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AutoNation Inc AN

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GM Loses U.S. Sales Crown for the First Time Since 1931; We Expect Industry Growth in 2022

Analyst Note

| David Whiston, CFA, CPA, CFE |

Most automakers, except Ford who reports on Jan. 5, reported fourth-quarter or December U.S. auto sales on Jan. 4. According to Wards, December light vehicle sales fell year over year by 25.6% and by 22.9% after adjusting for one less selling day in December 2021. The seasonally adjusted annualized selling rate of 12.44 million was far below December 2020’s 16.31 million due to 2021’s chip shortage continuing to cause woefully inadequate inventory. Wards put full-year 2021 sales at 14.93 million, up 3.1% from 2020 but still far from 17.1 million in 2019. Barring no mass pandemic shutdowns in 2022, we expect that this year sees at least about 5% growth from 2021, but the chip shortage will likely not be completely resolved until 2023. We expect gradual improvement throughout 2022, especially in the second half. We believe industry demand remains high.

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Company Profile

Business Description

AutoNation is the largest automotive dealer in the United States, with 2020 revenue of $20.4 billion and over 235 dealerships and over 300 locations, including collision centers. The firm also has nine AutoNation USA used-vehicle stores, four auction sites, and over 70 collision centers all across 16 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for about 51% of revenue; the company also sells used vehicles, parts, and repair services as well as auto financing. The company (formerly Republic Industries) spun off its waste management unit (Republic Services) in 1999 and its car rental businesses (ANC Rental) in 2000. Wayne Huizenga founded the company in the 1990s to bring the rollup acquisition strategy to auto retailing, which has proved to be a smart move.

200 South West 1st Avenue
Fort Lauderdale, FL, 33301
T +1 954 769-6000
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 21,600