ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Part I, including matters set forth in the “Risk Factors” section of this Form 10-K, and our Consolidated Financial Statements and notes thereto included in Part II, Item 8 of this Form 10-K. This section of this Form 10-K includes discussion of year-to-year comparisons between 2025 and 2024. Discussion of year-to-year comparisons between 2024 and 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis.
Certain reclassifications of amounts previously reported have been made to the accompanying Consolidated Financial Statements in order to maintain consistency and comparability between periods presented.
Overview
AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of December 31, 2025, we owned and operated 323 new vehicle franchises from 245 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 30 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 89% of the new vehicles that we sold in 2025, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of December 31, 2025, we also owned and operated 52 AutoNation-branded collision centers, 26 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.
We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service” (also referred to as “After-Sales”), which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products (also referred to as “Customer Financial Services”), which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. We also offer indirect financing through our captive auto finance company on vehicles we sell.
As of December 31, 2025, we had four reportable segments: (1) Domestic, (2) Import, (3) Premium Luxury, and (4) AutoNation Finance. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is primarily comprised of retail automotive franchises that sell new vehicles manufactured by Toyota, Honda, Hyundai, and Subaru. Our Premium Luxury segment is primarily comprised of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each of our Domestic, Import, and Premium Luxury segments also sell used vehicles, parts and automotive services, and automotive finance and insurance products. AutoNation Finance is our captive auto finance company, which provides indirect financing to qualified retail customers on vehicles we sell.
For the year ended December 31, 2025, new vehicle sales accounted for 49% of our total revenue and 13% of our total gross profit. Used vehicle sales accounted for 28% of our total revenue and 9% of our total gross profit. Our parts and service operations, while comprising 17% of our total revenue, contributed 48% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 30% of our total gross profit.
Market Conditions
Full-year U.S. industry new vehicle unit sales, which includes sales in markets in which we do not compete, were 16.3 million in 2025, as compared to 16.0 million in 2024, and 15.6 million in 2023. The higher levels of manufacturer vehicle production over the past several years led to an increased supply of new vehicle inventory, which has resulted in moderation of new vehicle unit profitability. We expect that new vehicle unit profitability may continue to moderate, in part due to the tariffs announced in 2025, as well as consumer concerns on vehicle affordability.
Table of Contents
The tariffs announced by the U.S. government beginning in the first quarter of 2025, and as may be modified in 2026 or beyond, on vehicles and parts imported from other countries could increase our costs and/or consumer prices and limit the availability of inventory and/or reduce demand for the products and services we offer, which in turn could have a material adverse effect on our business and results of operations. The policies and announcements regarding tariffs on imported goods have been evolving and remain highly fluid. The ultimate impact of any tariffs is uncertain and will depend on various factors, including whether the tariffs are maintained and/or implemented, the duration of the tariffs and the timing of their implementation, the amount, scope, and nature of the tariffs, and the related responses from other countries, manufacturers, and/or consumers.
The 2025 Budget Reconciliation Act (the “Act”), signed into law in July 2025, introduces several provisions with direct implications for the automotive retail industry, particularly in areas of taxation, consumer incentives, and electric vehicle policies. While we are encouraged by the potential uplift certain beneficial tax provisions of the Act may have on our business and the automotive retail industry, we currently do not expect the impact will be material to our results of operations.
Results of Operations
We had net income of $649.1 million and diluted earnings per share of $17.04 in 2025, as compared to net income of $692.2 million and diluted earnings per share of $16.92 in 2024.
Our total gross profit increased 3% during 2025, as compared to 2024, driven by increases in parts and service gross profit of 7% and finance and insurance gross profit of 8%, partially offset by a decrease in new vehicle gross profit of 14%. Parts and service results benefited primarily from increases in gross profit from customer-pay service and warranty service. Finance and insurance gross profit benefited from higher realized margins on vehicle service contracts and an increase in vehicle unit volume. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) resulting from continued moderation of margins following post-pandemic elevated levels and higher average vehicle costs.
SG&A expenses increased primarily due to an increase in performance-driven compensation expense, which was partially offset by certain one-time compensation of approximately $43 million paid to commission-based associates in the prior year to ensure business continuity as a result of the CDK outage.
Net income and diluted earnings per share during 2025 were favorably impacted by after-tax gains on insurance recoveries of $60.5 million for business interruption and related losses caused by the CDK outage that occurred in June 2024. As a result of the CDK outage, we estimate earnings per share in 2024 was negatively impacted by approximately $2.17 per share, without taking into account any recoveries related to the incident. The estimated impact was comprised of internal estimates for lost income during the outage period and the one-time costs incurred related to the incident, described above.
In addition, net income and diluted earnings per share during 2025 were adversely impacted by non-cash goodwill and franchise rights impairments and other asset adjustments totaling $161.7 million after-tax. See Note 19 of the Notes to Consolidated Financial Statements for a discussion of the impairment charges.
Net income during 2024 benefited from an after-tax net gain of $35.3 million related to business/property dispositions, net of asset impairments, partially offset by after-tax franchise rights impairments of $9.4 million and after-tax self-insured losses of $8.8 million primarily related to weather-related catastrophes.
Inventory Management
Our new and used vehicle inventories are stated at the lower of cost or net realizable value in our Consolidated Balance Sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends.
Our new vehicle inventory units at December 31, 2025 and 2024, were approximately 43,800 and 42,600, 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 $1.2 million at December 31, 2025, and $2.0 million at December 31, 2024.
Table of Contents
Our used vehicle inventory units at December 31, 2025 and 2024, were approximately 33,100 and 34,000, respectively. 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 $5.8 million at December 31, 2025, and $7.8 million at December 31, 2024.
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 $9.5 million at December 31, 2025, and $8.3 million at December 31, 2024.
Critical Accounting Estimates
We prepare our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. 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 Consolidated Financial Statements. Set forth below are the accounting estimates that we have identified as critical to our business operations and an understanding of our results of operations, based on the high degree of judgment or complexity in their application. See Note 1 of the Notes to Consolidated Financial Statements for a discussion of other significant accounting policies.
