AUTONATION INC

Previous wording

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of June 30, 2024, we owned and operated 347 new vehicle franchises from 251 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well known in our key markets, sell 32 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 88% of the new vehicles that we sold during the six months ended June 30, 2024, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of June 30, 2024, we also owned and operated 52 AutoNation-branded collision centers, 23 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company.

Current wording

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of September 30, 2024, we owned and operated 328 new vehicle franchises from 243 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well known in our key markets, sell 32 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 88% of the new vehicles that we sold during the nine months ended September 30, 2024, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of September 30, 2024, we also owned and operated 52 AutoNation-branded collision centers, 23 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company.

Previous wording

For the six months ended June 30, 2024, new vehicle sales accounted for 47% of our total revenue and 16% of our total gross profit. Used vehicle sales accounted for 30% of our total revenue and 9% of our total gross profit. Our parts and service operations, while comprising 18% of our total revenue, contributed 46% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 28% of our total gross profit.

Current wording

For the nine months ended September 30, 2024, new vehicle sales accounted for 47% of our total revenue and 16% of our total gross profit. Used vehicle sales accounted for 30% of our total revenue and 9% of our total gross profit. Our parts and service operations, while comprising 18% of our total revenue, contributed 47% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 28% of our total gross profit.

Previous wording

Although still below historical levels, new vehicle inventory levels continued to increase during the second quarter of 2024 due to higher levels of manufacturer vehicle production. The increasing supply and availability of new vehicle inventory, which varies by make and model, has resulted in moderation of new vehicle unit profitability, which we expect will continue throughout 2024. Additionally, the increased availability of new vehicles and an increase in manufacturer new vehicle incentives, including low-interest financing and customer rebates, has adversely impacted market demand for used vehicles, particularly for higher-priced, nearly new vehicle inventory, and stabilization of used vehicle value trends, as compared to the prior year period, has resulted in moderation of industry used vehicle unit profitability.

Current wording

In the third quarter of 2024, U.S. industry retail new vehicle unit sales decreased approximately 2%, as compared to the third quarter of 2023. Although still below historical levels, industry new vehicle inventory levels continued to increase during 2024 due to higher levels of manufacturer vehicle production. The increasing supply and availability of new vehicle inventory, which varies by make and model, has resulted in moderation of new vehicle unit profitability, which we expect will continue throughout 2024, but is stabilizing. Additionally, the increased availability of new vehicles and an increase in manufacturer new vehicle incentives, including low-interest financing and customer rebates, has resulted in a shift in mix from used vehicles to new vehicles. Lower new vehicle sales in recent years has also resulted in lower availability of used vehicle inventory, particularly for late model vehicles.

Previous wording

We immediately took precautionary containment steps to help protect our systems and data, implemented business continuity plans, and commenced a review of the potential impact of the incident. The incident resulted in outages of our DMS and Core Functions (the “CDK outage”), causing disruption and adverse impacts to our business, including our productivity. Access to our DMS and Core Functions was restored as of June 29, 2024. Restoration of certain ancillary systems and integrations, such as those that help automate ordering, scheduling, payment, and reporting processes, were restored by the end of July. See “Results of Operations” below for a discussion on the financial impact to our second quarter 2024 results.

Current wording

On June 19, 2024, we were notified by CDK Global (“CDK”), a third-party provider of information systems, that CDK was experiencing a cyber incident impacting its systems, including the systems necessary to support our dealer management system (“DMS”), which supports our dealership operations, including our sales, service, inventory, customer relationship management, and accounting functions (“Core Functions”). The incident resulted in outages of our DMS and Core Functions (the “CDK outage”), causing disruption and adverse impacts to our business, including our productivity. Access to our DMS and Core Functions was restored as of June 29, 2024. Certain ancillary systems and integrations, such as those that help automate ordering, scheduling, payment, sales, and reporting processes, were restored by the end of July. See “Results of Operations” below for a discussion on the financial impact to our third quarter 2024 results.

Previous wording

During the three months ended June 30, 2024, we had net income of $130.2 million and diluted earnings per share of $3.20, as compared to net income of $272.5 million and diluted earnings per share of $6.02 during the same period in 2023.

Current wording

During the three months ended September 30, 2024, we had net income of $185.8 million and diluted earnings per share of $4.61, as compared to net income of $243.7 million and diluted earnings per share of $5.54 during the same period in 2023.

