Chip supply shortage will not end in 2021, AutoNation CEO Mike Jackson says

AutoNation’s longtime CEO Mike Jackson thinks the semiconductor deficiency that is sending costs higher on new and utilized vehicles and making Ford and GM end some production will not end in 2021.

“So no question the chip supply is disruptive to the manufacturing of new vehicles. Nothing like closing the plants down in the second quarter. Our shipments will be double this year than they were when the plants were closed for six weeks. But demand far exceeds supply, and it’s going to be that way for some time,” Jackson tells Yahoo Finance Live.

Jackson added, “We performed despite the disruption from the shortages created by the chip disruption, which we expect to fully continue for the rest of this year.”

The enormous imbalance between supply and demand — in huge part powered by individuals sidestepping public transportation during the pandemic and purchasing a new vehicle for travel — assisted AutoNation with blowing first quarter sales and benefit estimates on Tuesday. Jackson said AutoNation had the option to effectively raise costs (because of the chip shortage) on its vehicles simultaneously buyers kept on trade up to expensive cars.

Here is how AutoNation performed contrasted with Wall Street estimates.

Net Sales: $5.90 billion versus $5.03 billion

Adjusted Diluted EPS: $2.79 versus $1.85

The organization saw same-store sales surge 27%, led by a 28% pop in used vehicle sales.

Given the solid purchaser demand, AutoNation said its new vehicle and used vehicle gross profit rose 61% and 17%, respectively, from the earlier year.

The organization delivered sales gains in every vehicle segment: domestic (up 24.5%); import (up 29.9%) and premium luxury (up 30.1%). Operating profits in every vehicle segment likewise expanded, paced by a 119% addition in domestic autos.