Goodwill
Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. We may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. When assessing goodwill for impairment, our decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, macroeconomic conditions, automotive industry and market conditions, and our operating performance.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment as of April 30, 2025, for our Domestic, Import, Premium Luxury, AutoNation Finance, and Collision Center reporting units and determined that it was not more likely than not that the fair values of these reporting units were less than their carrying amounts. For our Mobile Service reporting unit, which relates to the mobile automotive repair and maintenance start-up business we acquired in the first quarter of 2023, we elected to perform a quantitative goodwill impairment test as of April 30, 2025, and determined that its fair value was less than its carrying value. As a result, during the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $65.3 million. The non-cash impairment charge is reflected as Goodwill Impairment in the accompanying Consolidated Statements of Income.
The quantitative goodwill impairment test is dependent on many variables used to determine the fair value of each reporting unit. See Note 19 of the Notes to Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing. The key assumptions used in our estimate of fair value for our Mobile Service reporting unit included revenue growth rates to calculate projected future cash flows. As a measure of sensitivity, a 20% decrease in the revenue growth rates would have resulted in an increase to the goodwill impairment charge of approximately $30 million. This result and discussion is not intended to address all potential outcomes that could have resulted if different assumptions had been used in determining our goodwill impairment given the number of assumptions used in determining the impairment and the degree of sensitivity to changes in such assumptions in the determination of the fair value.
As of December 31, 2025, we have $221.7 million of goodwill related to the Domestic reporting unit, $530.6 million related to the Import reporting unit, $498.8 million related to the Premium Luxury reporting unit, $75.2 million related to
Table of Contents
the Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Center reporting unit.
Other Intangible Assets
Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred.
We may first perform a qualitative assessment to determine whether it is more likely than not that a franchise right asset is impaired. We elected to perform quantitative tests for our annual franchise rights impairment testing as of April 30, 2025. As a result of the quantitative tests, we determined the franchise rights carrying values for nine stores exceeded their fair values, and we recorded non-cash franchise rights impairment charges of $71.7 million during the three months ended June 30, 2025, to reduce the carrying value of the stores’ franchise agreements to their estimated fair values. We also identified 10 stores that, while they each had franchise rights fair value in excess of carrying value, had lower relative performance compared to our total store population. The remainder of our stores had franchise rights with calculated fair values that substantially exceeded their carrying values.
The quantitative franchise rights impairment test is dependent on many variables used to determine the fair value of each store’s franchise rights. See Note 19 of the Notes to Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing. Based on a sensitivity analysis of these estimates and assumptions, including if the fair value of each of our franchise rights had been determined to be a hypothetical 10% lower as of the valuation date of April 30, 2025, the resulting incremental impairment charge would have been approximately $7 million. The sensitivity analysis performed, including the effect of a hypothetical 10% decrease in fair value estimates, is not intended to provide a sensitivity analysis of every potential outcome.
During the fourth quarter of 2025, we concluded that a triggering event had occurred that indicated the fair values of franchise rights for three stores may have been less than their carrying values. Therefore, we performed quantitative franchise rights impairment tests for these stores during the fourth quarter of 2025. As a result of the quantitative tests, we determined the franchise rights carrying values for these stores exceeded their fair values, and we recorded non-cash franchise rights impairment charges of $22.0 million during the fourth quarter of 2025. As of December 31, 2025, we had 76 stores with franchise rights totaling $1.0 billion.
Table of Contents
Reported Operating Data
Years Ended December 31,
($ in millions, except per vehicle data)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
New vehicle
Retail used vehicle
Wholesale
Used vehicle
Finance and insurance, net
Total variable operations (1)
Parts and service
Other
Total revenue
Gross profit:
New vehicle
Retail used vehicle
Wholesale
Used vehicle
Finance and insurance
Total variable operations (1)
Parts and service
Other
Total gross profit
AutoNation Finance income (loss)
Selling, general, and administrative expenses
Depreciation and amortization
Goodwill impairment
Franchise rights impairment
Other income, net
Operating income
Non-operating income (expense) items:
Floorplan interest expense
Other interest expense
Other income, net
Income from continuing operations before income taxes
Retail vehicle unit sales:
New vehicle
Used vehicle
Revenue per vehicle retailed:
New vehicle
Used vehicle
Gross profit per vehicle retailed:
New vehicle
Used vehicle
Finance and insurance
Total variable operations (2)
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
Table of Contents
Years Ended December 31,
Revenue mix percentages:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total
Gross profit mix percentages:
New vehicle
Used vehicle
Parts and service
Finance and insurance
Other
Total
Operating items as a percentage of revenue:
Gross profit:
New vehicle
Used vehicle-retail
Parts and service
Total
Selling, general, and administrative expenses
Operating income
Other operating items as a percentage of total gross profit:
Selling, general, and administrative expenses
Operating income
December 31,
Days supply:
New vehicle (industry standard of selling days)
45 days
39 days
Used vehicle (trailing calendar month days)
38 days
37 days
Table of Contents
Same Store Operating Data
We have presented below our operating results on a same store basis to reflect our internal performance. The “Same Store” amounts presented below include the results of our stores for the identical months in each period presented in the comparison, commencing with the first full month in which the store was owned by us. Results from divested stores are excluded from both current and prior periods. Therefore, the amounts presented in the year 2024 column that is being compared to the year 2025 column may differ from the same store amounts presented in the year 2024 column that is being compared to the year 2023 column. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.
Years Ended December 31,
Years Ended December 31,
($ in millions, except per vehicle data)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
New vehicle
Retail used vehicle
Wholesale
Used vehicle
Finance and insurance, net
Total variable operations (1)
Parts and service
Other
Total revenue
Gross profit:
New vehicle
Retail used vehicle
Wholesale
Used vehicle
Finance and insurance
Total variable operations (1)
Parts and service
Other
Total gross profit
Retail vehicle unit sales:
New vehicle
Used vehicle
Total
Revenue per vehicle retailed:
New vehicle
Used vehicle
Gross profit per vehicle retailed:
New vehicle
Used vehicle
Finance and insurance
Total variable operations (2)
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
Table of Contents
Years Ended December 31,
Years Ended December 31,
Revenue mix percentages:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total
Gross profit mix percentages:
New vehicle
Used vehicle
Parts and service
Finance and insurance
Other
Total
Operating items as a percentage of revenue:
Gross profit:
New vehicle
Used vehicle-retail
Parts and service
Total
The following discussions of new vehicle, used vehicle, parts and service, and finance and insurance results are on a same store basis. The differences between reported amounts and same store amounts in revenue and gross profit of these lines of business in the tables below are related to acquisition and divestiture activity, as well as the opening of AutoNation USA used vehicle stores, as applicable.
