AN 10-K & 10-Q changes, risk factors and insider trading

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, statements regarding our expectations for the future performance of our business and the automotive retail industry, including during 2025, statements regarding the impact of the CDK Global (“CDK”) outage on our business and the availability of insurance or other sources of recovery,industry; 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:

We believe that many factors affect sales of new and used vehicles and automotive retailers’ gross profit margins in the United States and in our particular geographic markets, including the economy, tariffs, fuel prices, credit availability, interest rates, consumer confidence, consumer shopping preferences and the success of third-party online and mobile sales platforms,preferences, the level of personal discretionary spending, labor force participation and unemployment rates, the state of housing markets, vehicle production levels and capacity, auto emission and fuel economy standards, the rate of inflation, currency exchange rates, tariffs, manufacturer incentives (and consumers’ reaction to such offers), intense industry competition, the prospects of war, other international conflicts or terrorist attacks, global pandemics, severe weather events, product quality, affordability and innovation, the number of consumers whose vehicle leases are expiring, the length of consumer loans on existing vehicles, and the rise of ride-sharing applications. The imposition of new tariffs, quotas, duties, or other restrictions or limitations, including the tariffs announced by the U.S. government beginning in the first quarter of 2025 on imported vehicles and parts, could increase prices for vehicles and/or parts imported into the United States, limit the availability of such vehicles and/or parts, and adversely impact affordability and demand for such vehicles and/or parts, which in turn could have a material adverse effect on our business and results of operations. 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. Changes in interest rates can significantly impact new and used vehicle sales and vehicle affordability due to the direct relationship between interest rates and monthly loan payments, a critical factor for many vehicle buyers, and the impact interest rates have on customers’ borrowing capacity and disposable income. Any decreases in our customers’ disposable income could also negatively impact their ability to repay loans originated by AutoNation Finance, our captive auto finance company. Sales of certain vehicles, particularly trucks and sport utility vehicles that historically have provided us with higher gross profit per vehicle retailed, are sensitive to fuel prices and the level of construction activity. In addition, rapid changes in fuel prices can cause shifts in consumer preferences which are difficult to accommodate given the long lead-time of inventory acquisition. The imposition of new tariffs, quotas, duties, or other restrictions or limitations could increase prices for vehicles and/or parts imported into the United States and adversely impact demand for such vehicles and/or parts. Our vehicle sales, service, and collision businesses could also be adversely affected by changes in the automotive industry driven by new technologies, distribution channels, or products, including ride-sharing applications, subscription services, autonomous and electric vehicles, and accident avoidance technology.

Most vehicle manufacturers from time to time establish various marketing and sales incentive programs designed to spur consumer demand for their vehicles, particularly during periods of excess supply and/or in a flat or declining new vehicle sales market. These programs may impact our operations,new particularlyvehicle acquisition costs, the price ultimately paid by our salescustomers, and the number of newvehicles vehicles.sold in a particular period. Since these programs are often not announced in advance, they can be difficult to plan for when ordering inventory. Furthermore, manufacturers may modify and discontinue these marketing and incentive programs from time to time, which could have a material adverse effect on our results of operations and cash flows.

We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation Finance business, our AutoNation USA used vehicle stores, and our AutoNation Mobile Service business,initiatives and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.

We have invested and will continue to invest substantial resources in marketing activities with the goals of, among other things, extending and enhancing the AutoNation retail brand and attracting consumers to our own digital channels. We are also investing significantly in various strategic initiatives, including the planned expansion of our AutoNation Finance business,business and our AutoNation USA used vehicle stores, and our AutoNation Mobile Service business.stores. These strategic initiatives may be impacted by a number of variables, including customer adoption, availability of used vehicle inventory, demand for our branded products, market conditions, and our ability to identify, acquire, and build out suitable locations in a timely manner. There can be no assurance that these initiatives will be successful or that the amount we invest in these initiatives will result in improved financial results. If our initiatives are not successful, we will have incurred significant expenses without the benefit of improved financial results, and we may be required to incur impairment charges.

