What happened?

Shares of Lithia Motors Inc. (NYSE:LAD), one of the largest auto dealership groups in the U.S. with roughly 182 nationwide locations, were up more than 16% as of 12:15 p.m. EDT Wednesday, after the company delivered a better-than-expected third-quarter earnings report before the bell.

So what

Lithita Motors' Q3 revenue checked in at $3.09 billion, well above the $2.69 billion it took in a year earlier, but still just below analysts' consensus estimate. The bottom-line figure of $2.83 in adjusted earnings per share, however, topped the prior year's $2.18 mark and also beat analysts' expectations for $2.58 per share. Total same-store sales during Q3 rose a modest 1% from the prior-year period.

Rows of cars at a dealership lot

Image source: Getty Images.

"We achieved record results in the third quarter driven by strong top line growth," said President and CEO Bryan DeBoer in a press release. "Total revenue and gross profit both increased over 15%, and adjusted EPS grew 30%. We are seeing traction in realizing the over $250 million of store earnings potential as operations continue to season and stabilize."

Now what

Lithia's reach includes roughly 80% of consumers in the U.S., but with the domestic automotive market slowing after almost a decade of rising sales, automakers and dealerships must find creative ways to drive growth. One example is the partnership Lithia inked in Q3 with Shift Technologies, a digital purchase and selling platform that provides vehicle pickup and delivery to a customer's location. But further innovations will be needed.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.