More customers of Asbury Automotive are buying maintenance packages and extended warranties along with their vehicles thanks to loosened credit requirements that allow more car shoppers to get the full price of a car financed -- and more.
"There are more people today that can obtain credit on reasonable terms than there were in 2010," said Michael Kearney, Asbury's executive vice president and chief operating officer. The Duluth-based company is one of the nation’s largest auto retailers and includes the Nalley Automotive dealerships in metro Atlanta.
Profits from finance and insurance sales increased more than 21 percent for the company, in part a result of loosening purse strings.
Asbury plans to take advantage of a hot market for some brands, like Hyundai, by increasing its spending to renovate some stores. The company also is pre-paying some mortgages and continuing to reduce its costs.
Asbury had its most profitable quarter for used-car sales. It has re-evaluated how it values trade-ins and has added lower-priced cars to reach shoppers who in the past may not have been able to find an affordable vehicle on the company's lots.
That has led to increased sales of parts and service.
Sales of both new and used vehicles were up for the first three months of the year. Asbury President and CEO Craig Monaghan said the forced restructuring of the industry made the car business healthier.
"This industry is producing more profits with better margins than I can remember," he said.
Asbury made $17.6 million for the first quarter of the year, an 11.6 percent decrease from the first quarter of 2011. In the first quarter of last year, the company sold its heavy truck business. Discounting that sale, Asbury's profits increased 300 percent for the quarter, to $18 million from $4.5 million.
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