AutoNation (NYSE:AN) reported second-quarter 2026 adjusted earnings per share of $5.56, up from $5.46 a year earlier, marking its sixth consecutive quarter of year-over-year adjusted EPS growth. The company said after-sales operations, customer financial services and capital allocation helped offset lower new-vehicle volume tied in part to battery-electric vehicle sales and prior-year tariff-related demand pull-forward.
Total revenue was $6.93 billion, compared with $6.97 billion in the prior-year quarter, while gross profit totaled $1.23 billion, down from $1.28 billion. Adjusted operating income was $343 million, compared with $369 million a year earlier. AutoNation’s adjusted SG&A expense was 68.2% of gross profit, improving from 69.8% in the first quarter but above 66.2% a year earlier.
After-Sales Sets Gross Profit Record
After-sales remained AutoNation’s largest gross-profit contributor, producing a record $607 million in gross profit during the quarter. After-sales revenue rose to $1.26 billion from $1.22 billion a year earlier, with customer-pay revenue increasing 7% and wholesale parts revenue climbing 16%.
Customer-pay repair orders increased 5%, while warranty repair orders rose 8%. The gains offset lower internal repair activity, which AutoNation tied to its used-vehicle stocking mix and volume. Same-store after-sales gross profit increased 4%, while total after-sales gross profit rose 7%, according to CEO Michael Manley.
Szlosek said the after-sales gross margin was 48.1%, compared with 49% in the prior-year quarter, reflecting a greater mix of lower-margin wholesale parts sales. The company said recent commercial wins helped drive wholesale growth, as AutoNation moves toward managing products and brands through a more centralized supply-chain model.
Manley said the company views lower internal repair activity and changes in warranty mix as temporary rather than structural. He emphasized AutoNation’s efforts to improve customer retention and gain business from older vehicles that may otherwise be serviced by independent repair shops.
AutoNation increased same-store franchise technician headcount by more than 2% year over year. Management said technician hiring, retention, training and investments in service-facility layouts and tools are important to supporting mid-single-digit after-sales gross-profit growth.
Vehicle Margins Remain Stable as BEV Sales Decline
New-vehicle unit sales totaled 63,240, down 4% from a year earlier. The decline was driven principally by lower battery-electric vehicle sales, which fell more than 30% year over year, according to Manley. Import sales increased 1%, while domestic sales declined 12% and premium-luxury sales fell 4%. Excluding the battery-electric vehicle effect, premium-luxury sales declined 1%.
New-vehicle gross profit per unit was $2,381, compared with $2,785 a year earlier, reflecting higher vehicle costs. Management said new-vehicle profitability has remained within a relatively narrow range for four consecutive quarters. Inventory supply stood at 73 days for domestic vehicles, 66 days for luxury vehicles and 34 days for imports.
Used-vehicle gross profit per unit was $1,582, compared with $1,622 a year earlier. AutoNation said used-vehicle sales were constrained by a lower-than-desired mix of vehicles priced below $20,000, while units priced above $40,000 rose 10%. Revenue per used vehicle increased 8%, and management said profitability in the higher-priced category was more than double that of the rest of its used business.
The company internally sourced about 90% of its used-vehicle inventory and expects off-lease vehicle supply to increase meaningfully in the second half. Szlosek said certified pre-owned sales accounted for close to 20% of used sales during the first half, up from roughly 15% in the prior-year period.
Finance Business Scales and Cash Flow Supports Capital Returns
Customer Financial Services gross profit was $358 million, down from $368 million a year ago as lower retail unit volume offset stronger per-unit results. CFS gross profit per vehicle increased about 3% to $2,799. AutoNation said roughly three-quarters of vehicle sales included a finance contract, and customers purchased an average of two products per vehicle.
AutoNation Finance generated a record $11 million of profit in the quarter, compared with $2 million a year earlier. Its portfolio grew 52% to $2.67 billion, while quarterly originations were $485 million. The captive finance business represented 11% of total vehicle sales and 18% of sales financed during the quarter. AutoNation also completed a roughly $550 million asset-backed securities transaction in June, bringing the portfolio to 91% debt-funded.
Adjusted free cash flow totaled more than $180 million in the quarter and $439 million in the first half, up 11% from the prior-year period. Through June, AutoNation deployed $900 million of capital, including $457 million for share repurchases, $317 million for acquisitions and $126 million in capital expenditures.
The acquisitions included Toyota of Newnan in Georgia and three premium-luxury stores in the San Francisco Bay Area. The acquired stores are expected to contribute approximately $600 million in annual revenue and about 9,700 new and used vehicle sales.
Looking ahead, Manley said the company expects adjusted EPS growth in the second half, supported by stable vehicle profitability, growth in after-sales and CFS, AutoNation Finance’s expansion and a lower share count. He said AutoNation expects customer-pay after-sales business to deliver continued mid-single-digit growth and plans to continue returning residual cash flow to shareholders while pursuing acquisitions that meet its return-on-invested-capital criteria.
About AutoNation (NYSE:AN)
AutoNation, Inc is the largest automotive retailer in the United States, operating a network of franchised new vehicle dealerships, pre-owned vehicle superstores and collision-repair centers. The company offers a comprehensive range of automotive products and services, including the sale of new cars and light trucks from leading manufacturers, certified pre-owned vehicles and a wide selection of used models. In addition to retail vehicle sales, AutoNation provides financing, insurance and extended service contracts through its in-house financial services division, as well as genuine and aftermarket parts, factory-recommended maintenance and collision-repair services.
Headquartered in Fort Lauderdale, Florida, AutoNation was founded in 1996 by entrepreneur H.
