Oct 21, 2026 earnings call — Earnings and growth from used cars and finance unit
Company reported revenues just shy of $10 billion and adjusted diluted EPS of $10.34 for Q3.
Revenue $9.9B (est $9.7B) · EPS $10.34 (est $9.70)
Key quotes
"Total used gross profit grew 9.3% year-over-year, and used GPU was 1993, led by our core 3 to eight-year-old vehicle category, where GPUs rose 44%."
"Driveway Finance Corporation continues to scale profitably. With managed receivables now at $5 billion and penetration climbing towards our target of 20% or more, DFC is doing exactly what we built it to do,"
"Moving team members onto one AI-native system will take cost and complexity out of the business while freeing up our teams to do what they do best, bond, build trust, and create memorable experiences with each and every customer."
Analyst Q&A 11
Pinewood integration timing and SG&A
Q (Michael Ward · Citi): He wanted the gives and takes on PAG transaction and then asked if Pinewood integration is gradual and if SG&A falls as stores integrate by end of 2028.
A: Management said Pinewood is being rolled out by manufacturer and should finish by the end of 2028. They said SG&A reductions from Pinewood and AI will lag rollout by about 12 to 24 months and the U.K. is already showing early gains.
"The Pinewood integration is being rolled out pretty much by manufacturer because the APIs are developed by manufacturer, and should happen by the end of 2028." — Bryan DeBoer (CEO·CHAIR)
New car GPU and doc fees
Q (Ryan Sigdahl · Craig-Hallum Capital Group): He asked why new car GPU moderated less here than peers and how doc fee enforcement affects GPU and regions.
A: Management said new car GPU held up and that pricing and top-of-funnel demand are strong across regions. On doc fees, they said Lithia and Driveway were in compliance before the FTC clarifications and any store-level changes happened in Q2.
"I think the important thing to note is the FTC's enforcement rules that were clarified in, I believe it was February and March." — Bryan DeBoer (CEO·CHAIR)
Parts & services and capital allocation
Q (Rajat Gupta · JPMorgan): He asked why U.S. aftersales looked sluggish and when it might recover, and separately asked about deleveraging, buybacks, and M&A given leverage above 3x.
A: Management said U.K. aftersales grew from AI-driven presales giving 10%-11% lift, and U.S. aftersales were probably slightly up but facing comps. On capital allocation, they said Lithia generates almost $1.5 billion free cash flow, prefers being below 3x leverage, and will balance buybacks and acquisitions while staying disciplined.
"We do produce almost $1.5 billion in free cash flows a year, and we did delever from 3.2 to 3.1 in the quarter." — Bryan DeBoer (CEO·CHAIR)
Q4 outlook and GPU mix
Q (Jeff Lick · Stephens): He asked how to think about Q4 versus Q3 given demanding comps and whether new model changeovers (2026/2027) could hurt Q4 GPU; also about used unit vs GPU mix.
A: Management said Q4 is their toughest quarter historically and noted seasonality differences across regions. They expect day supply and GPU focus to help Q4 versus last year, see inventories as clean near 60 days, and said core product GPU gains (about $500) offset some certified declines.
"We used to have a Q1 and a Q4 that were our softest quarters by a large amount, like 20%, 25% lower than Q2, Q3." — Bryan DeBoer (CEO·CHAIR)
FTC enforcement and aftersales pricing
Q (Alex Perry · BofA): He asked whether advertised prices were raised to comply with FTC actions and how that affected price competitiveness, and whether aftersales pricing is causing deferrals or share loss.
A: Management said Lithia and Driveway were already in compliance and did not need price adjustments, with full disclosure online and in-store. On aftersales, they said stores should stay affordable using non-OEM parts post-warranty, and MyDriveway portal (156,000 users) helps transparency and offers to retain customers.
"At Lithia and Driveway, we were in compliance with virtually every store." — Bryan DeBoer (CEO·CHAIR)
Sustainability of used car GPU
Q (John Saager · Evercore): He asked if $2,000 used car GPU is a new floor into 2027 and what percent of stores already operate at target.
A: Management said $2,000+ GPU is likely sustainable into 2027 though Q4 can soften seasonally. They estimated less than a quarter of stores currently have efficient micro funnels that sell at market, so many stores still need to improve pricing patience and funnel management.
"I would say looking into 2027, that is absolutely accurate." — Bryan DeBoer (CEO·CHAIR)
Chinese OEMs in Canada and F&I trends
Q (John Babcock · Barclays): He asked about working with Chinese OEMs in Canada and any expansion plans, and about a pullback in F&I products and which products consumers are skipping.
A: Management said Chinese OEMs in Canada want exclusive franchises and real estate costs are about 30% higher, making payback longer; Lithia may adopt a few franchises but is cautious. On F&I, they said DFC penetration helps, but affordability is dragging some optional F&I sales like service contracts and lifetime oil products.
"In Canada, they're looking for exclusive franchises and exclusive locations." — Bryan DeBoer (CEO·CHAIR)
Service price inflation and U.K. business mix
Q (Bret Jordan · Jefferies): He asked how much average repair order price inflation has been year-to-date and how much Chinese brands contributed to U.K. growth.
A: Management estimated technician and parts cost inflation around 4%-5% but called it a rough guess. They said about half of U.K. growth came from Chinese brands while luxury and mainstream franchises also performed well, and Chinese adoption is starting to taper after initial rapid gains.
"It's a total swag, Bret, but I'm going to guess it's something like that." — Bryan DeBoer (CEO·CHAIR)
Agentic AI impact on dealerships
Q (Daniela Haigian · Morgan Stanley): She asked how agentic AI could change vehicle shopping and whether Lithia can use its scale and ecosystem as an advantage.
A: Management said agentic AI should handle repetitive tasks so staff can focus on customer relationships, and that about half of the SG&A improvement to reach sub 60% will come from agentics via presales and service automation. They view agentics as a large opportunity already showing early success in the U.K. and U.S.
"We believe that half of that improvement is going to come from agentics." — Bryan DeBoer (CEO·CHAIR)
DFC profitability drivers and new vehicle affordability
Q (Mark Jordan · Goldman Sachs): He asked why the midterm outlook for income from financing operations rose again and separately whether U.S. new vehicle affordability behavior changed recently.
A: Management said DFC's profitability outlook is driven by preferential portfolio selection with better delinquency/charge-off performance and strong growth approaching $1 billion in originations per quarter. On affordability, they said manufacturers could improve leases to help, but they haven't seen major consumer behavior shifts yet.
"We're really seeing 2 main things that are driving our forward-looking profitability growth." — Chuck Lietz
DFC funding costs and pricing balance
Q (Rob Sussman · UBS): He asked how DFC balances passing higher funding costs to customers versus absorbing costs to drive sales.
A: Management said there's a time lag between funding cost moves and pricing, and DFC supports stores while keeping profitability. They review each contract individually on a fully risk-adjusted NPV basis to ensure it remains profitable for Lithia and Driveway while serving customers and stores.
"we actually look at each contract on an individual basis on a fully risk-adjusted NPV basis to make sure that it is still profitable for Lithia and Driveway" — Chuck Lietz