Group 1 Automotive Q4 Earnings Call Highlights

Group 1 Automotive (NYSE:GPI) management said 2025 delivered record revenue across all major business lines, supported by strong parts and service and finance and insurance (F&I) performance, while the company continued to reshape its dealership portfolio and return capital to shareholders.

On the company’s fourth-quarter and full-year 2025 results call, President and CEO Daryl Kenningham said Group 1 generated “record gross profits in parts and service and F&I,” highlighting the “strength and resilience” of a diversified model. For the full year, the company produced an all-time high gross profit of more than $3.6 billion, including record parts and service gross profit of nearly $1.6 billion, and sold 459,000 new and used vehicles, another record.

Fourth-quarter results and U.S. operating trends

Chief Financial Officer Daniel McHenry said Group 1 reported fourth-quarter 2025 revenue of $5.6 billion and gross profit of $874 million. Adjusted net income from continuing operations was $105 million, and adjusted diluted EPS was $8.49.

In the U.S., McHenry described fourth-quarter performance as strong across the business, though new vehicle sales declined both on a reported and same-store basis. He said average selling prices continued to rise, while consumers are “increasingly concerned about affordability.” New vehicle gross profits per unit continued to moderate from the past few years’ highs, but management emphasized cost control and process consistency.

Used vehicle operations held volumes “basically flat” versus the prior year quarter, while revenues increased about 4% as reported and 1% on a same-store basis. Same-store used vehicle gross profit per unit declined about 8%, which McHenry attributed to higher used inventory acquisition costs. Management said it is leaning on scale and “disciplined sourcing and pricing” in a more competitive used market.

F&I remained a bright spot in the U.S. business. McHenry said fourth-quarter F&I gross profit per unit increased nearly 3%, or $67 reported and $65 same-store, helped by “improvements to our virtual finance operations” and higher product penetration across nearly all categories.

Aftersales results were again highlighted as a key contributor. McHenry said Group 1’s gross profit benefited from optimizing its collision footprint, including shifting some collision space to traditional service capacity and closing collision centers where returns fall short. Customer pay and warranty revenues increased approximately 5% and 11%, respectively, while customer pay and warranty gross profits rose over 8% and 13%. Technician recruiting and retention efforts lifted same-store technicians 2.3% year-over-year in the U.S.

On costs, McHenry said U.S. adjusted SG&A as a percentage of gross profit rose 200 basis points sequentially to 67.8%, primarily due to higher employee expense. He said the company remains focused on resource management and technology investments, aiming to keep SG&A as a percent of gross profit below pre-COVID levels as vehicle gross profits normalize.

U.K. challenges, restructuring, and operating improvements

Kenningham said the U.K. macro environment remains challenging, citing weak growth, persistent inflation, increased competition from new entrants, and margin pressure from the battery electric vehicle (BEV) mandate. In response, he said Group 1 reduced headcount by an additional 537 positions in 2025 and continued executing restructuring initiatives. He also said the company worked with “a number of interested parties” regarding an exit of the JLR brand.

Management said it completed a U.K. systems integration intended to improve visibility and consistency, consolidated 10 customer contact centers into two, and fully onshored transactional accounting operations. Kenningham said the company is seeing benefits from applying U.S. operating practices to U.K. aftersales, including increasing technician headcount by 9.5% on a same-store basis, reducing wait times, and driving nearly a six percentage point increase in customer pay mix and higher fixed absorption. He also noted changes to service pricing to move closer to the aftermarket, alongside eliminating diagnosis fees in many brands.

McHenry said U.K. results still reflected the difficult environment, though same-store revenues grew across most lines. Same-store new vehicle volumes declined 8.2%, and local currency new vehicle gross profits per unit moderated 3.2%, resulting in an 11% decline in same-store new vehicle revenue. Used vehicle same-store revenue rose over 9% in local currency with volumes up nearly 8%, but same-store used gross profits per unit fell almost 19%, reflecting what he called a challenging used market.