In addition, vehicle manufacturers are subject to government-mandated fuel economy and greenhouse gas, or GHG, emission standards, which continue to change and become more stringent over time.standards. Significant increases in fuel economy requirements or new federal or state restrictions on emissions of carbon dioxide that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven, or the products we sell.

The automotive retail and finance industry, including our facilities and operations, is subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle sales, retail installment sales, leasing, finance and insurance products, indirect auto financing, origination and servicing of consumer auto finance loans, vehicle protection products, advertising, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, the environment, vehicle emissions and fuel economy, health and safety, and employment practices. With respect to motor vehicle sales, retail installment sales, leasing, finance and insurance products, vehicle protection products, and advertising, we are subject to various laws and regulations, the violation of which could subject us to consumer class action or other lawsuits or governmental investigations and adverse publicity, in addition to administrative, civil, or criminal sanctions. With respect to our indirect auto financing and origination and servicing of consumer auto finance loans through our captive auto finance company, we are subject to extensive governmental laws and regulations relating to finance companies that could subject us to regulatory enforcement actions, including consent orders or similar orders where we may be required to revise the practices of our captive auto finance company, remunerate customers, or pay fines. In addition, as the assignee of consumer loans previously originated by third-party dealers prior to October 2023, our captive auto finance company could be named as a co-defendant in litigation initiated by consumers primarily against a specific dealer. Our captive auto finance company may also be involved in litigation with dealers or other third-party service providers, which could materially adversely impact our business, operating results, and prospects. With respect to employment practices, we are subject to various laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws. We are also subject to lawsuits and governmental investigations alleging violations of these laws and regulations, including purported class action lawsuits, which could result in significant liability, fines, and penalties. See the risk factor “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” above. The violation of other laws and regulations to which we are subject also can result in administrative, civil, or criminal sanctions against us, which may include a cease and desist order against the subject operations or even revocation or suspension of our license to operate the subject business, as well as significant fines and penalties. We currently devote significant resources to comply with applicable federal, state, and local regulation of health, safety, environmental, zoning, and land use regulations, and we may need to spend additional time, effort, and money to keep our operations and existing or acquired facilities in compliance therewith. In addition, we may be subject to broad liabilities arising out of contamination at our currently and formerly owned or operated facilities, at locations to which hazardous substances were transported from such facilities, and at such locations related to entities formerly affiliated with us. Although for some such liabilities we believe we are entitled to indemnification from other entities, we cannot assure you that such entities will view their obligations as we do or will be able to satisfy them. Failure to comply with applicable laws and regulations or the unfavorable resolution of one or more lawsuits, regulatory enforcement actions, or governmental investigations may have an adverse effect on our business, results of operations, financial condition, cash flows, and prospects.

Our business is dependent upon the efficient operation of our information systems. We rely on our information systems to manage, among other things, our sales, inventory, and service efforts, including through our digital channels, and customer information, as well as to prepare our consolidated financial and operating data. The failure of our information systems to perform as designed or the failure to maintain and enhance or protect the integrity of these systems could disrupt our business operations, impact sales and results of operations, expose us to customer or third-party claims, or result in adverse publicity. Additionally, we collect, process, and retain sensitive and confidential customer information in the normal course of our business. Our facilities and systems could experience security breaches, including with the use of adversarial artificial intelligence software or techniques, malicious software (malware, ransomware, and viruses), lost or misplaced data, programming errors, human errors, acts of vandalism, or other events. For example, several well-known retailers and other large companies have disclosed high-profile security breaches involving sophisticated and highly targeted attacks on their company’s infrastructure or their customers’ data, which were not recognized or detected until after such retailers had been affected notwithstanding the preventative measures such retailers had in place.

Future cybersecurity incidents or other events involving our information technology systems or those of our third-party service providers may disrupt our information systems and business operations, result in the theft, misappropriation, loss, or other unauthorized disclosure of confidential information, damage our reputation, expose us to the risks of litigation and liability, or reduce our customers’ willingness to do business with us, which could adversely affect our business, financial condition, and results of operations. The rapid evolution and increased availability and use of artificial intelligence by us, third-party service providers, or threat actors may intensify cybersecurity risks by making cyber incidents more sophisticated and cyber incidents more difficult to detect, contain, and mitigate.

