“Group 1 Automotive reported record full-year revenues of $22.6 billion in 2025, up 13.2% year-over-year, driven by strong growth in parts and service, which hit $1.6 billion in gross profit. Adjusted diluted EPS reached $40.71, a 3.8% increase, despite Q4 challenges including non-cash impairments of $192.8 million for the year. U.S. operations showed resilience with aftersales growth, while U.K. faced macroeconomic headwinds, prompting restructuring. Management emphasized AI-driven productivity gains, strategic acquisitions, and aggressive share repurchases, positioning for organic growth in 2026 amid affordability concerns and evolving vehicle markets.”
Financial Performance
Group 1 Automotive capped off 2025 with unprecedented financial milestones, underscoring the resilience of its diversified business model in a volatile automotive landscape. Full-year revenues climbed to $22.6 billion, marking a robust 13.2% increase from the previous year, fueled by expansions across all core segments. Gross profit surged to a record $3.6 billion, reflecting an 11.8% year-over-year gain, with the parts and service division emerging as a standout performer at nearly $1.6 billion in gross profit, up 15.9%.
On the earnings front, adjusted net income from continuing operations stood at $524.5 million, while adjusted diluted earnings per share rose 3.8% to $40.71. However, GAAP figures were tempered by significant non-cash asset impairments totaling $192.8 million for the year, primarily concentrated in the U.S. Audi brand and select markets like Maryland and D.C., resulting in GAAP diluted EPS of $25.13 from continuing operations.
In the fourth quarter, revenues edged up 0.6% to $5.6 billion, but gross profit dipped slightly by 0.5% to $874.4 million. Adjusted diluted EPS for the quarter came in at $8.49, down from $10.02 the prior year, with GAAP EPS at $3.47 amid $68.2 million in Q4 impairments. Unit sales presented a mixed picture: new vehicle units fell 5.0% to 55,035, while used retail units ticked up 0.2% to 55,474.
The following table outlines key consolidated financial metrics for Q4 and full-year 2025 compared to the prior year:
| Metric | Q4 2025 | Q4 YoY Change | FY 2025 | FY YoY Change |
|---|---|---|---|---|
| Total Revenues | $5.6B | +0.6% | $22.6B | +13.2% |
| Total Gross Profit | $874.4M | -0.5% | $3.6B | +11.8% |
| New Vehicle Units Sold | 55,035 | -5.0% | 224,166 | +10.1% |
| Used Retail Units Sold | 55,474 | +0.2% | 234,906 | +12.0% |
| Parts & Service Gross Profit | $394.2M | +6.3% | $1.6B | +15.9% |
| Adjusted Diluted EPS (Continuing Ops) | $8.49 | -15.2% | $40.71 | +3.8% |
| GAAP Diluted EPS (Continuing Ops) | $3.47 | -51.0% | $25.13 | -31.6% |
Finance and insurance (F&I) income per retail unit (PRU) continued to bolster profitability, with U.S. F&I GPUs increasing nearly 3% or $67 on a reported basis, and U.K. same-store F&I PRU advancing 13% to $1,060. These gains highlight effective product penetration strategies amid shifting consumer preferences.
Operational Highlights
Operationally, Group 1 Automotive demonstrated agility in navigating post-pandemic normalization and regional disparities. The company sold a combined 459,072 new and used vehicles for the year, underscoring its scale as one of the largest automotive retailers in the U.S. and U.K. Emphasis on aftersales proved pivotal, with parts and service revenues driving consistent margins less susceptible to vehicle sales fluctuations.
In the U.S., aftersales gross profits soared, supported by a 2.3% increase in same-store technicians and double-digit growth in customer pay and warranty revenues. Used vehicle revenues jumped 41% year-over-year, though same-store gross profit per unit (GPU) declined 8% due to elevated acquisition costs. New vehicle dynamics reflected a return to pre-COVID norms, with disciplined inventory management helping stabilize pricing in luxury segments.
U.K. operations contended with broader economic softness, including stagnant growth, persistent inflation, and competitive pressures from new market entrants like Chinese OEMs. Same-store new vehicle volumes dropped 8.2%, with GPUs down 3.2% in local currency, contributing to an 11% revenue decline. Used vehicle revenues grew 9% on a same-store basis, but GPUs fell nearly 19%, prompting intensified focus on sourcing and pricing discipline.
To counter these headwinds, the company executed significant restructuring in the U.K., reducing headcount by 537 positions, consolidating customer contact centers from 10 to two, and onshoring transactional accounting. Technician counts rose 9.5% on a same-store basis, boosting repair order counts by 36% and elevating the customer pay mix by nearly 6 percentage points. Service pricing was recalibrated to align more closely with aftermarket rates, and diagnostic fees were phased out for many brands to enhance customer retention.