Table of Contents
New Vehicle
Years Ended December 31,
($ in millions, except per vehicle data)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Reported:
Revenue
Gross profit
Retail vehicle unit sales
Revenue per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a percentage of revenue
Inventory days supply (industry standard of selling days)
45 days
39 days
Years Ended December 31,
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Same Store:
Revenue
Gross profit
Retail vehicle unit sales
Revenue per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a percentage of revenue
2025 compared to 2024
Same store new vehicle revenue increased during 2025, as compared to 2024, due to an increase in same store unit volume, particularly in the Domestic segment, and an increase in same store revenue PVR. Same store unit volume benefited from sustained consumer demand and better execution in our sales pipeline. In addition, same store unit volume in the prior year was adversely impacted by a decrease in productivity during the CDK outage.
Same store new vehicle revenue PVR increased during 2025, as compared to 2024, largely due to increases in the average selling price for vehicles across all franchised dealership segments. In addition, same store revenue PVR benefited from a 3% shift in mix to hybrid vehicles and electric vehicles and a 2% shift in mix toward larger vehicles, such as trucks and sport utility vehicles, that have relatively higher average selling prices.
Same store new vehicle gross profit PVR decreased during 2025, as compared to 2024, due in part to an increase in supply of new vehicle inventory as compared to the prior year, which has resulted in moderation of margins following post-pandemic elevated levels, and an increase in average vehicle costs. We expect that new vehicle unit profitability may continue to moderate, in part due to the tariffs announced in 2025.
Table of Contents
Net New Vehicle Inventory Carrying Benefit (Expense)
The following table details net new vehicle inventory carrying expense, consisting of new vehicle floorplan interest expense, net of floorplan assistance earned (amounts received from manufacturers specifically to support store financing of new vehicle inventory). Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark rates. See Note 7 of the Notes to the Consolidated Financial Statements for more information. Floorplan assistance is based on a percentage of the manufacturer’s suggested retail price or a flat rate per vehicle and is
accounted for as a component of new vehicle gross profit when the related vehicle is sold, in accordance with GAAP.
Years Ended December 31,
($ in millions)
Variance 2025 vs. 2024
Variance 2024 vs. 2023
Floorplan assistance
New vehicle floorplan interest expense
Net new vehicle inventory carrying benefit (expense)
2025 compared to 2024
The net new vehicle inventory carrying expense decreased in 2025, as compared to 2024, due to a decrease in floorplan interest expense largely as a result of lower average interest rates.
Table of Contents
Used Vehicle
Years Ended December 31,
($ in millions, except per vehicle data)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Reported:
Retail revenue
Wholesale revenue
Total revenue
Retail gross profit
Wholesale gross profit
Total gross profit
Retail vehicle unit sales
Revenue per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a % of retail revenue
Inventory days supply (trailing calendar month days)
38 days
37 days
Years Ended December 31,
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Same Store:
Retail revenue
Wholesale revenue
Total revenue
Retail gross profit
Wholesale gross profit
Total gross profit
Retail vehicle unit sales
Revenue per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a % of retail revenue
2025 compared to 2024
Same store retail used vehicle revenue increased during 2025, as compared to 2024, primarily due to an increase in same store revenue PVR. Same store revenue PVR benefited from an increase in the average selling price of used vehicles sold in all three of our franchised dealership segments and a shift in mix to higher-priced used vehicles. Wholesale used vehicle revenue decreased during 2025, as compared to 2024, due to a shift in mix to lower-value used vehicles and a decrease in wholesale unit volume.
Same store gross profit PVR during 2025 was relatively flat as compared to 2024, as used vehicle unit profitability has been stabilizing due in part to our initiatives to achieve more optimal levels and mix of used vehicle inventory.
Table of Contents
Parts & Service
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Reported:
Revenue
Gross profit
Gross profit as a percentage of revenue
Years Ended December 31,
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Same Store:
Revenue
Gross profit
Gross profit as a percentage of revenue
Parts and service revenue is primarily derived from vehicle repairs and maintenance paid directly by customers or via reimbursement from manufacturers and others under warranty programs, as well as from wholesale parts sales, the preparation of vehicles for sale, and collision services.
2025 compared to 2024
Same store parts and service revenue increased during 2025, as compared to 2024, primarily due to increases in revenue associated with customer-pay service of $111.4 million and warranty service of $86.6 million.
Same store parts and service gross profit increased during 2025, as compared to 2024, primarily due to an increase in gross profit associated with customer-pay service of $68.6 million and warranty service of $57.5 million.
Parts and service revenue and gross profit across all revenue types benefited from an increase in repair order volume due in part to the prior year being adversely impacted by the CDK outage, which disrupted our sales and service processes, and an increase in technician headcount. Parts and service revenue and gross profit associated with customer-pay service also benefited from higher value repair orders and improved margin performance. Parts and service revenue and gross profit associated with warranty service also benefited from an increase in manufacturer recalls, improved parts and labor rates, and higher value repair orders.
Table of Contents
Finance and Insurance
Years Ended December 31,
($ in millions, except per vehicle data)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Reported:
Revenue and gross profit
Gross profit per vehicle retailed
Years Ended December 31,
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Same Store:
Revenue and gross profit
Gross profit per vehicle retailed
Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with third-party 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.
As we continue to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores, we expect that income related to arranging customer financing will shift to AutoNation Finance and that the resulting decrease in finance and insurance gross profit will be offset by greater profitability generated by our AutoNation Finance business. Interest income on financing provided through AutoNation Finance is recognized over the contractual term of the related loans. See “AutoNation Finance” for additional information.
2025 compared to 2024
Same store finance and insurance revenue and gross profit increased during 2025, as compared to 2024, due to increases in finance and insurance revenue and gross profit PVR and vehicle unit volume. Finance and insurance revenue and gross profit PVR benefited from higher realized margins on vehicle service contracts, partially offset by an increase in retail vehicle sales financed through AutoNation Finance, which reduced finance commissions received from third-party lenders. In addition, finance and insurance gross profit in the prior year was adversely impacted by the CDK outage.