Previous wording

New vehicle gross profit was also adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) resulting from increasing supply and availability of new vehicle inventory, which has moderated pricing and margins. Used vehicle gross profit was also adversely impacted by a decrease in gross profit PVR primarily due to a shift in mix towards lower-priced entry-level vehicles, which have lower average gross profit PVR. Finance and insurance gross profit PVR was also adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Excluding the impact from the CDK outage, our parts and service results benefited primarily from increases in gross profit associated with warranty service and customer-pay service.

Current wording

Our total gross profit decreased 9% during the third quarter of 2024 compared to the third quarter of 2023, driven by decreases in new vehicle gross profit of 29%, used vehicle gross profit of 13%, and finance and insurance gross profit of 9%, each as compared to the third quarter of 2023, partially offset by an increase in parts and service gross profit of 2%. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) resulting from increasing supply and availability of new vehicle inventory, which has resulted in moderation of margins. Used vehicle gross profit was adversely impacted by a decrease in used vehicle unit volume, particularly for mid- to higher-priced used vehicles, due in part to the shift in mix from used vehicles to new vehicles. Finance and insurance gross profit was adversely impacted by the decrease in used vehicle unit volume, an increase in retail vehicle sales financed through our captive auto finance company, and a decrease in product penetration. Parts and service results benefited primarily from increases in gross profit from warranty service. In addition, floorplan interest expense increased primarily due to higher average floorplan balances.

Previous wording

As a result of the CDK outage, we estimate earnings per share for the quarter ended June 30, 2024, were negatively impacted by approximately $1.55 per share, without taking into account any potential recoveries related to the incident. The estimated impact is comprised of internal estimates for lost income during the outage period and the one-time costs incurred related to the incident, described above. We expect a modest adverse effect on the early part of our third quarter 2024 results.

Current wording

Our used vehicle, parts and service, and finance and insurance businesses were adversely impacted by the residual effects of the CDK outage in the third quarter of 2024. As a result of the CDK outage, we estimate earnings per share for the quarter ended September 30, 2024, were negatively impacted by approximately $0.21 per share based on internal estimates of lost income without taking into account any potential recoveries related to the incident.

Previous wording

Our new vehicle inventory units at June 30, 2024 and 2023, were 47,095 and 23,659, respectively. We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We monitor our new vehicle inventory values as compared to net realizable values. We had no new vehicle inventory cumulative write-downs at June 30, 2024, and December 31, 2023.

Current wording

Our new vehicle inventory units at September 30, 2024 and 2023, were 46,090 and 27,544, respectively. We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We monitor our new vehicle inventory values as compared to net realizable values. Our new vehicle inventory was net of cumulative write-downs of $3.6 million at September 30, 2024. We had no new vehicle inventory cumulative write-downs at December 31, 2023.

Previous wording

We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $6.7 million at June 30, 2024, and $12.2 million at December 31, 2023.

Current wording

We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $7.2 million at September 30, 2024, and $12.2 million at December 31, 2023.

Previous wording

Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or excess and obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $8.6 million at June 30, 2024, and $7.8 million at December 31, 2023.

Current wording

Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or excess and obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $9.2 million at September 30, 2024, and $7.8 million at December 31, 2023.

Previous wording

We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Unaudited Condensed Consolidated Financial Statements. For additional discussion of our critical accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K.

Current wording

We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Unaudited Condensed Consolidated

Previous wording

As of June 30, 2024, we have $219.8 million of goodwill related to the Domestic reporting unit, $524.0 million related to the Import reporting unit, $482.1 million related to the Premium Luxury reporting unit, $140.5 million related to the Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Centers reporting unit.

Current wording

As of September 30, 2024, we have $222.8 million of goodwill related to the Domestic reporting unit, $519.1 million related to the Import reporting unit, $482.2 million related to the Premium Luxury reporting unit, $140.5 million related to the Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Centers reporting unit.

Previous wording

The following discussion of new vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $26.7 million and $5.9 million in new vehicle revenue and $0.9 million and $0.2 million in new vehicle gross profit for the three months ended June 30, 2024 and 2023, respectively, and $68.9 million and $10.3 million in new vehicle revenue and $2.4 million and $0.4 million in new vehicle gross profit for the six months ended June 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity.

