Car Dealers Rise as Sonic Automotive Reports Record 2015 Sales

  • CEO says this year also will `be favorable to dealers'
  • Strong results help lift shares of Penske and AutoNation

Sonic Automotive Inc. rose the most in four months after the U.S. dealership group reported record retail sales volume for 2015, capping a strong earnings season for auto retailers.

The company said those sales totaled 138,129 vehicles, a 1.6 percent increase from the previous year, as U.S. consumers responded to cheap gasoline and a growing jobs base. Sonic, which operates about 135 dealerships, posted fourth-quarter adjusted profit of 61 cents a share, beating the 58-cent average of 10 analyst estimates compiled by Bloomberg.

“We expect 2016 to continue to be favorable to dealers,” Chief Executive Officer B. Scott Smith said in a statement Tuesday. U.S. industrywide deliveries in 2015 reached a record 17.5 million cars and light trucks.

Sonic rose 6.4 percent to $17.58 at 1:08 p.m. in New York after climbing as much as 9 percent, the most intraday since Oct. 28.

Penske, AutoNation

Shares of other auto retailers also advanced. Penske Automotive Group Inc. gained 2.7 percent to $35.77 after rising as much as 5.3 percent. The stock was raised to buy Tuesday by Buckingham Research Group on Tuesday. Penske earlier this month reported fourth-quarter revenue of $4.92 billion, exceeding the $4.73 billion average analyst estimate.

Penske “is the best positioned auto retailer for future net income growth,” Joseph Amaturo, a Buckingham Research analyst, said in a note, citing the company’s exposure to “higher-margin luxury/premium automotive brands, beneficial geographic exposure and top-notch management team.”

AutoNation Inc., the largest U.S. new-vehicle retailer, rose 1.8 percent to $50.71 and increased as much as 5.2 percent. The company said on Friday that it would buy back as much as $250 million more of its shares.

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