Table of Contents
Segment Results
In the following table of financial data, revenue and segment income of our reportable segments are reconciled to consolidated revenue and consolidated operating income, respectively.
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
Domestic
Import
Premium Luxury
Total Franchised Dealerships
Corporate and other
Total consolidated revenue
Segment income (1) :
Domestic
Import
Premium Luxury
Total Franchised Dealerships
AutoNation Finance income (loss)
Corporate and other (2)
Floorplan interest expense
Operating income
Retail new vehicle unit sales:
Domestic
Import
Premium Luxury
Retail used vehicle unit sales:
Domestic
Import
Premium Luxury
Other
(1) Segment income for the Domestic, Import, and Premium Luxury reportable segments is a non-GAAP measure and is defined as operating income less floorplan interest expense.
(2) Comprised of our non-franchised businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, mobile service, and auction operations, all of which do not meet the quantitative thresholds for reportable segments. “Corporate and other” income (loss) also includes unallocated corporate overhead expenses and other income items.
Table of Contents
Domestic
The Domestic segment operating results included the following:
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Revenue
Gross Profit:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Gross Profit
Segment income
Retail new vehicle unit sales
Retail used vehicle unit sales
2025 compared to 2024
Domestic revenue increased during 2025, as compared to 2024, primarily due to an increase in new vehicle unit volume, which benefited from sustained consumer demand and better execution in our sales pipeline, partially offset by a $71.4 million decrease in new vehicle revenue from the divestitures we completed in 2025 and 2024. In addition, Domestic revenue in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage.
Domestic segment income increased during 2025, as compared to 2024, primarily due to an increase in finance and insurance gross profit, approximately 70% of which was due to an increase in finance and insurance gross profit PVR of $222 driven by higher realized margins on vehicle service contracts, and 30% of which was due to higher vehicle unit volume. Domestic segment income also benefited from increases in parts and service gross profit associated with the preparation of vehicles for sale of $9.2 million and customer-pay service of $8.2 million and a decrease in floorplan interest expense of $13.6 million. In addition, Domestic segment income in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage. The increases in Domestic segment income were partially offset by a decrease in new vehicle gross profit driven by a decrease in new vehicle gross profit PVR of $552.
Table of Contents
Import
The Import segment operating results included the following:
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Revenue
Gross Profit:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Gross Profit
Segment income
Retail new vehicle unit sales
Retail used vehicle unit sales
2025 compared to 2024
Import revenue increased during 2025, as compared to 2024, primarily due to increases in parts and service revenue associated with warranty service of $70.0 million and customer-pay service of $26.6 million. Import revenue also benefited from an increase in new vehicle revenue due to an increase in average selling prices, with new vehicle revenue PVR up $846. In addition, Import revenue in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage.
Import segment income increased during 2025, as compared to 2024, primarily due to increases in parts and service gross profit associated with warranty service of $43.8 million and customer-pay service of $16.5 million, and an increase in finance and insurance gross profit PVR of $66 driven by higher realized margins on vehicle service contracts. In addition, Import segment income in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage. The increases in Import segment income were partially offset by a decrease in new vehicle gross profit, due to a decrease in new vehicle gross profit PVR of $308, and an increase in SG&A expenses of $36.4 million, largely due to an increase in performance-driven compensation expense.
Table of Contents
Premium Luxury
The Premium Luxury segment operating results included the following:
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Revenue:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Revenue
Gross Profit:
New vehicle
Used vehicle
Parts and service
Finance and insurance, net
Other
Total Gross Profit
Segment income
Retail new vehicle unit sales
Retail used vehicle unit sales
2025 compared to 2024
Premium Luxury revenue increased during 2025, as compared to 2024, primarily due to an increase in parts and service revenue associated with customer-pay service of $58.9 million and an increase in used vehicle retail revenue, approximately 55% of which was due to an increase in average selling prices, with used vehicle revenue PVR up $699, and 45% of which was due to higher used vehicle unit volume, particularly for higher-priced used vehicles. Additionally, Premium Luxury revenue benefited from a $17.3 million increase in parts and service revenue and a $23.2 million increase in used vehicle revenue from the acquisitions we completed in the third quarter of 2025. In addition, Premium Luxury revenue in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage.
Premium Luxury segment income increased during 2025, as compared to 2024, primarily due to an increase in parts and service gross profit associated with customer-pay service of $30.6 million, and a $150 increase in finance and insurance gross profit PVR driven by higher realized margins on vehicle service contracts. Premium Luxury segment income also benefited from a decrease in floorplan interest expense of $15.1 million. In addition, Premium Luxury segment income in the prior year was adversely impacted by a decrease in productivity as a result of the CDK outage. The increases in Premium Luxury segment income were partially offset by a $589 decrease in new vehicle gross profit PVR, and an increase in SG&A expenses of $29.4 million, largely due to the acquisitions we completed in the third quarter of 2025 and an increase in advertising expenses.
Table of Contents
AutoNation Finance
AutoNation Finance (“ANF”), our captive auto finance company, provides indirect financing to qualified retail customers on vehicles we sell. This business provides us an opportunity to extend our relationship with the customer beyond the vehicle sale and participate in the customer’s entire vehicle ownership cycle. As a result, we are able to diversify our sources of income, generate additional profits, cash flows, and sales, and increase customer retention.
ANF income (loss) includes the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued or used to fund these receivables, a provision for estimated credit losses on the auto loans receivable originated or acquired, direct expenses, and gains or losses on the sale of auto loans receivable. Interest income on auto loans receivable is recognized over the contractual term of the related loans. ANF income (loss) does not include amortization of intercompany discounts or intercompany dealer participation fees.
We typically use non-recourse funding facilities, including warehouse facilities and asset-backed term funding transactions, as well as free cash flows from operations to fund the auto loans receivable of ANF. See Notes 6 and 11 of the Notes to Consolidated Financial Statements for more information about our auto loans receivables and related non-recourse debt, respectively.