Current wording

The following discussion of new vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $13.7 million and $32.0 million in new vehicle revenue and $0.4 million and $1.6 million in new vehicle gross profit for the three months ended September 30, 2024 and 2023, respectively, and $139.3 million and $105.1 million in new vehicle revenue and $6.1 million and $7.1 million in new vehicle gross profit for the nine months ended September 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity.

Previous wording

Same store new vehicle revenue decreased during the three months ended June 30, 2024, as compared to the same period in 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume was largely due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. Our same store new vehicle unit volume increased for the first two months of the second quarter of 2024 by 4%, as compared to the prior year, and then was negatively impacted in June 2024 by the CDK outage. The decrease in same store unit volume was partially offset by increases in same store unit volume due to increasing supply of new vehicle inventory, particularly for Import manufacturers, an increase in manufacturer incentives, including low-interest financing and rebates, and sustained consumer demand.

Current wording

Same store new vehicle gross profit PVR decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to the increasing supply and availability of new vehicle inventory, which has resulted in moderation of margins.

Previous wording

Same store new vehicle revenue decreased during the six months ended June 30, 2024, as compared to the same period in 2023, due to a decrease in same store revenue PVR, partially offset by an increase in same store unit volume. Same store unit volume benefited from the increasing supply of new vehicle inventory, particularly for Import manufacturers, an increase in manufacturer incentives, including low-interest financing and rebates, and sustained consumer demand. The increase in same store unit volume was partially offset by a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024.

Current wording

Same store new vehicle revenue decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, due to a decrease in same store revenue PVR, partially offset by an increase in same store unit volume. Same store unit volume benefited from the increasing supply of new vehicle inventory, particularly for Import manufacturers, an increase in manufacturer incentives, including low-interest financing and rebates, and sustained consumer demand. The increase in same store unit volume was partially offset by a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024.

Previous wording

Same store new vehicle revenue PVR and gross profit PVR decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to the increasing supply and availability of new vehicle inventory and sustained consumer demand, which has resulted in moderation of pricing and margins. Same store new vehicle revenue PVR and gross profit PVR were also adversely impacted by a shift in mix towards Import vehicles, which have relatively lower average selling prices and gross profit PVR.

Current wording

Same store new vehicle revenue PVR decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to increasing supply and availability of new vehicle inventory, which has resulted in moderation of pricing and margins. Same store new vehicle revenue PVR was also adversely impacted by decreases in manufacturers’ suggested retail prices and a shift in mix towards Import vehicles, which have relatively lower average selling prices.

Previous wording

Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Up until the third quarter of 2023, since the first quarter of 2020, when the Federal Reserve cut interest rates to near 0%, we had a net new vehicle inventory carrying benefit. Additionally, over this same period, our average floorplan balances were significantly lower than historical standards due to manufacturers’ new vehicle inventory supply constraints. With the increases in new vehicle inventory supply and interest rates, floorplan interest expense has increased, resulting in a net new vehicle inventory carrying expense for the three months ended June 30, 2024. If interest rates remain at their current levels or continue to increase without a corresponding increase in floorplan assistance or a decrease in average new vehicle inventory levels, we would expect that we will continue to incur a net new vehicle inventory carrying expense.

Current wording

During the nine months ended September 30, 2024, we had a net new vehicle inventory carrying expense of $55.8 million, compared to a net new vehicle inventory carrying benefit of $3.0 million for the same period in 2023. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Up until the third quarter of 2023, since the first quarter of 2020, when the Federal Reserve cut interest rates to near 0%, we had a net new vehicle inventory carrying benefit. Additionally, over this same period, our average floorplan balances were significantly lower than historical standards due to manufacturers’ new vehicle inventory supply constraints. With the increases in new vehicle inventory supply and interest rates, floorplan interest expense has increased, resulting in a net new vehicle inventory carrying expense for the nine months ended September 30, 2024. If interest rates remain at their current levels or increase without a corresponding increase in floorplan assistance or a decrease in average new vehicle inventory levels, we would expect that we will continue to incur a net new vehicle inventory carrying expense.

