MAJRE sales up strongly because of price cutting by domestic car companies:
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2005 AND THREE MONTHS ENDED
JUNE 30, 2004
Revenues. Revenues for the three-month period ended June 30, 2005 increased
to approximately $134.8 million, which is $30.9 million, or 29.7%, more than the
prior comparable period's revenues of $103.9 million. The primary reason for the
increase in revenues was the increase in units of both new and used vehicles
sold. New vehicle unit sales increased by 424 units, or 28.5%, in the current
quarter compared with the 2004 second quarter. Used vehicle sales revenues also
increased substantially quarter to quarter. The number of used vehicles sold
increased by 1,236 (36.8%) units, retail and wholesale, from 3,359 in 2004 to
4,595 in 2005. Total used vehicle sales revenue increased to $74.0 million in
the 2005 second quarter from $54.7 million in the 2004 comparable period, an
increase of $19.3 million, or 35.3%. Increased unit sales volume was the reason
for growth of used vehicle revenues. Revenue per new vehicle sold decreased by
$1,005 per vehicle in the 2005 second quarter to $28,784 as compared with the
second quarter of 2004's revenue per new vehicle of $29,789. Revenue per used
vehicle sold decreased, on average, by approximately $195 in the 2005 period
from the comparable quarter in the prior year. We believe that during the first
two quarters of 2005, there was a consumer trend toward new vehicle purchases
that will continue as long as manufacturers remain committed to giving new
vehicle purchasers substantial incentives to do so. Also, our ability to sell a
wide variety of quality used vehicles at all price points, plus our ability to
arrange financing for most customers, has enabled us to attract and retain used
vehicle customers and contribute to our growth this period.
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Such a difficult industry to do well in, hence the low PE and low expectations. How much longer can US car manufacturers offer these huge price incentives? I guess if you think longer than one year, then this is a buy. I'm wary of the fundamentals beyond this quarter......I can see why this might only trade at a fair value of 5-10x future earnings. Winter mos are also typically lower sales periods, so they have maybe one more good quarter (Q3) but Q4 will probably be breakeven at best.....
AI
