Can AutoNation’s (AN) Used-Car Lending Approach Redefine Affordability for the Aging Vehicle Market?

• AutoNation recently addressed the used vehicle financing landscape, highlighting that high loan-to-value ratios on older models are less problematic than widely assumed and that customers can still secure financing despite elevated prices due to dealership reconditioning.
• This perspective, echoed by Lithia Motors, suggests continued consumer access to credit for "value" used vehicles, which may support ongoing demand and ease prior concerns about affordability in the aging vehicle segment.
• We'll explore how AutoNation’s positive stance on accessible used-vehicle financing may influence its long-term growth expectations and business outlook.

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AutoNation Investment Narrative Recap

To be a shareholder in AutoNation, you need to believe that its dealership network, focus on after-sales, and efforts in used vehicle sourcing and financing can offset disruption from digital competitors and shifts in consumer vehicle preferences. The recent update around used car financing should alleviate some immediate fears about demand or margin pressure, but it does not materially change the primary catalysts or the core risks linked to margin compression due to rising digital competition. Of recent announcements, the $700 million asset-backed securitization deal completed this May stands out as most relevant. This transaction, which supports AutoNation’s automobile loan portfolio, reinforces the company's commitment to making used vehicle financing accessible, aligning closely with its optimistic stance on credit availability for “value” models in the current market. However, in contrast to improving access to used car credit, investors should be aware of how rising digital retail competition could still impact…

Read the full narrative on AutoNation (it's free!)

AutoNation's narrative projects $29.9 billion in revenue and $871.6 million in earnings by 2028. This requires 2.9% yearly revenue growth and a $237.8 million increase in earnings from $633.8 million today.

Uncover how AutoNation's forecasts yield a $233.00 fair value, a 8% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community fair value estimates for AutoNation, ranging from US$233 to US$347.85 across two contributors, highlight varying views on company prospects. While opinions differ significantly, margin pressure from digital-first competitors remains a persistent theme, consider how this could influence longer-term industry profitability as you review the data.

Explore 2 other fair value estimates on AutoNation - why the stock might be worth as much as 62% more than the current price!

Build Your Own AutoNation Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your AutoNation research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free AutoNation research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AutoNation's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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