Previous wording

The following discussion of used vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $61.0 million and $6.5 million in total used vehicle revenue and $1.5 million and $0.4 million in total used vehicle gross profit for the three months ended June 30, 2024 and 2023, respectively, and $131.4 million and $13.5 million in total used vehicle revenue and $4.3 million and $0.7 million in total used vehicle gross profit for the six months ended June 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Current wording

The following discussion of used vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $60.0 million and $38.3 million in total used vehicle revenue and $1.0 million and $1.6 million in total used vehicle gross profit for the three months ended September 30, 2024 and 2023, respectively, and $245.3 million and $123.3 million in total used vehicle revenue and $7.1 million and $6.4 million in total used vehicle gross profit for the nine months ended September 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Previous wording

Same store retail used vehicle revenue decreased during the three months ended June 30, 2024, as compared to the same period in 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume was largely due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions. In addition, the decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to the shift in mix from used vehicles to new vehicles.

Current wording

Same store retail used vehicle revenue decreased during the three months ended September 30, 2024, as compared to the same period in 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is resulting from the shift in mix from used vehicles to new vehicles due in part to lower availability and levels of late model used vehicles, as well as increasing supply of new vehicle inventory, an increase in manufacturer new vehicle incentives including low-interest financing and customer rebates, and moderation of new vehicle pricing. In addition, the pace of our used vehicle inventory turnover was adversely impacted by the CDK outage, resulting in less than optimal levels and mix of used vehicle inventory at the start of the third quarter of 2024 and an adverse impact on used vehicle unit volume during the third quarter of 2024.

Previous wording

Same store used vehicle revenue PVR and gross profit PVR decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to a shift in mix towards lower-priced entry-level vehicles, which have lower average selling prices and gross profit PVR. The decrease in same store gross profit PVR was partially offset by the favorable impact of certain actions we took in the first quarter of 2024 to better align used vehicle inventory with market demand and achieve a more optimal inventory supply, resulting in quarterly sequential improvement in gross profit PVR since the fourth quarter of 2023.

Current wording

Same store used vehicle revenue PVR and gross profit PVR decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to a shift in mix towards lower-priced entry-level vehicles, which have lower average selling prices and gross profit PVR. In addition, gross profit PVR was adversely impacted by less than optimal levels and mix of used vehicle inventory at the start of the third quarter as a result of the CDK outage.

Previous wording

Same store retail used vehicle revenue decreased during the six months ended June 30, 2024, as compared to the same period in 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to the shift in mix from used vehicles to new vehicles. In addition, same store unit volume was adversely impacted by a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions.

Current wording

Same store retail used vehicle revenue decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to the shift in mix from used vehicles to new vehicles. In addition, same store unit volume was adversely impacted by the CDK outage, which resulted in a decrease in productivity from the disruption to our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024 and less than optimal levels and mix of used vehicle inventory at the start of the third quarter of 2024.

Previous wording

Same store used vehicle revenue PVR and gross profit PVR decreased during the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to a shift in mix towards lower-priced entry-level vehicles, which have lower average selling prices and gross profit PVR. The decrease in same store gross profit PVR was partially offset by the favorable impact of certain actions we took in the first quarter of 2024 to better align used vehicle inventory with market demand and achieve a more optimal inventory supply, resulting in quarterly sequential improvement in gross profit PVR since the fourth quarter of 2023.

Current wording

Same store used vehicle revenue PVR and gross profit PVR decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to a shift in mix towards lower-priced entry-level vehicles, which have lower average selling prices and gross profit PVR.

Previous wording

The following discussion of parts and service results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $11.4 million and $3.2 million in parts and service revenue and $6.6 million and $1.5 million in parts and service gross profit for the three months ended June 30, 2024 and 2023, respectively, and $28.2 million and $7.2 million in parts and service revenue and $15.3 million and $3.5 million in parts and service gross profit for the six months ended June 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Current wording

The following discussion of parts and service results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $19.4 million and $35.2 million in parts and service revenue and $7.6 million and $12.7 million in parts and service gross profit for the three months ended September 30, 2024 and 2023, respectively, and $107.5 million and $105.8 million in parts and service revenue and $43.3 million and $37.4 million in parts and service gross profit for the nine months ended September 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Previous wording

The CDK outage continued to adversely impact our parts and service business in July 2024 as certain ancillary systems and integrations were not fully restored until the end of July.

