Auto retailer Group 1 Automotive Inc. on Tuesday reported a significant rise in second-quarter profit as a result of higher margins on new vehicles and lower costs.

The company said net income increased to $24.7 million, or $1.06 a share, up from $12.8 million, or 54 cents a share, a year earlier. Revenue rose just 3.9 percent to $1.47 billion as shortages of Japanese-brand vehicles crimped the company's sales of new cars and trucks, reported The Wall Street Journal.

But Group 1 was able to command firmer pricing for the cars it had on hand, which increased its margins on new cars and trucks. On average, Group 1 made a gross profit of $2,252 on every new car or truck it sold in the second quarter, $455 more than in the same period a year earlier.

Although the pace of U.S. auto sales slowed in the second quarter, in part because of shortages of Japanese cars and trucks, "Group 1's operating team turned in one of the best profit performances in our company's history," Earl J. Hesterberg, Group 1's president and chief executive, said in a statement. "We were able to generate revenue increases in every business segment, significantly increase our new and used vehicle margins and maintain strong expense controls in a constrained vehicle sales market."

The Houston-based company was able to keep its sales, general and administrative expenses essentially unchanged at $183 million even as revenue rose, fueling an increase in gross profit.

Interest on loans for stocking its dealerships—known as floorplan in the industry—totaled $6.5 million, down 25 percent. After taking into account sales rebates from auto manufacturers, Group 1's net floorplan expenses was just $635,000, a quarter of the year-earlier level.

The company's also recorded lower asset impairment charges than a year ago—$142,000 compared to charges of $1.4 million in the second quarter of 2010.

Group 1, which has 105 dealerships in the U.S. and Britain, is heavily dependent on Japanese manufacturers, whose vehicles accounted for 52 percent of the company's new-vehicle sales in the second quarter. Toyota Motor Corp. alone accounted for 28.5 percent of its new-car sales. Reflecting its reliance on Japanese brands, Group 1's sales of new cars and trucks declined 4 percent in the second quarter to 24,097 vehicles. Sales of used vehicles fell 2.5 percent to 17,200 cars and trucks.

In a telephone interview, Mr. Hesterberg said he expects shortages of vehicles from Toyota and Honda Motor Co. to linger into the third quarter. "It's going to be the latter half of the quarter before we get reloaded on Toyota," he said.

Group 1's earnings follow a similar pattern by other auto retailers experiencing higher margins amid modest growth in vehicle sales. Last week, Penske Automotive Group said its net income rose to $39.6 million from $29.4 million even as new-vehicle sales declined slightly. AutoNation Inc., another major auto retailer, reports its second-quarter earnings on Wednesday.