Oct 23, 2013 01:14 PM EDT
Auto Dealer Ashbury's Sales Slow 'Significantly' in October after Third-Quarter Growth

Ashbury Automotive Group saw slowing sales last month after demand for used cars helped it to report a promising third-quarter profit.

The U.S. auto dealer's shares fell as much as 9 percent, Reuters reported.

Traffic at the company's stores and websites slowed significantly in the first two weeks of October, chief executive Craig Monaghan told analysts in a conference call.

Most of Ashbury's revenue comes from sales of luxury and foreign cars made by BMW, Mercedes-Benz, Honda, Nissan and others. The auto industry took a hit during the government shutdown, which Monaghan said was likely related to the slow in sales. The time of year could also be a factor.

"I think the big question is--was (the fall in sales) the result of the uncertainty in Washington?" Monaghan said. "Or are we, as an industry, moving back to what we've seen historically, where there is a significant seasonality factor?"

Auto sales are typically much slower in the first and fourth quarters than in the second and third, he said.

The company's used-car sales rose 33 percent in the third quarter, which ended Sept. 30, and demand for luxury cars drove up new-vehicle sales by 13 percent, according to Reuters.

Ashbury plans to focus on the used-car market to drive up sales, and the company may set up showrooms to sell only used vehicles.

"...In this lending environment, used cars are financed at very favorable rates and terms," Chief Operating Officer Michael Kearney told Reuters. "(Used cars) will be a big part of our strategy process as we go forward."

Car sales have been boosted recently as more banks loan to borrowers with poor credit profiles. Lending to subprime borrowers stopped after the start of the credit crisis in 2008.

U.S. banks made 36 percent of their car loans to such borrowers in the second quarter of this year, up from 34 percent a year earlier, according to data released in September by Experian Plc , which tracks credit information and data on nearly 700 million vehicles in North America.

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