Scottie Scott of Prospect, who describes herself as a dedicated Jeep driver, checks out a new Chrysler Jeep while waiting for her husband at the Lithia dealership on Highway 62. Lithia reported a record sales month in March. - Mail Tribune / Bob Pennell

Lithia rolls to record March sales

Lithia Motors projected a solid 40-cent per share return in the first quarter a few weeks ago, reflecting both the auto industry — and its own — steady recovery, That was before an unexpected buying surge swept through many of the Medford auto retailer's 83 stores, propelling Lithia to a record month in March.

The trend to fuel-efficient new models and hefty used vehicle sales boosted Lithia Motors earnings 92 percent as it reported a $15.8 million first-quarter profit. The company earned 60 cents per share compared with 33 cents a year ago when it netted $8.8 million. First-quarter revenue of $758.9 million was up $176 million — a 30 percent gain — from $582.9 million in the first quarter of 2011.

"Our January results were lighter than expected, but we started pacing ahead in February," said Chris Holzshu, senior vice president and chief financial officer during a conference call with analysts on Wednesday. "Then we had the best month we've had since 2005 as a company."

Lithia broke records not just for sales volume, but in a variety of financial measures.

Same-store new vehicle sales increased 25 percent, following a 40 percent gain a year ago, and used vehicle sales grew 18 percent.

Customers, said Lithia Motors President Bryan DeBoer, "are willing to trade in a car with poor gas mileage for one with good gas mileage."

All told, Lithia sold roughly 11,600 new vehicles and 10,800 used during the quarter.

"We've increased market share," DeBoer said, pointing to a 32 percent jump in domestic sales and 13 percent gain in luxury and imports.

"We've target 3 percent to 5 percent growth in market share on top of the underlying recovery," he said.

Each Lithia location averaged 45 used vehicle sales per month, DeBoer said. But the goal is to reach 60.

Sales of the company's "Value Autos" — 7-to-10-year-old models with more than 80,000 miles — grew 46 percent.

"We're definitely attacking the Value vehicles," he said.

Used car pricing remains high, because few units were manufactured between 2008 and 2010, resulting in little difference between a new and late-model used vehicles, he said. The scarcity of late-model used cards will continue through 2013, leading more buyers to opt for new vehicles.

Even though warranty work declined 11 percent compared to early 2011, Lithia's maintenance departments have kept busy because drivers have held on to cars longer in recent years.

"There has been a longer retention than in the past so we are performing many more services than in past," DeBoer said. "It's not heavy maintenance and typically smaller tickets with not as much margin, but we're getting them in more often."

While Lithia admittedly wants more 3- to 5-year-old vehicles on its lots, it picks a lot of them up through trades. Two out of three new car buyers trade-in a vehicle.

"When we sell more new vehicles we get more used and we're able to ramp up more," said Lithia's Executive Chairman Sid DeBoer. "We can get those cars we can't find externally."

Lithia will benefit from advancing new vehicle sales across the industry to between 14 million and 14.5 million units this year. Access to credit, improved safety, fuel-efficiency, new technology and styling are driving consumer demand, said Sid DeBoer. "Coupled with an aging fleet on the road."

As one of the top Chrysler retailers Lithia has benefited from the automaker's resurgence.

"They know how to get a dealer motivated to sell more cars," said Sid DeBoer. "That's still their strength. It's not done with a national marketing strategy, but store by store, salesman by salesman finding a way to get a customer in that car."

Lithia announced its extended credit line earlier this month, setting the stage for acquisitions. Unlike its pre-recession forays into markets that ultimately didn't fit the company's mid-sized and rural market template, Lithia's focus is now on dealers looking to exit the business.

"My role is to find guys motivated to sell," said Sid DeBoer, who officially will turn over day-to-day oversight on May 1. "Taxes will never be cheaper and there is never a better time to sell than when things are improving. ... There are 17,000 dealerships in the country and 5 percent will turn over this year."

Reach reporter Greg Stiles at 541-776-4463 or email

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