AutoNation, Inc. (AN) reported fourth-quarter results on Friday that tell an interesting story about the automotive retail business right now: selling cars is tough, but servicing them is absolutely booming.

The company posted adjusted earnings per share of $5.08, up 2% year over year and comfortably ahead of the analyst consensus estimate of $4.85. Revenue came in at $6.929 billion, missing expectations of $7.200 billion and down 4% from the prior year. The culprit? Fewer people buying cars, both new and used.

Quarterly gross profit declined 2% year over year to $1.214 billion, while same-store gross profit fell 4% to $1.188 billion, driven by lower vehicle unit sales and shrinking profit per unit. Adjusted operating income slipped 7% to $335.1 million.

AutoNation closed the quarter with $58.6 million in cash and equivalents and $3.405 billion in inventory. The company continued its aggressive capital return strategy, buying back 1.7 million shares for $350 million (or $209 per share) during the quarter. For the full year 2025, share repurchases totaled $785 million, shrinking the share count by 10%.

The Vehicle Sales Picture Looks Rough

Same-store unit sales tell the tale: new vehicle retail dropped 10% year over year, while used vehicle retail fell 5%. The company noted that new vehicle volumes faced difficult comparisons and were hurt by higher sales earlier in 2025 as buyers rushed to beat tariffs and snapped up electric vehicles before government incentives expired.

But the Service Business Is Crushing It

Here's where things get interesting. AutoNation's after-sales division delivered same-store revenue growth of 4% and record gross profit growth of 4% year over year. Customer Financial Services wasn't far behind, posting total unit profitability growth of 8% in the quarter.

This matters because it demonstrates the value of AutoNation's diversified business model. When car sales slow down, the service bays and financing operations can pick up the slack.

Management Commentary

"We are pleased to report another quarter of strong performance with record gross profit in After-Sales and unit profitability in Customer Financial Services. For the full year, we grew unit volume for both new and used vehicles, increased revenues across all our business lines and grew gross profit for After-Sales, Customer Financial Services and Used vehicles," said Mike Manley, CEO of AutoNation.

"AutoNation Finance continued to scale, growing the portfolio to $2.2 billion while improving profitability and funded status. AutoNation's multiple revenue streams, flexible cost structure, cash flow generation, and investment grade balance sheet position us to continue delivering strong results and deploying capital to generate attractive shareholder returns."

AN Price Action: AutoNation shares gained 2.96% to $210.06 during Friday's premarket trading session.