The following table presents the components of ANF income (loss):
Interest margin:
Interest and fee income
Interest expense
Total interest margin
Provision for credit losses
Total interest margin after provision for credit losses
Direct expenses (2)
Gain on sale of auto loans receivable
AutoNation Finance income (loss)
NM - Not meaningful
(1) Percentage of total average managed receivables.
(2) Direct expenses are comprised primarily of compensation expenses and loan administration costs incurred by our auto finance company.
Table of Contents
The following tables present selected loan origination and loan performance information:
Loan Origination Information
Loans originated
Vehicle units financed
Penetration rate (1)
Weighted average contract rate
Weighted average credit score (2)
Weighted average loan-to-value (3)
Weighted average term (in months)
(1) Units financed as a percentage of total new and used vehicle retail units sold.
(2) Represents weighted average FICO scores for receivables with obligors that have a FICO score at the time of application. For receivables with co-borrowers, we use the primary borrower’s FICO score. FICO scores are not a significant factor in our proprietary credit model, which relies on information from credit bureaus and other information.
(3) Front-end loan-to-value represents the ratio of the amount financed to the total collateral value, which is measured as the vehicle selling price plus applicable taxes, title, and fees.
Loan Performance Information
Total average managed receivables
Allowance for credit losses as a percentage of ending managed receivables
Net credit losses on managed receivables
Annualized net credit losses as a percentage of total average managed receivables
Accounts greater than 30 days past due as a percentage of ending managed receivables
Average recovery rate (1)
(1) Represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at wholesale auctions.
2025 compared to 2024
ANF generated income of $9.8 million during 2025, compared to a loss of $9.3 million during 2024. The current period benefited from an increase in interest and fee income from the growth in average managed receivables of $955.6 million as we continue to grow our ANF business and increase our finance penetration rates associated with vehicles sold through our stores.
ANF income also benefited from a decrease in the expected credit loss rates compared to the prior year reflecting improved credit quality of new loan originations. As auto loans receivable shifted towards higher credit tiers, annualized net credit losses as a percentage of managed receivables decreased in 2025, compared to the prior year. The increases in ANF income were partially offset by the gain on sale of third-party receivables originated through third-party dealers that we completed in the fourth quarter of 2024.
ANF continues to realize operational efficiencies as the portfolio scales, resulting in reduced direct expenses as a percentage of the managed portfolio.
While we have seen improvement in our credit loss rates resulting from the improved credit quality of our portfolio, we expect our portfolio delinquency rates will continue to normalize and trend upward as our portfolio seasons.
Table of Contents
Selling, General, and Administrative Expenses
Our SG&A expenses consist primarily of compensation, including store and corporate salaries, commissions, and incentive-based compensation, as well as advertising (net of reimbursement-based manufacturer advertising rebates), and store and corporate overhead expenses, which include occupancy costs, outside service costs, information technology expenses, service loaner and rental inventory expenses, legal, accounting, and professional services, and general corporate expenses. The following table presents the major components of our SG&A expenses.
Years Ended December 31,
($ in millions)
Variance
Favorable /
(Unfavorable)
Variance
Variance
Favorable /
(Unfavorable)
Variance
Reported:
Compensation
Advertising
Store and corporate overhead
Total
SG&A as a % of total gross profit:
Compensation
bps
bps
Advertising
bps
bps
Store and corporate overhead
bps
bps
Total
bps
bps
2025 compared to 2024
SG&A expenses increased in 2025, as compared to 2024, primarily due to an increase in compensation expense, an increase in advertising expenses to support vehicle sales, an increase in acquisition-related expenses of $11.5 million, and acquisitions and newly opened stores. The increase in compensation expense was largely due to an increase in performance-driven compensation, as well as an increase in stock-based compensation of $10.0 million, partially offset by certain one-time compensation of approximately $43 million paid to commission-based associates in the prior year to ensure business continuity as a result of the CDK outage. The increases in SG&A expenses were offset by decreases from the divestitures we completed in 2024 and 2025, as well as a decrease in self-insured losses largely due to the prior year including $11.7 million of losses related to hailstorms and other natural catastrophes. As a percentage of total gross profit, SG&A expenses decreased to 67.9% during 2025, from 68.2% in 2024, due to prior year gross profit and SG&A expenses being adversely impacted by the CDK outage in the prior year and effective cost management.
Other Income, Net (Operating)
Other Income, Net generally includes asset impairments, gains or losses associated with business/property divestitures, and legal settlements, among other items.
During 2025, we recognized $80.0 million in insurance recoveries received under our cybersecurity insurance policies for business interruption and related losses caused by the CDK outage that occurred in the prior year, partially offset by asset impairments of $37.9 million. During 2024, we recognized $55.1 million related to net gains on business/property divestitures, which were partially offset by asset impairments of $9.3 million.
Table of Contents
Non-Operating Income (Expenses)
Floorplan Interest Expense
Our floorplan facilities utilize Prime-based and SOFR-based interest rates, which are variable and, therefore, our floorplan interest rates increase and decrease with changes in the underlying benchmark interest rates.
Floorplan interest expense was $188.8 million in 2025 and $218.9 million in 2024. The decrease in floorplan interest expense of $30.1 million in 2025, as compared to 2024, is primarily a result of lower average interest rates.
Interest Expense
Other interest expense includes the interest related to non-vehicle long-term debt, commercial paper, and finance lease obligations.
Other interest expense was $180.0 million in 2025 compared to $179.7 million in 2024. The slight increase in interest expense of $0.3 million was driven by higher average interest rates, partially offset by lower average debt balances.
Other Income (Loss), Net
During 2025 and 2024, we recognized net gains of $19.1 million and $14.5 million, respectively, related to changes in the cash surrender value of corporate-owned life insurance (“COLI”) for deferred compensation plan participants as a result of changes in market performance of the underlying investments. Gains and losses related to the COLI are substantially offset by corresponding increases and decreases, respectively, in the deferred compensation obligations, which are reflected in SG&A expenses.
During 2025 and 2024, we recorded unrealized losses of $7.9 million and $7.0 million, respectively, related to the change in fair value of the underlying securities of our minority equity investments. During the period that we hold our minority equity investments, unrealized gains and losses will be recorded as the fair market values of securities with readily determinable fair values change over time, or as observable price changes are identified for securities without readily determinable fair values. See Note 19 of the Notes to Consolidated Financial Statements for more information.