Current wording

Warranty service revenue and gross profit benefited from improved parts and labor rates, an increase in repair order volume, and higher value repair orders. Customer-pay service revenue and gross profit benefited from higher value repair orders. Repair order volume was adversely impacted by the CDK outage as certain ancillary systems and integrations were not fully restored until the end of July 2024.

Previous wording

During the six months ended June 30, 2024, same store parts and service revenue increased compared to the same period in 2023, primarily due to increases in revenue associated with warranty service of $30.7 million and the preparation of vehicles for sale of $19.7 million, partially offset by a decrease in revenue associated with wholesale parts sales of $22.3 million.

Current wording

During the nine months ended September 30, 2024, same store parts and service revenue increased compared to the same period in 2023, primarily due to increases in revenue associated with warranty service of $60.0 million, customer-pay service of $23.0 million, and the preparation of vehicles for sale of $16.6 million, partially offset by a decrease in revenue associated with wholesale parts sales of $21.9 million.

Previous wording

During the six months ended June 30, 2024, same store parts and service gross profit increased compared to the same period in 2023, primarily due to increases in gross profit associated with warranty-service of $23.4 million and the preparation of vehicles for sale of $11.9 million, partially offset by a decrease in wholesale parts sales of $5.1 million.

Current wording

During the nine months ended September 30, 2024, same store parts and service gross profit increased compared to the same period in 2023, primarily due to increases in gross profit associated with warranty service of $43.5 million and the preparation of vehicles for sale of $11.3 million, partially offset by a decrease in wholesale parts sales of $6.9 million.

Previous wording

Parts and service revenue and gross profit associated with warranty service and the preparation of vehicles for sale benefited from higher value repair orders. Parts and service gross profit associated with warranty service also benefited from improved parts and labor rates. The increases in parts and service revenue and gross profit were partially offset by the CDK outage, which disrupted our sales and service processes, resulting in a decrease in repair order volume and parts sales.

Current wording

Parts and service revenue and gross profit associated with warranty service and the preparation of vehicles for sale benefited from higher value repair orders and improved margin. Customer-pay revenue increased due to higher value repair orders. The increases in parts and service revenue and gross profit were partially offset by the CDK outage, which disrupted our sales and service processes, resulting in a decrease in repair order volume and parts sales.

Previous wording

Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with financial institutions in connection with customer vehicle purchases financed, (ii) vehicle service contracts with third-party providers, and (iii) other vehicle protection products with third-party providers. We sell these products on a commission basis, and we also participate in the future underwriting profit on certain products pursuant to retrospective commission arrangements with the issuers of those products.

Current wording

Revenue on finance and insurance products represents commissions earned by us primarily for the placement of: (i) loans and leases with financial institutions in connection with customer vehicle purchases financed, (ii) vehicle service contracts with third-party providers, and (iii) other vehicle protection products with third-party providers. We sell these products on a commission basis, and we also participate in the future underwriting profit on certain products pursuant to retrospective commission arrangements with the issuers of those products.

Previous wording

The following discussion of finance and insurance results is on a same store basis. The difference between reported amounts and same store amounts in finance and insurance revenue and gross profit in the above tables of $7.1 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively, and $15.7 million and $1.3 million for the six months ended June 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Current wording

The following discussion of finance and insurance results is on a same store basis. The difference between reported amounts and same store amounts in finance and insurance revenue and gross profit in the above tables of $6.7 million and $4.7 million for the three months ended September 30, 2024 and 2023, respectively, and $29.7 million and $16.3 million for the nine months ended September 30, 2024 and 2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

Previous wording

Same store finance and insurance revenue and gross profit decreased during the three months ended June 30, 2024, as compared to the same period in 2023, due to decreases in finance and insurance gross profit PVR and new and used vehicle unit volume. Finance and insurance gross profit PVR was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. In addition, finance and insurance gross profit was adversely impacted by the CDK outage, which disrupted our finance and insurance sales process including our ability to offer certain products.

Current wording

Same store finance and insurance revenue and gross profit decreased during the three months ended September 30, 2024, as compared to the same period in 2023, due to decreases in finance and insurance gross profit PVR and used vehicle unit volume. Finance and insurance gross profit PVR was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Product penetration was adversely impacted by the CDK outage as certain ancillary systems and integrations related to the finance and insurance sales process were not fully restored until mid-July 2024.