As of December 31, 2024,2025, we had $3.8$4.0 billion of total non-vehicle long-term debt, $3.7$3.8 billion of vehicle floorplan financing, and $801.5$1.9 millionbillion of non-recourse debt under our warehouse facilities.debt. Our substantial indebtedness could have important consequences. For example:

Goodwill and indefinite-lived intangible assets are subject to impairment assessments at least annually (or more frequently when events or changes in circumstances indicate that an impairment may have occurred) by applying a fair-value based test. Our principal intangible assets are goodwill and our rights under our franchise agreements with vehicle manufacturers. A decrease in our market capitalization or profitability increases the risk of goodwill impairment. Negative or declining cash flows or a decline in actual or planned revenues for our stores increases the risk of franchise rights impairment. An impairment loss could have a material adverse impact on our results of operations and shareholders’ equity. During 2024, weWe recorded non-cash goodwill impairment charges of $12.5$65.3 million associatedduring with2025 and non-cash franchise rights atimpairment certaincharges of our$93.7 stores.million and $12.5 million during 2025 and 2024, respectively. See Note 19 of the Notes to Consolidated Financial Statements for more information.

Our stores are concentrated in states and regions in the United States, including primarily Florida, California,Texas, and Texas,California, in which actual or threatened natural disasters and severe weather events (such as hailstorms, hurricanes, earthquakes, fires, tornadoes, snowstorms, and landslides) may disrupt our store operations, which may adversely impact our business, results of operations, financial condition, and cash flows. The effects of climate change may serve as a risk multiplier increasing the frequency, severity, and duration of natural disasters and adverse weather events that may affect our business operations. In addition to business interruption, the automotive retail business is subject to substantial risk of property loss due to the significant concentration of property values at store locations.

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 20242025 and 2023.2024. Discussion of year-to-year comparisons between 20232024 and 2022 (other than for AutoNation Finance, a new reportable segment, for which discussion is included herein)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, 2023.2024.

Certain reclassifications of amounts previously reported have been reclassified from the previously reported financial statements to conformmade to the financialaccompanying statementConsolidated presentationFinancial ofStatements thein currentorder period.to maintain consistency and comparability between periods presented.

As of December 31, 2024,2025, 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 comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is 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 repair and maintenance 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.

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 and its residual effects,outage, we estimate earnings per share in 2024 werewas negatively impacted by approximately $1.75$2.17 per share, without taking into account any potential recoveries related to the incident. The estimated impact iswas comprised of internal estimates offor lost income during the outage period and the one-time costs incurred related to the incident, described above.

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. During 2023, net income was adversely impacted by an after-tax loss of $12.4 million from weather-related catastrophes.

Our new vehicle inventory units at December 31, 20242025 and 2023,2024, were approximately 42,60043,800 and 35,300,42,600, 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. We had no new vehicle inventory cumulative write-downs at December 31, 2023.

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, and $12.2 million at December 31, 2023.2024.

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, and $7.8 million at December 31, 2023.2024.

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 atas 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 for our reporting units is tested for impairment annually onas 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.

The fairquantitative valuesgoodwill ofimpairment test is dependent on many variables used to determine the Domestic, Import, Premium Luxury, AutoNation Finance, and Collision Center reporting units substantially exceeded their carrying values as of April 30, 2024. The fair value of the Mobile Serviceeach reporting unit,unit. whichSee relatesNote 19 of the Notes to Consolidated Financial Statements for a description of the mobilevaluation automotive repairmethod and maintenancerelated businessestimates weand acquiredassumptions used in theour firstquantitative quarterimpairment of 2023, exceeded carrying value by approximately 25%.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, ifa 20% decrease in the revenue growth rates decreased by 20%, the fair value would have stillresulted slightlyin exceededan increase to the carryinggoodwill valueimpairment charge of theapproximately Mobile$30 Service reporting unit.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 fairthe valueimpairment and the degree of sensitivity to changes in such assumptions.assumptions in the determination of the fair value.

As of December 31, 2024,2025, we have $223.4$221.7 million of goodwill related to the Domestic reporting unit, $524.3$530.6 million related to the Import reporting unit, $481.7$498.8 million related to the Premium Luxury reporting unit, $140.5$75.2 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 CentersCenter reporting unit.

