Lithia Motors turns its first profit in a year

Lithia Motors returned to profitability in the second quarter.

Whether that becomes a trend, or the first quarter was a momentary respite from hard times, is yet to be seen.

While new and used car sales were down in the first quarter of the year, the Medford auto retailer turned a profit for the first time in more than a year, earning $200,000 from continuing operations in the first quarter, or 1 cent per share, the same as in 2008.

Net income for the first quarter of 2009 was $1.33 million, or 6 cents per share, thanks to the sales of several stores and the closing of others during the quarter. Lithia lost $2.16 million during the first quarter of 2008.

Lithia's last profitable quarter was the third quarter of 2007.

First quarter 2009 revenue totaled $398 million, compared to $567 million in the year-ago period, driven primarily by lower vehicle sales. Same-store sales declined 39.9 percent for new vehicles and 13 percent for used vehicles from sales in the same quarter last year.

However, media reports went out Wednesday suggesting President Obama may announce today that Chrysler LLC will file for bankruptcy protection. About a third of Lithia's stores are Chrysler dealerships.

"Reorganization is not closing down the company," Lithia Chairman and Chief Executive Officer Sid DeBoer said. "I don't think it makes any difference. They can't come out of reorganization without car dealers; we're their customers. They will still offer rebates and we'll be selling cars like we do today. We believe we have done all we can do to position Lithia for whatever uncertainties the industry sees."

He anticipates Chrysler will merge with Italian auto maker Fiat Group SpA.

"Ultimately, it looks like it's going that way," said DeBoer, who joked with analysts about Italian suits and shoes during a conference call. "Fiat looks like it's going to be part of it. It won't be called Fiat, but Chrysler will have the technology, the diesel engines, small 4-cylinder turbo-charged engines that get high performance with limited gas consumption. They're the No. 1 seller in Brazil, Spain and Italy."

Lithia has sold or shuttered 20 of the 31 dealerships it announced it would jettison last summer, realizing $55 million in annualized cost savings.

All but two of Lithia's remaining Chrysler dealerships dominate their markets, DeBoer said, and are unlikely to be affected by a bankruptcy.

DeBoer told analysts Lithia expects vehicle sales to remain flat through the balance of 2009.

Reach reporter Greg Stiles at 776-4463 or e-mail

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