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AutoNation's Sales Soar in August

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AutoNation Inc. (AN - Free Report) recorded an outstanding performance in new vehicle sales in August. Sales in the month rose 28% year over year to 23,213 vehicles. The meteoric rise was attributable to higher demand for both imported and domestic vehicles.

Sales in the Domestic segment went up 20% to 6,961 vehicles. The segment comprises retail automotive franchises that sell vehicles manufactured by Ford Motor Co. (F - Free Report) , General Motors Company (GM - Free Report) and Chrysler.

Sales in the Import segment escalated 42% to 12,530 vehicles. The segment covers retail automotive franchises that sell vehicles produced by Toyota Motor Corp. (TM - Free Report) , Honda Motor Co. (HMC - Free Report) and Nissan Motor Co. (NSANY - Free Report) . Sales of Toyota and Honda branded vehicles declined significantly in 2011 due to the fall of U.S. inventory resulting from the earthquake and tsunami in Japan.

Sales in the Premium Luxury segment increased 6% to 3,722 vehicles during the month. The segment consists of retail automotive franchises selling vehicles manufactured by Daimler AG’s (DDAIF - Free Report) Mercedes Benz, BMW and Lexus.

In addition, August 2012 had an advantage over the corresponding month last year with 27 selling days compared with 26 selling days a year ago. With this, on daily selling rate basis, the company’s retail new vehicle unit sales improved 23% in August this year.

Auto sales in the U.S., in August 2012, improved 19.9% to 1.29 million vehicles, thus recording the highest monthly figure for the month of August since 2007. Seasonally adjusted annual rate (SAAR) went up 16% to 14.52 million vehicles, according to Autodata Corp. The major factors behind this remarkable improvement are easier credit terms and rising demand.

Headquartered in Fort Lauderdale, Florida, AutoNation is the largest automotive retailer in U.S. The dramatic recovery of auto sales brought about by the improved customer confidence and introduction of new products will eventually boost the company’s performance. In addition, revamped models of Civic and Accord as well as stabilization of inventory are expected to help the company to outperform in the U.S. light vehicle market.

Currently, AutoNation retains a Zacks #1 Rank, which translates into a short-term (1 to 3 months) Strong Buy rating. We have a long-term (more than 6 months) Outperform recommendation on the stock.

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