There was good news for Fort Lauderdale-based AutoNation last week as the company reported that it earned $65 million in the third quarter of this year, compared to a big loss last year during the same time period.
But while the bottom line looks good, the top line - well not so much.
Sales revenue was down about 13 percent for the year, and that was bolstered a bit by cash for clunkers.
So how does the nation's largest auto retailer make money when its sales revenues are down?
Well maybe some of the profits came from other parts of the business - service, finance and insurance and maybe used cars.
But the big difference maker was cost cutting. Expenses for the period fell 10 percent to $380 million. It's good that AutoNation could find areas to cut but the problem is simply this.
You can't save your way to prosperity.
And eventually you're going to have to cut to the bone, which could impact your effectiveness.
AutoNation is a good company led by very smart and talented people. How they do in the coming year will be the real test of just how good they are. All of us in South Florida should be pulling for them.
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Good stuff...
ReplyDeleteAuto Nation has always been considered a leader in its industry, especially here in South Florida. But I agree...eventually, you can't save your way to prosperity. Eventually, you'll have cut out so much fat that you'll reach the muscle. And you can't cut that.
It will, indeed, be interesting to watch Auto Nation...not only here in South Florida, but as a barometer for the American auto industry as a whole.
Steve Winston
President, WINSTON COMMUNICATIONS
steve@winstoncommunications.com
www.winstoncommunications.com