Demand for used automobiles stays robust though the value of preowned automobiles has soared all through the Covid pandemic, Group 1 Automotive CEO Earl Hesterberg instructed CNBC on Thursday.

Hesterberg mentioned on “The Change” that Group 1 has largely been capable of increase sticker costs to offset larger acquisition prices as a result of there are prospects prepared to purchase them. It helped the corporate obtain file profitability in 2021.

Regardless of Group 1’s capability to efficiently defend its margins, Hesterberg prompt there could also be some extent at which demand cools.

“I do not know that we will do this indefinitely, and we transfer them fairly shortly,” he mentioned. “Usually we now have solely a couple of 30-day provide of used automobiles, so we will react fairly shortly to market worth adjustments.”

There is a mindset amongst some folks that proper now could be the “finest time ever” to promote a automobile, Hesterberg mentioned, which has each helped and complex build up Group 1’s used automobile fleet.

“These automobiles are value some huge cash. … We have needed to be a bit of extra inventive in sourcing, however we have been capable of preserve our stock fairly close to supreme ranges,” Hesterberg mentioned.

Group 1 had 36 days of used automobile stock as of Dec. 31, in contrast with 32 days of stock on the similar level in 2020, in accordance with the corporate’s earnings report issued Thursday. New automobile stock stood at 9 days as of Dec. 31, in contrast with 48 days of stock in 2020.

Group 1’s inventory dropped greater than 5% on Thursday, at the same time as its earnings got here in higher than anticipated for the fourth quarter. U.S. shares fell on Thursday after the buyer worth index report for January revealed a 7.5% soar for the reason that yr earlier than, marking the largest rise since 1982.

Thursday’s inflation studying has precipitated some on Wall Avenue to consider the Federal Reserve will act extra aggressively in elevating rates of interest. The central financial institution is predicted to take action at its March coverage assembly after which a number of occasions all year long.

Hesterberg mentioned that he is not too involved in regards to the influence larger rates of interest could have on demand for each used and new automobiles.

“The buyer has cash and so they wish to spend the cash. They want to be shopping for extra automobiles than we will provide. It is by no means good when rates of interest go up, however they’re simply so low,” in comparison with historic averages, Hesterberg mentioned. He added that even when charges do soar up for auto loans, automobile producers can offset a few of these prices by incentives to maintain gross sales flowing.

“I do not see that being a headwind for us both within the close to time period,” he mentioned.