AutoNation Inc. (NYSE: AN) had a rough Friday. The automotive retailer reported second-quarter results that beat earnings expectations but missed on revenue, and investors weren't in a forgiving mood. Shares dropped about 5% in response.

Here's the breakdown: Adjusted earnings came in at $5.56 per share, edging past the analyst consensus of $5.50. But revenue slipped 1% year over year to $6.93 billion, falling short of the Street's $7.02 billion estimate. Gross profit also took a hit, declining 3% to $1.23 billion. Yet operating income jumped 47% to $319 million, so it wasn't all bad news.

Same-store metrics painted a mixed picture. Same-store revenue fell 2% to $6.82 billion, and same-store gross profit dropped 5% to $1.21 billion. New vehicle retail unit sales at existing stores declined 5%, while used vehicle retail unit sales fell 8%.

CEO Mike Manley pointed to a sharp decline in electric vehicle sales as a key culprit. During the earnings call, he said battery electric vehicle sales fell more than 30% from a year earlier. That drop was partly due to a tough comparison period in 2025, when EV incentives and tariff-related pull-forward demand boosted sales.

Financially, AutoNation remains in solid shape. As of June 30, 2026, the company had total liquidity of $1 billion, including $53 million in cash and $900 million available under its revolving credit facility. During the quarter, it repurchased 800,000 shares for $157 million at an average price of $196.25 per share. AutoNation Finance also expanded its portfolio to $2.7 billion while improving profitability.

Manley emphasized that resilient consumer demand, growth in after-sales, customer financial services, and wholesale parts, along with disciplined capital allocation, continue to support the business. He noted that June marked the strongest seasonally adjusted annual rate (SAAR) for U.S. vehicle sales in four years, and pointed to improving consumer sentiment and stronger lending activity from banking partners.

The after-sales business is a key growth driver, Manley said, because it generates recurring, high-margin revenue. Customer-pay revenue kept rising, supported by repair demand, customer retention, and technician capacity. CFO Tom Szlosek added that after-sales revenue benefited from growth in customer-pay work and wholesale parts. He also said investments in technology, technician hiring, and retention should support mid-single-digit growth in after-sales gross profit.

Management said the wholesale parts business continues to gain market share through a centralized supply chain that improves efficiency and customer service. Szlosek noted that AutoNation Finance continues to grow profitably, supported by portfolio expansion, stable credit performance, and improved funding costs. Manley added that customer financial services remain important because extended service contracts and related products help drive future after-sales revenue and customer retention.

Looking ahead, executives expect second-half vehicle sales to broadly track the markets and brands the company serves. Management said it will continue balancing sales volume, margins, inventory levels, and customer experience with a focus on long-term customer value.

At the time of publication on Friday, AutoNation shares were down 5.27% at $203.35.