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, 2024,2025. As a result of the quantitative tests, we determined the franchise rights carrying values for nine stores exceeded their fair values, and nowe recorded non-cash franchise rights impairment charges resultedof from$71.7 thesemillion quantitativeduring tests.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 1510 stores that, while they each had franchise rights fair value in excess of or equal to carrying value, had lower relative performance compared to our total store population. We will continue to monitor these stores, as well as all stores, for events or changes in circumstances that may indicate potential impairment. The remainder of our stores had franchise rights with calculated fair values that substantially exceeded their carrying values as of April 30, 2024.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, 2024,2025, the resulting incremental impairment charge would have been approximately $3$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 2024,2025, we concluded that a triggering event had occurred that indicated the fair values of franchise rights for twothree 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 2024.2025. As a result of the quantitative tests, we determined the franchise rights carrying values for boththese stores wereexceeded fullytheir impaired,fair values, and we recorded non-cash franchise rights impairment charges of $12.5$22.0 million during the fourth quarter of 2024.2025. As of December 31, 2024,2025, we had 7976 stores with franchise rights totaling $861.2$1.0 million.billion.

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 20232024 column that is being compared to the year 20242025 column may differ from the same store amounts presented in the year 20232024 column that is being compared to the year 20222023 column. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.

Same store new vehicle revenue increased during 2024,2025, as compared to 2023,2024, due to an increase in same store unit volume, partiallyparticularly offsetin bythe aDomestic decreasesegment, and an increase in same store revenue PVR. Same store unit volume benefited from the increasing supply and availability of new vehicle inventory, particularly for Import manufacturers, and sustained consumer demand.demand Sameand storebetter unit volume also benefited from an increaseexecution in vehicleour affordability,sales partiallypipeline. dueIn to an increase in manufacturer incentives, including low-interest financing and rebates. The increase inaddition, same store unit volume in the prior year was partiallyadversely offsetimpacted by a decrease in productivity as a result ofduring the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024.outage.

Same store new vehicle revenue and gross profit PVR both decreased during 2024,2025, as compared to 2023, primarily2024, due in part to increasingan increase in supply and availability of new vehicle inventory,inventory as compared to the prior year, which has resulted in moderation of pricingmargins following post-pandemic elevated levels, and margins.an Sameincrease storein average vehicle costs. We expect that new vehicle revenueunit PVRprofitability wasmay alsocontinue adverselyto impacted by decreasesmoderate, in manufacturers’part suggesteddue retailto pricesthe andtariffs a shiftannounced in mix away from Premium Luxury vehicles, which have relatively higher average selling prices.2025.

The following table details net new vehicle inventory carrying benefit (expense),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 U.S. GAAP.

Same store parts and service revenue increased during 2024,2025, as compared to 2023,2024, primarily due to increases in revenue associated with customer-pay service of $111.4 million and warranty service of $95.3 million and customer-pay service of $40.1 million, partially offset by a decrease in wholesale parts sales of $27.8$86.6 million.

Same store parts and service gross profit increased during 2024,2025, as compared to 2023,2024, primarily due to an increase in gross profit associated with customer-pay service of $68.6 million and warranty service of $66.4 million and customer-pay service of $10.9$57.5 million.

Same store finance and insurance revenue and gross profit decreasedincreased during 2024,2025, as compared to 2023,2024, due to decreasesincreases in finance and insurance revenue and gross profit PVR and used vehicle unit volume, partially offset by an increase in new vehicle unit volume. Finance and insurance revenue and gross profit PVR wasbenefited adverselyfrom impactedhigher realized margins on vehicle service contracts, partially offset by an increase in retail vehicle sales financed through ourAutoNation captiveFinance, autowhich reduced finance company,commissions asreceived wellfrom asthird-party alenders. decreaseIn in product penetration, driven in part by the CDK outage, which disrupted our finance and insurance sales process including our ability to offer certain products. The decreases inaddition, finance and insurance gross profit PVRin werethe partiallyprior offsetyear was adversely impacted by higherthe realizedCDK margins on certain vehicle protection products.outage.

