CHARLOTTE, N.C., Dec 17 (Reuters) - Auto dealer Sonic Automotive Inc. said on Tuesday it was lowering earnings estimates for the fourth quarter and all of 2003 on slower than expected sales of new vehicles.
Sonic said it was expecting fourth-quarter earnings of 48 cents a share to 52 cents a share, down from its previous forecast of 62 cents a share to 66 cents a share. For 2003, Sonic reset its earnings target to $2.70 per share to $2.80 per share, instead of $2.95 per share to $3.05 per share.
Sonic cited "a slower new vehicle sales environment, particularly in our domestic franchises," as the reason for lowering its estimates. U.S. new vehicle sales hit their lowest rate in four years in October and rebounded only slightly in November, when Detroit's Big Three automakers hit a record low for market share.
Another dealer group, Group 1 Automotive Inc., said last week it was also lowering earnings estimates due to disappointing new vehicle sales. While new vehicles often provide the largest revenue stream for dealers, other businesses such as used cars, service and financing provide larger margins.
Sonic said it would reduce its new vehicle inventory levels to cut costs, along with undertaking other unspecified cost cuts. The company has 188 new-vehicle franchises.