Lithia Motors Q2 Earnings Call Highlights

Lithia Motors Q2 Earnings Call Highlights Lithia Motors Q2 Earnings Call Highlights Record Q2 revenue reached $9.8 billion , while adjusted diluted EPS rose 9% year over year to $10.03 despite a 1.6% same-store revenue decline and a difficult comparison with Q2 2025. Used-vehicle profitability improved, with gross profit per unit rising to $2,019, while after-sales remained the largest profit contributor as gross profit increased 3.1% and margins expanded to 59.2%. Driveway Finance more than doubled financing-operations income to $37 million, and Lithia returned over $560 million to shareholders in the first half through buybacks and dividends; the company also plans a North American rollout of Pinewood.AI to reduce technology costs. Lithia Motors NYSE: LAD reported record second-quarter revenue of $9.8 billion and adjusted diluted earnings per share of $10.03, up 9% from a year earlier, as used-vehicle profitability, after-sales margins and Driveway Finance Corporation income supported results in what management characterized as a dynamic market environment. President and Chief Executive Officer Bryan DeBoer said the company’s diversified operating model contributed across its businesses during the quarter. Same-store revenue declined 1.6% and total gross profit fell 2.7% against what he described as the company’s toughest comparison of the year, following an exceptionally strong second quarter of 2025. However, total vehicle gross profit per unit rose to $4,119, an increase of nearly $200 from the first quarter. Used Vehicles and After-Sales Support Profitability Used-vehicle gross profit increased 1.2% year over year, helped by a $339 sequential increase in used-vehicle gross profit per unit to $2,019. DeBoer attributed the improvement in part to the company’s dynamic-pricing efforts and said Lithia was working to balance sales volume and margins. Management said it expects used-vehicle volumes to range from flat to up mid-single digits during the second half, with stores targeting 3% to 5% growth. DeBoer noted that certified pre-owned vehicles accounted for more than 40% of the company’s used-vehicle sales mix during the quarter. He also identified older vehicles as an opportunity, saying vehicles more than nine years old represent 63% of U.S. used-vehicle sales, while only 17% of Lithia’s mix falls in that category. New-vehicle revenue declined 1.5% as unit sales fell 2.2% on a same-store basis. New-vehicle gross profit per unit was $2,718, essentially flat from the first quarter and marking the third straight quarter of stability, according to DeBoer. Imports posted 5% growth, while domestic and luxury sales declined 7% and 4%, respectively. After-sales remained the company’s largest gross-profit contributor, accounting for 42.2% of gross profit. After-sales gross profit increased 3.1% on revenue growth of 1%, while margins expanded 120 basis points to 59.2%. Customer-pay gross profit grew 2.6% and warranty gross profit rose 5.4%. DeBoer said the margin gains reflected a greater labor mix as vehicle propulsion systems diversify, along with longer warranty periods. He added that electrified vehicles represented nearly 55% of Lithia’s new-vehicle sales in the quarter, including hybrids that accounted for 46.5% of total new-vehicle sales. Cost Actions and Pinewood.AI Rollout Adjusted selling, general and administrative expense as a percentage of gross profit was 68.6%, an improvement of 290 basis points from the first quarter. Chief Financial Officer Tina Miller said same-store SG&A dollars declined year over year, while personnel expense, the company’s largest cost category, improved by 30 basis points as a percentage of gro...