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of MarchJune 31,30, 2026, we owned and operated 324327 new vehicle franchises from 244246 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 coremajor brands of new vehicles that we sell, representing approximately 88% of the new vehicles that we sold during the threesix months ended MarchJune 31,30, 2026, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, BMW, Stellantis, and Volkswagen (including Audi and Porsche). As of MarchJune 31,30, 2026, we also owned and operated 52 AutoNation-branded collision centers, 2524 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 in-store and mobile 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 finance company on vehicles we sell.

At MarchJune 31,30, 2026, 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 threesix months ended MarchJune 31,30, 2026, new vehicle sales accounted for 46%47% of our total revenue and 12% of our total gross profit. Used vehicle sales accounted for 30%29% of our total revenue and 10% of our total gross profit. Our parts and service operations, while comprising 19%18% of our total revenue, contributed 49% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 29% of our total gross profit.

In the firstsecond quarter of 2026, U.S. industry retail new vehicle unit sales, which includes sales in markets in which we do not compete, decreasedwas approximatelyrelatively 8%,flat, with a decrease in April offset by increases in May and June, as compared to the firstsame periods in the second quarter of 2025,2025. primarilyNew duevehicle tounit sales benefited from accelerated consumer demand in April 2025 following tariff-related announcements, and consumer demand and industry new vehicle unit sales stabilized in the later part of Marchthe 2025second followingquarter tariff-relatedof announcements, as well as consumer caution stemming from macroeconomic factors.2025.

During the three months ended MarchJune 31,30, 2026, we had net income of $205.4$182.1 million and diluted earnings per share of $5.85,$5.39, as compared to net income of $175.5$86.4 million and diluted earnings per share of $4.45$2.26 during the same period in 2025.

Our total gross profit wasdecreased relatively flat3% during the firstsecond quarter of 20262026, compared to the same period in the prior year, driven by decreases in new vehicle gross profit of 17% and18%, used vehicle gross profit of 2%,8%, largelyand finance and insurance gross profit of 3%, partially offset by an increase in parts and service gross profit of 5%,1%, each as compared to the firstsecond quarter of 2025. New vehicle gross profit was adversely impacted by a decrease in new vehicle unit volume as the prior year benefited from accelerated consumer demand following tariff-related announcements,announcements in April 2025 and a decrease in electric vehicle (“EV”) unit volume in the current year period due in part to the phasing out of EV tax credits at the end of the third quarter of 2025, as well as a decrease in gross profit per vehicle retailed (“PVR”) resulting from higher average vehicle costs, a shift in mix away from Premium Luxury vehicles, and moderation of margins following post-pandemic elevated levels.costs. Used vehicle gross profit was adversely impacted by a decrease in used vehicle retail unit volume primarily due to supply constraints on lower-priced used vehicles. Finance and insurance gross profit was adversely impacted by a decrease in grossvehicle profitunit PVRvolume, resultinglargely fromoffset by an increase in acquisitionfinance costs,and partially offset by improvement in wholesaleinsurance gross profit.profit PVR reflecting higher realized margins on vehicle service contracts and higher gross profit per transaction associated with arranging customer financing. Parts and service results benefited primarily from increases in gross profit associated with customer-pay service,service of 7% and wholesale parts sales,sales andof warranty service.9%.

Our new vehicle inventory units at MarchJune 31,30, 2026 and 2025, were 42,44045,283 and 39,300,42,600, 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 $0.6$0.2 million at MarchJune 31,30, 2026, and $1.2 million at December 31, 2025.

Our used vehicle inventory units at MarchJune 31,30, 2026 and 2025, were 32,61534,777 and 34,281,35,802, 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 $5.2$5.7 million at MarchJune 31,30, 2026, and $5.8 million at December 31, 2025.

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 $9.1$9.0 million at MarchJune 31,30, 2026, and $9.5 million at December 31, 2025.

As of MarchJune 31,30, 2026, we have $219.4$221.5 million of goodwill related to the Domestic reporting unit, $531.0$538.5 million related to the Import reporting unit, $498.8$504.6 million related to the Premium Luxury reporting unit, $75.2 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 Center reporting unit.