Income Tax Provision
Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates, adjusted, as necessary, for any discrete tax matters occurring during the period. As we operate in various states, our effective tax rate is also dependent upon our geographic revenue mix. Our effective income tax rate was 26.6% in 2025 and 24.5% in 2024. The tax rate for 2025 reflects that the goodwill impairment charge recorded in the second quarter of 2025 was not deductible for tax purposes.
Discontinued Operations
Results of discontinued operations reflected in 2023 are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income taxes, were primarily related to a gain on the sale of real estate in the first quarter of 2023 associated with a store that was closed prior to January 1, 2014.
Liquidity and Capital Resources
We manage our liquidity to ensure access to sufficient funding at acceptable costs to fund our ongoing operating requirements and future capital expenditures while continuing to meet our financial obligations. We believe that our cash and cash equivalents, funds generated through operations, and amounts available under our revolving credit facility, commercial paper program, secured used vehicle floorplan facilities, and non-recourse warehouse facilities will be sufficient to fund our working capital requirements, fund the origination of auto loans receivable, service our debt, pay our tax obligations and commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future. Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to augment our liquidity, to reduce our cost of capital, or for general corporate purposes. In addition, we expect to periodically securitize auto loans receivable to provide funding for our auto finance company.
Table of Contents
Available Liquidity Resources
We had the following sources of liquidity available for the years ended December 31, 2025 and 2024:
(In millions)
December 31,
December 31,
Cash and cash equivalents
Revolving credit facility
(1) At December 31, 2025, we had $0.4 million of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. We had $200.0 million of commercial paper notes outstanding at December 31, 2025. See Note 11 of the Notes to Consolidated Financial Statements for additional information.
In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance primarily relating to insurance matters. At December 31, 2025, surety bonds, letters of credit, and cash deposits totaled $115.5 million, of which $0.4 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit.
In February 2025, we filed an automatic shelf registration statement with the SEC that enables us to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, warrants, subscription rights, depositary shares, stock purchase contracts, and units.
In addition, we own a significant portion of our new vehicle franchise store locations and other locations associated with our non-franchised businesses, as well as other properties. At December 31, 2025, these properties had a net book value of $3.0 billion. None of these properties are mortgaged or encumbered.
Capital Allocation
Our capital allocation strategy is focused on growing long-term value per share. We invest capital in our business to maintain and upgrade our existing facilities and to build new facilities for existing franchises, as well as for other strategic and technology initiatives. We also deploy capital opportunistically to complete acquisitions or investments, build facilities for newly awarded franchises, and/or repurchase our common stock and/or debt. Our capital allocation decisions are based on factors such as the expected rate of return on our investment, the market price of our common stock versus our view of its intrinsic value, the market price of our debt, the potential impact on our capital structure, our ability to complete acquisitions that meet our strategic objectives, market and vehicle brand criteria, and/or return on investment threshold, and limitations set forth in our debt agreements.
Share Repurchases
Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
(In millions, except per share data)
Shares repurchased
Aggregate purchase price (1)
Average purchase price per share
(1) Excludes the excise tax accrual imposed under the Inflation Reduction Act of $7.4 million for 2025, $4.2 million for 2024, and $8.1 million for 2023.
From January 1, 2026 through February 10, 2026, we repurchased 0.6 million shares of common stock for an aggregate purchase price of $128.7 million (average purchase price per share of $212.01). As of February 10, 2026, $947.3 million remained available under our stock repurchase limit authorized by the Board of Directors.
Table of Contents
The decision to repurchase shares at any given point in time is based on factors such as the market price of our common stock versus our view of its intrinsic value, the potential impact on our capital structure (including compliance with our maximum leverage ratio, minimum interest coverage ratio, and other financial covenants in our debt agreements as well as our available liquidity), and the expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.
Capital Expenditures
The following table sets forth information regarding our capital expenditures over the past three years:
(In millions)
Purchases of property and equipment
Acquisitions and Divestitures
During 2025, we purchased one Domestic store, two Import stores, and two Premium Luxury stores. During 2024, we did not purchase any stores. During 2023, we acquired a mobile automotive repair and maintenance business and purchased one Domestic store, five Import stores, and one Premium Luxury store.
During 2025, we divested one Domestic store and one Import store. During 2024, we divested seven Domestic stores and one Import store. During 2023, we divested one Domestic store.
(In millions)
Cash used in business acquisitions, net (1)
Cash received from business divestitures, net
(1) Excludes finance leases.
Debt
The following table sets forth our non-vehicle long-term debt as of December 31, 2025 and 2024:
(in millions)
Debt Description
Maturity Date
Interest Payable
4.5% Senior Notes
October 1, 2025
April 1 and October 1
3.8% Senior Notes
November 15, 2027
May 15 and November 15
1.95% Senior Notes
August 1, 2028
February 1 and August 1
4.45% Senior Notes
January 15, 2029
January 15 and July 15
4.75% Senior Notes
June 1, 2030
June 1 and December 1
2.4% Senior Notes
August 1, 2031
February 1 and August 1
3.85% Senior Notes
March 1, 2032
March 1 and September 1
5.89% Senior Notes
March 15, 2035
March 15 and September 15
Revolving credit facility
July 18, 2028
Monthly
Finance leases and other debt
Various dates through 2041
Less: unamortized debt discounts and debt issuance costs
Less: current maturities
Long-term debt, net of current maturities
On February 24, 2025, we issued $500.0 million aggregate principal amount of 5.89% Senior Notes due 2035, which were sold at 99.995% of the aggregate principal amount. In October 2025, we repaid the outstanding $450.0 million of
Table of Contents
4.5% Senior Notes due 2025. On November 14, 2025, we issued $600.0 million aggregate principal amount of 4.45% Senior Notes due 2029, which were sold at 99.846% of the aggregate principal amount.
We had $200.0 million and $630.0 million of commercial paper notes outstanding as of December 31, 2025 and 2024, respectively.
A downgrade in our credit ratings could negatively impact the interest rate payable on our 3.8% Senior Notes and 4.75% Senior Notes, and could also negatively impact our ability to issue, or the interest rates for, commercial paper notes or other debt. Additionally, an increase in our leverage ratio could negatively impact the interest rates charged for borrowings under our revolving credit facility.
