Is AutoNation Captive Finance Arm Coming?

Rumors have been growing that AutoNation would create their own captive finance company. And in a recent interview, AutoNaton CEO Mike Jackson almost refuted those reports. Speaking to Automotive News, Jackson said, “It’s most unlikely that we do that. I never say anything’s final. But I would say it’s on the back burner with the gas turned off.”

Reports indicate last November Jackson and AutoNation was looking into the eventual creation of its own captive finance arm. That plan it appears, is now on the back burner.

For the time being Jackson sounds content to see AutoNation invest in other parts of its organization in lieu of setting up that captive. Speaking to AN, Jackson said, “The return on capital cannot be justified compared to the other choices we have for our capital. Those other options include investing in our own stores, building our digital capabilities, doing acquisitions, repurchasing our own stock.”

This declaration to not set up its own finance arm comes after AutoNation reported very strong numbers for the first quarter. The dealer group posted a 17 percent gain in net profit year-over-year. AutoNation reported $112 million in net profit for the first quarter of 2015 compared with $91 million in Q1 of 2014. First quarter revenue for the nation’s largest dealer group came in at $4.9 billion.

Speaking about the state of AutoNation, company CEO Mike Jackson said, “AutoNation delivered its 18th consecutive quarter of double-digit year-over-year growth in EPS as we increased profitability in each of our business sectors. We continue to expect U.S. industry new vehicle unit sales above 17 million in 2015.” AutoNation has also acquired five more stores thus far in 2015, with the combined revenue for all 5 totaling $320 million.

When AutoNation CEO Mike Jackson speaks, people listen. It’s clear the nation’s largest dealership group is continuing to grow and generating revenue into the billions. However, what do you think that impact would be if they also had their own captive finance arm? Do you think any other dealer group will be able grow and overtake AutoNation as the largest in the country?