AutoNation 2003 Annual Report Download - page 27

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Table of Contents
New Vehicle
Years ended December 31,
2003 vs. 2002 2002 vs. 2001
Variance Variance
Favorable/ Favorable/
($ in millions, 2003 2002 (Unfavorable) % Variance 2001 (Unfavorable) % Variance
except per vehicle data)
Reported:
Revenue $11,791.2 $11,694.8 $96.4 .8 $12,000.0 $(305.2) (2.5)
Gross profit $852.3 $909.9 $(57.6) (6.3) $964.6 $(54.7) (5.7)
Retail vehicle unit sales 414,765 426,706 (11,941) (2.8) 453,857 (27,151) (6.0)
Revenue per vehicle
retailed $28,429 $27,407 $1,022 3.7 $26,440 $967 3.7
Gross profit per vehicle
retailed $2,055 $2,132 $(77) (3.6) $2,125 $ 7 .3
Days supply (industry
standard of selling
days, including fleet) 71 days 63 days
Same Store:
Revenue $11,541.9 $11,552.7 $(10.8) (.1)
Gross profit $835.9 $899.6 $(63.7) (7.1)
Retail vehicle unit sales 406,467 421,151 (14,684) (3.5)
Revenue per vehicle
retailed $28,396 $27,431 $965 3.5
Gross profit per vehicle
retailed $2,057 $2,136 $(79) (3.7)
Years Ended December 31,
% 2003 % 2002 % 2001
Reported:
Revenue mix percentage 60.8 60.0 60.0
Gross profit as a percentage of revenue 7.2 7.8 8.0
Same Store:
Revenue mix percentage 61.0 60.3
Gross profit as a percentage of revenue 7.2 7.8
New vehicle revenue for 2003 remained relatively flat compared to 2002 as the average revenue per unit increase was offset by a
decrease in volume. The average increase in revenue per unit was attributable to a shift in mix to more expensive trucks and luxury vehicles.
The decrease in volume is primarily due to lower consumer demand in certain markets in which we operate and for certain brands sold by
us. In 2002, although we continued to benefit from high levels of manufacturer consumer incentive programs introduced during the fourth
quarter of 2001, we experienced volume decreases consistent with industry declines of retail unit sales.
We experienced downward pressure on our new vehicle gross profit margins during 2003, which we believe was largely due to
manufacturers’ excess production capacity and intense competition in the industry. While we anticipate that the new vehicle market will
remain intensely competitive in 2004 and that manufacturers will look to reduce incentives offered to consumers, we expect that an
improving economic environment will stabilize both new vehicle volumes and margins. However, the level of retail sales and gross profit for
2004 is very difficult to predict.
Gross profit in 2002 decreased compared to 2001 primarily due to same store sales declines partially offset by the impact of acquisitions.
Same store sales in 2002 decreased in large part due to volume decreases as well as slight margin compression.
New vehicle days supply increased eight days compared to 2002 consistent with industry inventory levels. Inventory levels were
impacted by a lower than expected sales pace during December 2003. The net inventory carrying benefit (floorplan interest expense net of
floorplan assistance from manufacturers) decreased in 2003 compared to 2002, primarily as a result of a decrease in floorplan assistance
partially offset by a decrease in floorplan interest expense. The decrease in floorplan assistance was primarily due to lower vehicle sales and
interest rates. The decrease in floorplan expense was primarily due to lower interest rates partially offset by higher inventory levels. In 2004,
we expect the net inventory carrying benefit to decrease due to higher interest rates.
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