AutoNation’s (NYSE: AN) President and Chief Operating Officer; William Berman, unexpectedly resigned after just three months on the job. Berman was promoted to president in February but resigned on May 15.
No reason was given for Berman’s departure, The Sun-Sentinel reported. Instead AutoNation CEO Mike Jackson simply thanked Berman for his service in a press release.
The company’s public relations officer refused to comment on the resignation which was apparently unexpected, when contacted by reporters. No announcement about a replacement for Berman was made.
AutoNation is Making Less Money
AutoNation has been struggling to maintain its’ income in an increasingly cut throat automotive business.
During 2016 its’ net income fell from a peak of $461.8 million in September 2015 to $412.7 million in September, ycharts data indicate. Despite that loss, the income recently recovered to $432.7 million March 2017.
AutoNation’s revenues have been growing, the company added $610 million in revenue over the course of 2016. The dealership chain started the year with $20.86 billion in revenues in December 2015 that rose to $21.61 billion a year later. The growth has continued into the New Year, revenues rose again to $21.63 billion in March 2017.
Even though AutoNation is making money its’ been struggling to convince Mr. Market of its value. The company’s share price fell from a high of $53.01 on January 24, 2017, to $40.79 on May 16, 2017. The market capitalization has dropped from $7.133 billion on December 1, to $4.128 billion May 16, 2017.
Did Wall Street Dump AutoNation because of Used Cars?
The decline has been fueled by growing hysteria about an impending fall in auto sales on Wall Street. Investors might also be unhappy about the company’s new focus on used car sales just as analysts are predicting a major drop in used car prices.
Preowned vehicles might lose up to 50% of their value over the next five years, Morgan Stanley analysts predicted. Car values will drop because of high volumes of trade-ins and new technology that will make older vehicles less desirable to buyers.
AutoNation is America’s largest operator of new-car dealerships with 372 sales operations. It is also reeling from a 21% drop in domestic vehicle sales during first quarter 2016.