Previous wording

Same store finance and insurance revenue and gross profit decreased during the six months ended June 30, 2024, as compared to the same period in 2023, due to a decrease in finance and insurance gross profit PVR and a decrease in used vehicle unit volume, partially offset by an increase in new vehicle unit volume. Finance and insurance gross profit PVR was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. In addition, finance and insurance gross profit was adversely impacted by the CDK outage, which disrupted our finance and insurance sales process including our ability to offer certain products.

Current wording

Same store finance and insurance revenue and gross profit decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, due to a decrease in finance and insurance gross profit PVR and a decrease in used vehicle unit volume, partially offset by an increase in new vehicle unit volume. Finance and insurance gross profit PVR was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company, a decrease in product penetration, and a decrease in gross profit associated with arranging customer financing. In addition, finance and insurance gross profit was adversely impacted by the CDK outage, which disrupted our finance and insurance sales process including our ability to offer certain products.

Previous wording

Domestic revenue decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to a decrease in new and used vehicle unit volume largely due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. In addition, Domestic revenue was adversely impacted by a decrease in used vehicle revenue PVR due to a shift in mix towards lower-priced entry-level vehicles and a decrease in new vehicle revenue PVR due to continued moderation of pricing resulting from the increasing supply and availability of new vehicle inventory.

Current wording

Domestic revenue decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new and used vehicle revenue. New vehicle revenue decreased largely due to the continued moderation of pricing resulting from the increasing supply of new vehicle inventory. Used vehicle revenue was adversely impacted by a decrease in unit volume due to the shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have lower average selling prices. Domestic revenue was also adversely impacted by the divestitures we completed in the third quarter of 2024, as well as the residual effects of the CDK outage.

Previous wording

Premium Luxury segment income decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit and finance and insurance gross profit. New vehicle gross profit was adversely impacted by a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by the decrease in new and used vehicle unit volume and a decrease in finance and insurance gross profit PVR, which was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Premium Luxury segment income was also adversely impacted by decreases in gross profit resulting from the CDK outage.

Current wording

Domestic segment income decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit, finance and insurance gross profit, and used vehicle gross profit, as well as an increase in floorplan interest expense. New vehicle gross profit was adversely impacted by a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by the decrease in used vehicle unit volume and a decrease in finance and insurance gross profit PVR, which was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Used vehicle gross profit decreased primarily due to a decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, due in part to the shift in mix from used vehicles to new vehicles. The decreases in Domestic segment income were partially offset by a decrease in SG&A expenses, which benefited from the divestitures we completed in the third quarter of 2024.

Previous wording

Domestic revenue decreased during the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to decreases in new and used vehicle unit volume largely due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. In addition, Domestic revenue was adversely impacted by a decrease in used vehicle revenue PVR due to a shift in mix towards lower-priced entry-level vehicles and a decrease in new vehicle revenue PVR due to continued moderation of pricing resulting from the increasing supply and availability of new vehicle inventory.

Current wording

Domestic revenue decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new and used vehicle revenue. New vehicle revenue decreased largely due to the continued moderation of pricing resulting from the increasing supply of new vehicle inventory. Used vehicle revenue was adversely impacted by a decrease in unit volume due to a shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to a shift in mix towards lower-priced entry-level vehicles, which have lower average selling prices. Domestic revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and the residual effects of the CDK outage in the third quarter of 2024.

Previous wording

Domestic segment income decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit, used vehicle gross profit, and finance and insurance gross profit. New vehicle gross profit was adversely impacted by a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory. Used vehicle gross profit was adversely impacted by a shift in mix towards lower-priced entry-level vehicles, which have lower average gross profit PVR, and a decrease in used vehicle unit volume due in part to the shift in mix from used vehicles to new vehicles. Finance and insurance gross profit was adversely impacted by the decrease in vehicle unit volume and a decrease in finance and insurance gross profit PVR, which was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Domestic segment income was also adversely impacted by decreases in gross profit resulting from the CDK outage.

Current wording

Domestic segment income decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit, finance and insurance gross profit, and used vehicle gross profit. New vehicle gross profit was adversely impacted by continued moderation of margins resulting from the increasing supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. Used vehicle gross profit was adversely impacted by a shift in mix towards lower-priced entry-level vehicles, which have a lower average gross profit PVR, and a decrease in used vehicle unit volume due in part to the shift in mix from used vehicles to new vehicles. Domestic segment income was also adversely impacted by decreases in gross profit resulting from the CDK outage.

