia Motors continued to carve out a profit in the first quarter of 2010, taking advantage of consistent used car sales and a surge in new car demand in March.
The Medford auto retailer's revenue grew 13.4 percent to $463 million through the first three months of 2010. It reported a $2.168 million profit from continued operations after losing money a year ago.
"We continued to improve solidly throughout the quarter locally and nationally," Lithia Chairman and Chief Executive Officer Sid DeBoer said Tuesday.
"We have a very good market share. Even with unemployment high, the consumer returned to the new vehicle market and credit constraints that were around in 2009 were reduced."
Factoring in a write-off of property left over from past acquisitions and store closures, Lithia earned $1.3 million, or 5 cents per share, compared with a loss of $800,000, or 4 cents per share, for the first quarter of 2009.
Same store new vehicle sales increased 11.5 percent compared with early 2009, while used vehicle sales jumped 22.4 percent.
Excluding the impact of Chrysler sales highly escalated by incentives last year, Lithia said its same store new vehicle sales increased 25.3 percent.
The company said early spring demand came from its online efforts. Lithia anticipated a 15 percent growth in website hits; instead it saw a 30 percent jump in hits.
"Internet shoppers show up ready to buy," DeBoer said. "They can nearly buy the car right on the computer. We're doing more to encourage them."
Lithia ended the reporting period with $90.8 million in readily available funds for acquisitions and DeBoer said Lithia was set to return to growth mode.
"We are planning to growing, but not as aggressively as the past," he said. "We have cash in reserve to grow a lot, if we found the right deals. We're generating money, so we don't need to save before we could spend."
During its previous growth spurt, Lithia invested in dealerships it felt was underperforming and then banked on turning them around.
"We've got to have deals on stores where by bringing them in we will make more per share than we were," DeBoer said.
Following a recent equity offering, the number of Lithia shares has grown 25 percent, to more than 26 million.
During a conference call with industry analysts, DeBoer noted lenders are relaxing standards a bit for purchases, with the average credit scores of buyers falling to 718 from 732 a year ago.
The company expects revenue to reach between $1.9 and $1.95 billion this year, well off the high of $2.6 billion in 2007.
"Our forecasts don't require improvement beyond what we're doing now," DeBoer said. "We can't predict roses and everyone buying cars, but people are buying more cars than a year ago and we're getting a bigger share."
Lithia shares fell 8 percent on Tuesday, closing at $8.41 on the New York Stock Exchange amid a 213-point drop in the Dow Jones Industrial Average.
Reach reporter Greg Stiles at 776-4463 or e-mail firstname.lastname@example.org.