HOUSTON -

Though executives acknowledged on Thursday’s quarterly conference call that used-vehicle supply and pricing are likely to continue to be challenging, Group 1 Automotive celebrated a double-digit spike in fourth-quarter used sales on its way to achieving what was the most profitable year ever for the dealership group.

Group 1 capped its best-ever year with a 14-percent hike in retail used-vehicle gross profit in the fourth quarter, spurred by used retail revenue that was 16.8 percent higher at $362.9 million.

The company moved 17,775 used units during the period, up 12.7 percent year-over-year.

Additionally, total used-vehicle margins (including retail and wholesale) came in a 6.9 percent, a gain of 10 basis points. Senior vice president and chief financial officer John Rickel said during the call that  this margin gain is “reflecting a slight increase in the percent of used units acquired via trade-in.”

For the full year, used retail revenue climbed 11.2 percent at $1.4 billion, with used retail sales climbing 6.8 percent at 70,475 units.

All of this used retail strength occurred in a market where was supply was tough and appears to remain that way.

“It’s still hard to find good used cars. We’re getting more trade-ins as the new-vehicle market improves … but the age of some of these trade-ins, many of them aren’t really retail(-worthy) or they’re low-dollar units that don’t hit the fat part of our target market for used-vehicle retail,” Group 1 president and chief executive officer Earl Hesterberg said on Thursday’s call.

“So, I think the used-car pricing will probably stay firm this year and it’s still going to be a challenge to get enough high-quality used cars for retailers such as ourselves,” he added.

Sharing overall results, Group 1’s adjusted net income for full-year 2011 hit an all-time high of $86 million, a 38.3-percent hike from 2010. Yearly revenues came in at $6.1 billion, marking a 10.4-percent increase.

As for the fourth quarter, adjusted net income was a best-ever $22 million, up 49.3 percent year-over-year. Quarterly revenue was $1.6 billion, up 13.1 percent.

“I am proud of the record fourth-quarter and full-year results that Group 1 reported today, especially given the supply challenges we faced with most of our Japanese brand stores for the majority of the year and in a sales environment that was about 25 percent lower than our previous record year in 2006," stated Hesterberg

“The strong results reflect the strength of our operating team as well as the significant improvements we have made to our operating model during the past several years,” he continued. “These improvements should continue to deliver operating leverage as new-vehicle sales increase to a more normalized 15 million to 16 million unit selling environment in the next few years. Looking ahead, we anticipate new vehicle industry sales will increase by more than one million, to 14 million, units in 2012.”