AI integration emerged as a transformative theme, permeating every facet of operations. Virtual F&I processes were rolled out nationwide in the U.S., slashing transaction costs while maintaining compliance. Sales lead management leveraged AI for predictive analytics, drawing on owned customer data to optimize marketing spend. Technician management tools reduced turnover by 10 percentage points, and aftersales AI applications enabled 6% customer pay growth and 9% warranty expansion with only a 2.5% increase in technicians. These initiatives not only curbed costs but also amplified productivity, positioning the company to capture organic growth opportunities.
U.S. Operations Deep Dive
The U.S. segment, which accounts for the bulk of Group 1’s footprint, exhibited steady performance despite affordability challenges weighing on consumer demand. New vehicle sales faced headwinds from normalizing volumes and GPUs, particularly in luxury brands, but strategic acquisitions bolstered the portfolio. Notable additions included Lexus and Acura dealerships in Fort Myers, Florida, a Mercedes-Benz outlet in Austin, Texas, and another in Atlanta, Georgia, enhancing geographic diversity and brand mix.
Used vehicle strength was a bright spot, with revenues and volumes holding firm through scale advantages and AI-assisted auction sourcing. F&I performance remained robust, with GPUs up $65 on a same-store basis, driven by higher adoption of extended warranties and protection products. Aftersales momentum was evident in warranty and customer pay surges, attributed to improved technician efficiency and fixed absorption rates.
Adjusted SG&A as a percentage of gross profit climbed 200 basis points sequentially to 67.8%, influenced by rising employee expenses, but management targets mid- to high-60% levels annualized, leveraging AI to streamline back-office functions.
U.K. Operations Deep Dive
In the U.K., macroeconomic turbulence and regulatory shifts, including battery electric vehicle (BEV) mandates, tested operational resilience. The market saw new vehicle sales contract overall, with Chinese OEM market share stabilizing below 12% in Q4 after earlier gains. Group 1’s luxury-focused lineup provided a buffer, as Chinese brands primarily targeted mass-market segments via dealer networks.
Restructuring efforts yielded tangible improvements, with SG&A declining year-over-year despite inflationary pressures and nonrecurring costs. The long-term goal is to compress SG&A to 80% of gross profit, with quarterly variations around plate-change periods. Used GPUs, while down, are expected to rebound through enforced discipline in acquisition and pricing.
F&I PRU gains of $123 underscored better product bundling, while aftersales growth stemmed from technician expansions and mix shifts toward higher-margin customer pay work. Discussions to exit the Jaguar Land Rover (JLR) brand are progressing, part of broader portfolio optimization to prioritize profitable franchises.
Capital Allocation and Balance Sheet
Group 1 maintained a disciplined approach to capital deployment, prioritizing shareholder returns. Acquisitions totaled $640 million, adding $40 million in annualized revenues, while 13 dealership dispositions—encompassing 32 franchises and $775 million in annualized revenues—streamlined underperforming assets, mainly in the U.K.
Share repurchases were aggressive, with 1.3 million shares bought back for $554.8 million, representing over 10% of outstanding shares. An additional 71,750 shares were repurchased post-Q4 for $28.3 million. Dividends amounted to $26 million, reinforcing commitment to total returns.
The balance sheet remains solid, with $883 million in liquidity, including $537 million in accessible cash and $346 million on the acquisition line. Rent-adjusted leverage stood at 3.1 times, below the target ceiling, while adjusted operating cash flow reached $699 million and free cash flow $494 million after $205 million in capital expenditures.
Forward Outlook
Looking to 2026, management anticipates full realization of 2025 U.K. restructuring benefits, including cost savings from headcount reductions and operational consolidations. U.S. organic growth is projected in aftersales, F&I, and used vehicles, buoyed by anticipated increases in lease returns (30-40% of used supply) that could enrich inventory quality and profitability.
Uncertainties loom, such as potential tariffs, EV tax credit expirations, and economic headwinds, but focus remains on controllables like AI productivity, inventory discipline, and acquisition integration. EV mix was low at 1.3% in Q4, with improved margins, and tax refund seasons may support used market demand. Capital priorities favor accretive acquisitions, continued buybacks, and leverage below 3 times.
Insights from Q&A
Analysts probed impairments, confirming they were U.S.-centric, tied to Audi and regional markets, with U.K. impacts isolated to prior quarters. On AI, executives detailed its role in reducing F&I costs, enhancing sales CRM, curbing technician turnover, and optimizing marketing through predictive tools.
U.K. restructuring was described as in “earlier innings,” with 2026 set to capture full savings, though not at 2025’s $28 million scale. Chinese OEM influences were downplayed, with share plateauing and minimal overlap in luxury segments.
Used GPU trajectories were optimistic, with U.S. expected to firm amid better inventory and new products, and U.K. through pricing rigor. Divestitures in 2025 were an outlier, with fewer anticipated in 2026, and capital allocation tilting toward growth and buybacks over deleveraging.
Overall, the call painted a picture of strategic fortification, with AI and restructuring paving the way for sustained value creation in a normalizing industry.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendations, or endorsements. All data and opinions are based on publicly available information and should not be relied upon for making decisions. Consult professional advisors for personalized guidance.
