(Reuters) - AutoNation IncAN.N , the largest U.S. car dealership chain, said first quarter income from continuing operations fell to 90 cents a share from 97 cents a share a year ago, in part because of expenses related to extensive hail damage to cars.
AutoNation Chief Executive Mike Jackson told Reuters in an interview Friday that the U.S. auto industry is hitting a plateau, with sales flattening despite a 14 percent increase in average vehicle discounts and a growing reliance on new vehicle leases. Leasing accounted for about 30 percent of new vehicle transactions, AutoNation said.
If auto makers “hadn’t taken those steps, the market would have gone down,” Jackson said.
Production of passenger cars “needs to be pulled back significantly,” Jackson said, to reduce inventories and avoid further price cutting. “The American consumer has stampeded to trucks,” he said.
AutoNation cut orders for cars in the first quarter and is reducing orders in the current quarter, Jackson said.
AutoNation shares were little changed in morning trading at $48.09 following the release of first quarter results that fell short of Wall Street forecasts.
AutoNation said first quarter results were hit by costs of $6.8 million, or six cents a share, for hail damage to vehicles, and another $3.2 million, or 3 cents a share, related to stock compensation costs shifted into the quarter.
Analysts had expected the company to report net income from continuing operations of 93 cents a share for the quarter, according to ThomsonReuters I/B/E/S. The company reported $5.1 billion in revenue for the January to March period, short of analysts’ consensus forecasts of $5.29 billion.