Same store new vehicle revenue decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to a decrease in same store unit volumevolume, primarilyparticularly in the Domestic and Premium Luxury segments, largely as a result of the prior year period benefiting from accelerated consumer demand in the later part of MarchApril 2025 following tariff-related announcements,announcements and a decrease in electric vehicleEV unit volume in the current year period due in part to the phasing out of EV tax credits at the end of the third quarter of 2025, and consumer caution stemming from macroeconomic factors.2025.

Same store new vehicle revenuegross profit PVR increased slightlydecreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, reflecting an increase in average sellingvehicle pricescosts across all franchised dealership segments due in allpart three segments, largely offset byto a 3% shiftdecrease in mixmanufacturer away from Premium Luxury vehicles, which have relatively higher average revenue PVR.incentives.

The net new vehicle inventory carrying expense decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to a decrease in floorplan interest expense, partially offset by a decrease in floorplan assistance. Floorplan interest expense decreased as a result of lower average interest rates, partially offset by higher average vehicle floorplan balances. Floorplan assistance decreased due to lower new vehicle sales, partially offset by an increase in the average floorplan assistance per unit.

Same store retail used vehicle revenue was relatively flat during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, reflecting a decrease in same store retail unit volume primarily due to tightening supply inconstraints theon lower-priced used vehicle market,vehicles, largely offset by an increase in same store revenue PVR. Wholesale used vehicle revenue increased during the three months ended March 31, 2026, as compared to the same period in 2025 due to an increase in used vehicle wholesale values.

Same store used vehicle revenue PVR increased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due toreflecting an increase in the average selling price of used vehicles sold inacross all threefranchised dealership segments andprimarily due to a 3% shift in mix to higher-priced vehicles including late-model and lower-mileage used vehicles.

Same store used vehicle gross profit PVR decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to an increase in acquisition costs.costs Wholesalein usedthe Domestic and Premium Luxury segments, reflecting a competitive vehicle grosssourcing profit increased during the three months ended March 31, 2026, as compared to the same period in 2025 due to an increase in used vehicle wholesale values.market.

Same store parts and service revenue increased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to increases in revenue associated with wholesale parts sales of $26.1$40.4 million and customer-pay service of $21.6$20.2 million, partially offset by a decrease in revenue associated with the preparation of vehicles for sale of $8.0$18.4 million.

Same store parts and service gross profit increasedwas relatively flat during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due toreflecting an increase in gross profit associated with customer-pay service of $13.4$11.6 million,million and wholesale parts sales of $4.9 million, and warranty service of $4.5$4.7 million, partially offset by a decrease in gross profit associated with the preparation of vehicles for sale of $9.0$12.5 million. Gross profit as a percentage of revenue decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to a shift in mix to wholesale parts sales, which have relatively lower margins.

Parts and service revenue and gross profit associated with customer-pay service benefited from an increase in repair order volume,volume due in part to an increase in technician headcount, and higher value repair orders.headcount. Wholesale parts revenue and gross profit increased primarily due to an increase in volume.volume Partsdriven andby servicenew revenuecommercial associated with warranty service benefited from higher value repair orders and improved parts and labor rates.agreements. Parts and service revenue and gross profit associated with the preparation of vehicles for sale was adversely impacted by lower new and used vehicle unit volumevolume, margin compression, and marginlower compressionvalue primarilyrepair resulting from a shift in mix to service work outsourced to third parties.orders.

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 future 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.

Same store finance and insurance revenue and gross profit slightly decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, reflecting a decrease in vehicle unit volume, largely offset by an increase in finance and insurance gross profit PVR. Finance and insurance gross profit PVR benefited primarily from higher realized margins on vehicle service contracts.contracts and higher gross profit per transaction associated with arranging customer financing, partially offset by an increase in retail vehicle sales financed through AutoNation Finance.

