ABG
#This is <UNK>, I will take the first shot and maybe <UNK> would want to jump in.
Years ago, it would've been because of cost the sale but now the cost of sales has come up so much one preowned vehicles that it really isn't impactful.
And we think our fourth-quarter numbers is the number that we can sustain.
Thanks.
<UNK>, that's a great question, but one that is difficult for us to answer.
We are just a retailer.
We run car stores.
We look at some of the same economic forecasts that the large banks put together, people like yourselves.
In our guts, we certainly feel that if new car prices are going to go up because of tariffs and we've seen estimates that say they could go up on average of $2000 a car, some much more.
Obviously, we think that's going to have some impact on sales volumes.
SAR will fall.
How far it would fall we don't know.
Like I said earlier, we're just paying close attention to what is happening in Washington, and we'll be prepared to adjust to whatever comes our way.
Hi, Liz, this is <UNK>.
Basically all our long-term debt is fixed effectively, and our new floorplan is LIBOR-based and it's floating.
We carry about $800 million of floorplan at the end of the fourth quarter.
There's clearly an advantage that we enjoy because we can sell a CPO unit.
And with all these vehicles coming off lease, they fall right into that sweet spot.
Stop-sale has been brand specific with respect to its impact.
I feel that to a large extent that issue is behind us.
Like <UNK> said, we do have some brands ---+ really, we are down to the point were essentially where one brand holds half of our stop-sale vehicles.
So that's causing some disruption, but it's not material to us from an overall perspective.
<UNK>, I don't know if you want to talk in more detail about the off lease and how we might move that through the system.
The only comment I'd make is that the inventory is plentiful.
To acquire it is easy.
Is there a benefit from a large group to a smaller group.
There should be, because it gives you the ability to move inventory around between stores and easier access for other stores to get brands or inventory that they maybe wouldn't have access to get.
But generally speaking our goal is to turn the inventory every 30 days, so there are cars that, from an appetite perspective, we might be able to turn but we can't turn them in a timely manner so we don't acquire them.
We let them go.
But it's a good time to be opportunistic, to buy what you need and what you want, so you can turn it in a timely manner.
I can't give you an exact number, I don't have it in front of me, but I can tell you generally speaking, your profits are larger when you take a vehicle in trade than when you acquire one at auction.
When you think about the auction concept there's a lot of competition there.
If you leave with 10 vehicles it just means no one would pay more than you would for those 10 vehicles.
So naturally your gross profits are going to be better on the cars that you traded at your door.
Let me start, and then maybe <UNK> can get into the details.
On that divestiture we gave up five franchises.
There were some body shops in there as well, and essentially we replaced it with one large store.
Typically a larger store is going to be much more efficient and we are going to get better flow-through, better net-to-gross, and so the SG&A's going to look better.
And philosophically we like that kind of a concept.
<UNK>, I don't know if you can add any more specific color.
<UNK>, we disclosed in our release and our financials ---+ we do SG&A on a same-store and all-store basis.
And the improvement of SG&A on a same-store basis was similar in nature to what you saw on an all-store basis and actually even stronger.
We've had a great run of SG&A.
I think we have a focus here, and it's a cultural focus.
It's not just a finance team focus but it's all the way to the operational team.
And it starts from the top, and we're always focused on continuous improvement.
So we are proud of where we are from a SG&A perspective.
It's <UNK>.
One of the things we do is manage a portfolio of stores.
There are sometimes opportunities for us to divest stores at prices that are very attractive and potentially prices that are greater than where we trade.
And if we can ---+ and an asset that like we said earlier we don't think we can necessarily get it to the level of efficiency that we can get some of the larger stores to.
So in this case selling those stores made economic sense to us from a shareholder value perspective.
And the beauty of the transaction was we could then turn around and reinvest a portion of the proceeds and buy a store that we think we can run, and currently run at a very attractive level of efficiency.
And roll that into the portfolio and be better off.
<UNK>, this is <UNK>, I don't think those are really factors at the end of the day or at least as it pertains to us.
We are lucky to have good operators and people in our stores running the business.
They've really got their arms around this and focused on growing the CPO business.
And I think it is just a collective effort that we've been focused on the last four months and we just starting to see some of the benefits.
Folks, that wraps of our call for today.
We appreciate you joining us and look forward to talking to you next quarter.