The following table sets forth our non-recourse debt, as of December 31, 2025 and 2024.
Warehouse facilities
Term securitization debt of consolidated VIEs
Less: unamortized debt discounts and debt issuance costs
Less: current maturities
Non-recourse debt, net of current maturities
In May 2025, we issued non-recourse notes payable related to asset-backed term securitizations with an aggregate principal amount of $700.0 million, a weighted-average interest rate of 4.90%, and maturity dates ranging from June 2026 to September 2032. In July 2025, we repaid the outstanding balance of non-recourse notes payable of the CIG Auto Receivables Trust 2021-1.
In January 2026, we issued non-recourse notes payable related to asset-backed term securitizations with an aggregate principal amount of $749.2 million, a weighted-average interest rate of 4.25%, and maturity dates ranging from 2027 to 2034.
See Note 11 of the Notes to Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and non-recourse debt.
Restrictions and Covenants
Our amended and restated credit agreement and the indentures for our senior unsecured notes contain customary covenants that place restrictions on us, including our ability to incur additional or guarantee other indebtedness, to create liens or other encumbrances, to engage in sale and leaseback transactions, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities. Our failure to comply with the covenants contained in our amended and restated credit agreement and the indentures for our senior unsecured notes could result in the acceleration of other indebtedness of AutoNation.
Under our amended and restated credit agreement, we are required to remain in compliance with a maximum leverage ratio and a minimum interest coverage ratio. The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a measure of earnings. The interest coverage ratio is a contractually defined amount reflecting a measure of earnings divided by certain interest expense principally associated with vehicle floorplan payable and non-vehicle debt. The specific terms of the leverage and interest coverage ratios can be found in our amended and restated credit agreement, which is filed with our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
Table of Contents
As of December 31, 2025, we were in compliance with the covenants under our credit agreement and the indentures for our senior unsecured notes. At December 31, 2025, our leverage and interest coverage ratios were as follows:
December 31, 2025
Requirement
Actual
Leverage ratio
Interest coverage ratio
Vehicle Floorplan Payable
The components of vehicle floorplan payable are as follows:
(In millions)
Vehicle floorplan payable - trade
Vehicle floorplan payable - non-trade
Vehicle floorplan payable
Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related vehicles are sold. Vehicle floorplan facilities are primarily collateralized by vehicle inventories and related receivables. See Note 7 of the Notes to Consolidated Financial Statements for more information on our vehicle floorplan payable.
Cash Flows
The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities:
Years Ended December 31,
(In millions)
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Cash Flows from Operating Activities
Our primary sources of operating cash flows result from the sale of vehicles, finance and insurance products, and parts and automotive repair and maintenance services, proceeds from vehicle floorplan payable-trade, and collections on auto loans receivable for vehicles sold through our stores. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of inventory, personnel-related expenditures, originations of auto loans receivable for vehicles sold through our stores, and payments related to taxes and leased properties.
2025 compared to 2024
Net cash provided by operating activities decreased during 2025, as compared to 2024, primarily due to a $304.5 million increase in auto loans receivable for vehicles sold through our stores as we continued to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores. In addition, net cash provided by operating activities was adversely impacted by an increase in income tax payments of $146.8 million driven by payment in 2025 of the fourth quarter 2024 tax that had been deferred pursuant to hurricane relief granted by the IRS. The cash outflows from operating activities were partially offset by an increase in cash earnings.
Cash Flows from Investing Activities
Net cash flows from investing activities consist primarily of cash used in capital additions and activity from business acquisitions, business divestitures, property dispositions, originations of and collections on auto loans receivable acquired through third-party dealers, and other transactions.
Table of Contents
We will make facility and infrastructure upgrades and improvements from time to time as we identify projects that are required to maintain our current business or that we expect to provide us with acceptable rates of return.
2025 compared to 2024
During 2025, we had net cash used in investing activities, as compared to net cash provided by investing activities during 2024, primarily due to an increase in cash used for acquisitions, a decrease in cash received from divestitures, and a decrease in proceeds from the sale of auto loans receiveable. We acquired five stores for an aggregate purchase price of $459.1 million in 2025 and acquired no stores in 2024. We divested two stores for aggregate proceeds of $16.1 million in 2025 and divested eight stores for aggregate proceeds of $156.0 million in 2024. We had no sale of auto loans receivable in 2025 and received $96.0 million in proceeds from the sale of auto loans receivable in 2024.
Cash Flows from Financing Activities
Net cash flows from financing activities primarily include repurchases of common stock, debt activity, and changes in vehicle floorplan payable-non-trade.
2025 compared to 2024
During 2025, we continued to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores. As a result, we borrowed $2.5 billion and repaid $1.4 billion under our non-recourse debt facilities in 2025. During 2024, we borrowed $1.5 billion and repaid $946.7 million under our non-recourse debt facilities.
During 2025, we issued $500.0 million aggregate principal amount of 5.89% Senior Notes due 2035 and $600.0 million aggregate principal amount of 4.45% Senior Notes due 2029, and repaid the outstanding $450.0 million of 4.5% Senior Notes due 2025. In 2024, we repaid the outstanding $450.0 million of 3.5% Senior Notes due 2024.
Cash flows from financing activities include changes in commercial paper notes outstanding totaling net payments of $430.0 million during 2025 compared to net proceeds of $190.0 million during 2024, and changes in vehicle floorplan payable-non-trade totaling net proceeds of $61.1 million during 2025 and net payments of $113.5 million during 2024.
During 2025, we repurchased 4.1 million shares of common stock for an aggregate purchase price of $784.8 million (average purchase price per share of $193.33), including repurchases for which settlement occurred subsequent to December 31, 2025, and excluding the excise tax imposed under the Inflation Reduction Act. During 2024, we repurchased 2.9 million shares of our common stock for an aggregate purchase price of $460.0 million (average purchase price per share of $160.86), excluding the excise tax imposed under the Inflation Reduction Act.
Table of Contents
Material Cash Requirements
The following table summarizes our current and long-term material cash requirements as of December 31, 2025. The amounts presented are based upon, among other things, the terms of any relevant agreements. Future events that may occur related to the following payment obligations could cause actual payments to differ significantly from these amounts.
