AutoNation 2006 Annual Report Download - page 28

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Table of Contents
New vehicle revenue for 2005 decreased compared to 2004 primarily as a result of a unit volume decrease partially offset by an
increase in revenue per unit. In June 2005, General Motors announced an “employee pricing for everyone” program, which was followed
in July 2005 with similar programs by Ford and Chrysler. Although these programs helped drive unit volume during 2005, a challenging
United States automotive retail environment and the effects of Hurricane Wilma on our Florida stores negatively impacted new vehicle unit
volume during the fourth quarter of 2005. Despite higher gas prices, rising interest rates, and a shift in consumer preferences from trucks
to crossover vehicles and cars, we expanded revenue per vehicle retailed and gross profit per vehicle retailed through our focus on pricing
and profitability and management of our new vehicle inventory levels and a shift in mix from domestics to imports and luxury.
At December 31, 2006, our new vehicle inventories were at $1.9 billion or 52 days supply compared to new vehicle inventories of
$2.1 billion or 55 days supply at December 31, 2005.
The net inventory carrying cost (floorplan interest expense net of floorplan assistance from manufacturers) increased in 2006
compared to 2005, primarily as a result of increased floorplan interest expense due to higher short-term LIBOR interest rates.
27