U.S. auto retailer AutoNation posted better-than-expected revenue in the second quarter on Friday, as demand for new vehicles and aftermarket services offset the impact from falling used-vehicle sales.

Demand for used vehicles, which accelerated during the pandemic, has taken a hit after automakers started to ramp up production as the global supply chain crisis gradually eases. That has helped companies such as AutoNation to boost their new-vehicle deliveries to customers.

Besides, consumers' preference to buy vehicles with advanced safety technology and a lower turnover for newer models in the pre-owned market have also dented demand for used vehicles.

AutoNation said its second-quarter unit sales of new retail vehicles rose 8%, while unit sales of used vehicles fell 11%.

Demand for personal transportation remains strong, it said.

The company's overall revenue for the quarter was $6.89 billion, higher than analysts' average estimate of $6.78 billion, according to Refinitiv data.

The slump in used vehicle demand, dubbed as "used-vehicle recession" by an analyst, has rippled across the sector, hurting profits at retailers such as CarMax and Carvana.

AutoNation's selling, general and administrative expenses were 63.1% of gross profit in the quarter ended June 30, compared with 55.4% a year earlier.

The company's quarterly net income dropped to $272.5 million, or $6.02 per share, compared with $376.3 million, or $6.48 per share, a year earlier.

Excluding items, it reported a profit of $6.29 per share. Analysts on average expected $5.91 per share. It was not immediately clear if the figures were comparable.

(Reporting by Nathan Gomes and Raechel Thankam Job in Bengaluru; Editing by Shilpi Majumdar)