Previous wording

Import segment income decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit and finance and insurance gross profit. New vehicle gross profit was adversely impacted by a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory. The decrease in finance and insurance gross profit was primarily due to the decrease in vehicle unit volume during the CDK outage and a decrease in finance and insurance gross profit PVR, which was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration.

Current wording

Import segment income decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle gross profit and finance and insurance gross profit. New vehicle gross profit was adversely impacted by continued moderation of margins resulting from the increasing supply of new vehicle inventory. The decrease in finance and insurance gross profit was primarily due to the decrease in used vehicle unit volume and a decrease in finance and insurance gross profit PVR, which was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration.

Previous wording

Import revenue increased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to an increase in new vehicle unit volume due to the increasing supply of new vehicle inventory and sustained consumer demand. Import revenue also benefited from the acquisitions we completed in 2023. The increases in Import revenue were partially offset by a decrease in used vehicle revenue PVR due to a shift in mix towards lower-priced entry-level vehicles, as well as a decrease in new and used vehicle unit volume during the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024.

Current wording

Import revenue increased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to an increase in new vehicle revenue, partially offset by a decrease in used vehicle revenue. New vehicle revenue benefited from an increase in new vehicle unit volume due to the increasing supply of new vehicle inventory and sustained consumer demand. Used vehicle revenue was adversely impacted by a decrease in used vehicle unit volume due to the shift in mix from used vehicles to new vehicles, and a decrease in used vehicle revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have lower average selling prices. Import revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and the residual effects of the CDK outage in the third quarter of 2024.

Previous wording

Import segment income decreased during the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory. In addition, Import segment income was adversely impacted by an increase in SG&A expenses, largely due to the acquisitions we completed in 2023 and the one-time compensation paid to commission-based associates during the CDK outage, as well as decreases in gross profit resulting from the CDK outage.

Current wording

Import segment income decreased during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply of new vehicle inventory, and a decrease in finance and insurance gross profit PVR primarily due to an increase in retail vehicle sales financed through our captive auto finance company and a decrease in product penetration. In addition, Import segment income was adversely impacted by an increase in SG&A expenses, largely due to the acquisitions we completed in 2023 and the one-time compensation paid to commission-based associates during the CDK outage, as well as decreases in gross profit resulting from the CDK outage. The decreases in Import segment were partially offset by increases in parts and service revenue associated with the preparation of vehicles for sale and warranty service.

Previous wording

Premium Luxury revenue decreased slightly during the six months ended June 30, 2024, as compared to the same period in 2023, primarily due to a decrease in new vehicle revenue and used vehicle revenue due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. In addition, new vehicle revenue was adversely impacted by lower availability of higher demand vehicle models in certain markets. Decreases in revenue were partially offset by an increase in parts and service revenue associated with warranty service and customer-pay service.

Current wording

Premium Luxury revenue decreased during the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to a decrease in used vehicle unit volume due to the shift in mix from used vehicles to new vehicles, and a decrease in used vehicle revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have lower average selling prices. The decreases in Premium Luxury revenue were offset by an increase in parts and service revenue associated with warranty and customer-pay service. Premium Luxury revenue was also adversely impacted by the residual effects of the CDK outage.

Previous wording

Premium Luxury revenue decreased during the three months ended June 30, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle revenue and used vehicle revenue largely due to a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. New vehicle revenue was also adversely impacted by lower availability of higher demand vehicle models in certain markets and sale restrictions placed on certain vehicles in June 2024 related to a manufacturer recall. Used vehicle revenue was also adversely impacted by a decrease in used vehicle revenue PVR due to a shift in mix towards lower-priced entry-level vehicles.

Current wording

Premium Luxury revenue decreased slightly during the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to decreases in new and used vehicle revenue. New vehicle revenue was adversely impacted by the continued moderation of pricing resulting from the increasing supply and availability of new vehicle inventory. Used vehicle revenue was adversely impacted by a decrease in unit volume due to the shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have lower average selling prices. Premium Luxury revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and the residual effects of the CDK outage in the third quarter of 2024.