Domestic revenue was relatively flatdecreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to decreases in new and used vehicle unit volume, largelypartially offset by increases in new vehicle revenue PVR of $868,$1,261 and used vehicle revenue PVR of $1,108, and finance and insurance revenue PVR of $295.$1,674. New vehicle unit volume decreased primarilyas duea toresult of the prior year benefittingperiod benefiting from accelerated consumer demand in April 2025 following tariff-related announcements and useda decrease in EV unit volume in the current year period due in part to the phasing out of EV tax credits at the end of the third quarter of 2025. Used vehicle unit volume decreased due to tightening supply inconstraints theon lower-priced used vehicle market. Domestic revenue also benefited from an increase in used vehicle wholesale revenue of $6.2 million, and increases in parts and service revenue associated with warranty service of $7.4 million and customer-pay service of $7.3 million.vehicles.

Domestic segment income increaseddecreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to increasesdecreases in partsnew and serviceused grossvehicle profitunit associated with warranty service of $5.4 million and customer-pay service of $5.1 million,volume, as well as a decrease in new vehicle gross profit PVR of $345 resulting from an increase in average vehicle costs driven in part by a decrease in manufacturer incentives. These decreases were partially offset by an increase in finance and insurance gross profit PVR of $159 due to higher realized margins on service contracts.contracts Theseand werehigher partiallygross offsetprofit byper antransaction increaseassociated with arranging customer financing, and a decrease in SG&A expenses of $6.3$7.1 million.

Import segmentrevenue income decreasedincreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to an increase in SG&A expenses of $8.0 million, a decrease in new vehicle gross profitrevenue PVR of $217,$957 due in part to a 7% shift in mix to hybrid and aelectric decreasevehicles, which have relatively higher average revenue PVR, and an increase in new vehicle unit volume.volume Theparticularly decreasesfor hybrid vehicles. Import revenue also benefited from an increase in Importused segmentvehicle incomerevenue werePVR of $1,411 resulting from a shift in mix to higher-priced vehicles, including late-model and lower-mileage used vehicles, partially offset by ana increasedecrease in financeused andretail insurancevehicle grossunit profit PVRvolume due to highersupply realized marginsconstraints on servicelower-priced contracts.used vehicles.

Premium Luxury revenue decreasedincreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to a decrease in new vehicle unit volume, partially offset by a $25.7$82.3 million increase in revenue from the acquisitions we completed in the third quarter of 2025 and second quarter of 2026, and increases in used vehicle revenue and parts and service revenue. Used vehicle revenue increased due to an increase in newused vehicle revenue PVR of $2,083.$3,536 Newreflecting a shift in mix to late-model and lower-mileage used vehicles, which have relatively higher average selling prices, partially offset by a decrease in used vehicle unit volume decreased primarily due to supply constraints on lower-priced used vehicles. Parts and service revenue benefited from an increase in revenue associated with customer-pay service of $20.4 million. The increases in Premium Luxury revenue were partially offset by a decrease in new vehicle unit volume as a result of the prior year period benefiting from accelerated consumer demand in the later part of MarchApril 2025 following tariff-related announcements and a decrease in electric vehicleEV unit volume in the current year period due in part to the phasing out of EV tax credits at the end of the third quarter of 2025. The decrease in new vehicle revenue was partially offset by increases in parts and service revenue associated with customer-pay service of $15.3 million and wholesale and retail parts sales of $8.9 million.

Premium Luxury segment income decreased during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to a decreasedecreases in new and used vehicle unit volume, a decrease in newused vehicle gross profit PVR of $299,$266 largely due to an increase in vehicle acquisition costs reflecting a competitive vehicle sourcing market, and a $5.8$6.0 million increase in SG&A expenses, partially offset by increasesan increase in parts and service gross profit associated with customer-pay service of $8.2 million and warranty service of $5.6$10.5 million.

ANF recognized income of $9.4 millionincreased during the three months ended MarchJune 31,30, 2026, andas $0.1compared million duringto the three months ended March 31, 2025. The current yearsame period benefitedin from2025, primarily due to an increase in interest and fee income from the growth in average managed receivables of $1.1$942.5 billionmillion as we continue to grow our ANF business and increase our finance penetration rates associated with vehicles sold through our stores. ANF continues to realize operational efficiencies as the portfolio scales, resulting in reduced direct expenses as a percentage of the managed portfolio. We expect our portfolio delinquency rates will continue to normalize and trend upward as our portfolio seasons.