(Reuters) -U.S. auto retailer Lithia Motors (NYSE:LAD) Inc's quarterly results handily beat Wall Street expectations on Wednesday, helped by tight vehicle inventories that have pushed car prices to record levels.
The company's shares rose 5.7% to $358.00 premarket.
A global semiconductor shortage has forced dealers and automakers to operate with far leaner inventories than usual and has made buyers pay record prices for the vehicles of their choice.
The average retail price for new vehicles hit new highs every month during the quarter, according to auto consultant J.D. power, boosting profits at auto retailers as demand for personal transportation remains high.
Lithia, the first large U.S. auto retailer to report third-quarter results, said its quarterly profit nearly doubled as gross profit per new vehicle jumped 78.7% to $5,221.
"Profit margins per vehicle may get even stronger in the near term, as consumer demand for vehicles is very strong right now amid tight supply," Guggenheim Securities analyst Ali Faghri said.
The Oregon-based company's average gross profit for used vehicles, on the other hand, rose 3.9% to $3,046.
Lithia's quarterly revenue rose about 70% to $6.17 billion, beating analyst estimates of $5.8 billion, according to Refinitiv IBES.
Net income rose 94% to $307.9 million, or $10.11 per share, for the quarter ended Sept. 30.
Excluding items, company earned $11.21 per share, beating expectations of $9.28 per share.