Group 1 Reports Record U.S. Parts & Service Revenue Growth

Group 1 Automotive’s total parts and service revenue rose 5.6% to $369.17 million in the first quarter of 2019, primarily driven by growth in the United States and United Kingdom that was partially offset by a decline in the company’s Brazil business. Total same-store parts and service revenue growth was 6.1%. In constant currency, total same-store revenue growth was 7.7%.

Same-store U.S. parts and service revenue climbed 6.8% to $293.98 million, reflecting …
• A 7.6% increase in customer-pay parts and service revenue (a new record).
• A 12.2% rise in warranty parts and service revenue.
• A 2.8% uptick in wholesale parts revenue.
• A 3.1% increase in collision revenue.

A key factor in the company’s customer-pay parts and service revenue growth was the rollout of a four-day work week schedule. This has, according to Group 1, increased capacity and efficiency in a “significant number” of its service departments, and allowed them to improve recruiting and retention of technicians and service advisors. Management expects to have roughly 85% of its U.S. parts and service operations (by revenue) on the four-day work schedule by the end of the third quarter.

Same-store U.S. parts and service gross profit rose 7.5% to $158.03 million, while gross margin increased from 53.4% to 53.8% on a year-over-year basis. While the company reported growth in all sectors of the business, the increase came primarily from improvements in customer-pay and warranty.

For the full year, management expects Group 1’s U.S. parts and service revenue to grow in the mid-single digits.

Houston-based Group 1 owns and operates 181 automotive dealerships, 233 franchises and 47 collision centers in the United States, United Kingdom and Brazil.