Payments Due by Period
(In millions)
Total
Less Than 1
Year
1 - 3 Years
(2027 and
3 - 5 Years
(2029 and
More Than
5 Years
(2031 and
thereafter)
Vehicle floorplan payable (Note 7) (1)
Non-vehicle long-term debt, including finance leases (Note 11) (1)(2)
Commercial paper (Note 11) (1)
Interest payments (3)
Operating lease and other commitments (Note 10) (1)(4)
Deferred compensation obligations (Note 1) (1)(5)
Estimated chargeback liability (Note 12) (1)(6)
Estimated self-insurance obligations (Note 13) (1)(7)
Purchase obligations and other commitments (8)
Total
(1) See Notes to Consolidated Financial Statements.
(2) Amounts for non-vehicle long-term debt obligations reflect principal payments and are not reduced for unamortized debt discounts of $4.0 million or debt issuance costs of $20.4 million.
(3) Primarily represents scheduled fixed interest payments on our outstanding senior unsecured notes and finance leases. Estimates of future interest payments for vehicle floorplan payables and commercial paper are excluded due to the short-term nature of these facilities.
(4) Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes. Additionally, operating leases that are on a month-to-month basis are not included.
(5) Due to uncertainty regarding timing of payments expected beyond one year, long-term obligations for deferred compensation arrangements have been classified in the “More Than 5 Years” column.
(6) Our estimated chargeback obligations do not have scheduled maturities, however, the timing of future payments is estimated based on historical patterns.
(7) Our estimated self-insurance obligations are based on management estimates and actuarial calculations. Although these obligations do not have scheduled maturities, the timing of future payments is estimated based on historical patterns.
(8) Primarily represents purchase orders and contracts in connection with real estate construction projects and information technology and communication systems.
We expect that the amounts above will be funded through cash flows from operations or borrowings under our commercial paper program or credit agreement. In the case of payments due upon the maturity of our debt instruments, we currently expect to be able to refinance such instruments in the normal course of business.
Table of Contents
The table above excludes the non-recourse debt that relates to auto loans receivable funded through asset-backed term securitizations and/or warehouse facilities. These receivables can only be used as collateral to settle obligations of this non-recourse debt. In addition, the investors and/or creditors in the non-recourse debt have no recourse to our assets for payment of the debt beyond the related receivables, the amounts on deposit in reserve accounts, and the restricted cash from collections on auto loans receivable. Non-recourse debt, net of unamortized debt discounts and issuance costs, totaled $1.9 billion at December 31, 2025. See Note 6 and Note 11 to the Consolidated Financial Statements for more information.
In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance. At December 31, 2025, surety bonds, letters of credit, and cash deposits totaled $115.5 million, of which $0.4 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit. We have negotiated a letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under this revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit.
As further discussed in Note 14 of the Notes to Consolidated Financial Statements, there are various tax matters where the ultimate resolution may result in us owing additional tax payments.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Forward-Looking Statements
Our business, financial condition, results of operations, cash flows, and prospects, and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Annual Report on Form 10-K, including, without limitation, statements regarding our strategic initiatives, partnerships, or investments, including AutoNation Finance, and statements regarding potential tariff-related impacts and our expectations for the future performance of our business and the automotive retail industry, including during 2026, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf that describe our objectives, goals, or plans constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact, including statements that describe our objectives, plans or goals are, or may be deemed to be, forward-looking statements. Words such as “anticipate,” “expect,” “estimate,” “intend,” “goal,” “target,” “project,” “plan,” “believe,” “continue,” “may,” “will,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these statements. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances. The risks, uncertainties, and other factors that our stockholders and prospective investors should consider include, but are not limited to, the following:
• The automotive retail industry is sensitive to changing economic conditions and various other factors, including, but not limited to, unemployment levels, consumer confidence, fuel prices, interest rates, and tariffs. Our business and results of operations are substantially dependent on new and used vehicle sales levels in the United States and in our particular geographic markets, as well as the gross profit margins that we can achieve on our sales of vehicles, all of which are very difficult to predict .
• Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers .
• We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises. In addition, we rely on various third-party suppliers for key products and services.
Table of Contents
• We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores.
• We are investing significantly in various strategic initiatives and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.
• If we are not able to maintain and enhance our retail brands and reputation or to attract consumers to our own digital channels, or if events occur that damage our retail brands, reputation, or sales channels, our business and financial results may be harmed.
• We are subject to various risks associated with originating and servicing auto finance loans through indirect lending to customers, any of which could have an adverse effect on our business.
• New laws, regulations, or governmental policies in response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, could adversely impact our business, results of operations, financial condition, cash flow, and prospects.
• We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects .
• Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer .
• We depend on information technology for our business and are subject to risks related to cybersecurity threats and incidents, including those affecting our third-party suppliers and other service providers. A failure of our information systems or any cybersecurity breaches or unauthorized disclosure of confidential information could have a material adverse effect on our business, disrupt our business, and adversely impact our reputation and results of operations.
• Our debt agreements contain certain financial ratios and other restrictions on our ability to conduct our business, and our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations .
• We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability .
• Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our goodwill and other intangible assets for impairment at least annually, which could result in a material, non-cash write-down of goodwill or franchise rights and could have a material adverse impact on our results of operations and shareholders’ equity .
• Our minority equity investments with readily determinable fair values are required to be measured at fair value each reporting period, which could adversely impact our results of operations and financial condition. The carrying values of our minority equity investments that do not have readily determinable fair values are required to be adjusted for observable price changes or impairments, both of which could adversely impact our results of operations and financial condition.
• Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business.
Additional Information
Investors and others should note that we announce material financial information using our company website ( www.autonation.com ), our investor relations website ( investors.autonation.com ), SEC filings, press releases, public conference calls, and webcasts. Information about AutoNation, its business, and its results of operations may also be announced by posts on AutoNation’s X feed ( www.x.com/autonation ).
Table of Contents
The information that we post on our websites and social media channels could be deemed to be material information. As a result, we encourage investors, the media, and others interested in AutoNation to review the information that we post on those websites and social media channels. Our social media channels may be updated from time to time on our investor relations website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K.