Aftersales and F&I delivered year-over-year growth in revenue and gross profit in the U.K. McHenry cited an “outsized uplift” in repair order count of nearly 36% year-over-year, same-store technicians up 9.5%, and customer pay revenue up 9%. Same-store F&I PRU reached $1,060, up over 13% year-over-year.

Asked about restructuring magnitude, McHenry said he did not expect restructuring costs in 2026 to be “anything like” the $28 million referenced by the analyst, noting that much of the heavy lifting occurred in 2025. Kenningham characterized the U.K. restructuring as in the “earlier innings,” with more work to do and adjustments expected quarter to quarter.

Portfolio actions, impairments, and capital allocation

Kenningham said Group 1 pursued “highest and best use” capital deployment in 2025. In the U.S., the company acquired Lexus and Acura dealerships in Fort Myers, Florida, and Mercedes-Benz dealerships in Austin, Texas, and Atlanta, Georgia. In the U.K., it acquired three Toyota and one Lexus dealership. Management expects these acquisitions to generate about $640 million in annual revenue.

At the same time, Group 1 disposed of 13 dealerships comprising 32 franchises that generated about $775 million in annualized revenue. Kenningham said 2025’s disposition activity was more of an outlier, driven largely by underperforming U.K. stores and consolidation efforts with OEM partners, though he expects some additional U.K. activity in 2026.

McHenry said the company performs an annual impairment review in the fourth quarter. He said fourth-quarter impairments were “virtually totally” related to the U.S. business, with the principal brand cited as Audi, along with an impairment in the Maryland/D.C. market, which he described as difficult for consolidators.

On capital returns, management emphasized share repurchases. McHenry said Group 1 repurchased $555 million of stock in 2025, buying about 1.3 million shares at an average price of $413.05, and paid $26 million in dividends. After quarter-end, the company repurchased an additional 71,750 shares at an average price of $394.20 for $28.3 million, reducing share count about 0.6% since Jan. 1. McHenry said $350 million remained under the board-authorized repurchase plan.

In response to questions about priorities, Kenningham said the company prefers to keep leverage below 3 times and wants to continue growing through acquisitions, but not at prices that are not “instantly accretive” to EPS. He added the company would remain aggressive on buybacks “as and when the time is right.”

Technology and 2026 themes: AI, productivity, and used vehicle supply

Management described ongoing productivity and technology efforts, including AI tools and virtual F&I. Kenningham said AI is being used in customer interface and back office functions, including lead management, CRM, parts and service, and marketing with predictive analytics. He also pointed to technician productivity gains, noting aftersales growth alongside a smaller increase in technician headcount and lower turnover.

In discussing 2026, executives said they remain focused on controllables amid a dynamic environment. Kenningham said Group 1 expects opportunities to grow organically, particularly in the U.K., and still sees opportunities in the U.S. in used vehicles and cost structure. On the used market, management expressed optimism around increased lease returns later in the year as a source of premium used supply, while also pointing to continued focus on sourcing from service drives and trade-in processes.

In closing remarks, Kenningham said the company remains committed to operating excellence, “differentiated aftersales,” and disciplined capital management, with the U.K. a priority for ongoing restructuring, operating discipline, and portfolio shaping.

About Group 1 Automotive (NYSE:GPI)

Group 1 Automotive, Inc (NYSE: GPI) is an international automotive retailer headquartered in Houston, Texas. The company operates an extensive network of franchised dealerships, offering new and pre-owned vehicles from leading domestic and import manufacturers. In addition to vehicle sales, Group 1 Automotive provides a full complement of aftersales services, including finance and insurance products, parts distribution, collision repair centers and vehicle maintenance.

Founded in 1997, Group 1 Automotive has grown through both organic expansion and strategic acquisitions to establish a presence across the United States, the United Kingdom and Brazil.