AutoNation, Lithia captive originations up sequentially

Retailers’ captive finance originations grew in the first quarter and finance and insurance revenue was mixed as sales and inventory improved. AutoNation ’s captive finance arm, AutoNation Finance , originated more than $160 million in loans in Q1, bringing the portfolio to over $560 million, Chief Executive Michael Manley said during the company’s April 26 earnings call. Originations grew 45.5% compared with $110 million in Q4 2023 . The captive is on track to originate more than $700 million in loans by yearend through AutoNation stores, Thomas Szlosek , AutoNation chief financial officer, said during the call, adding that the lender’s portfolio is expected to “more than double during 2024.” “The profitability for AutoNation is expected to be more than two-and-a-half times that of a non-AutoNation Finance model,” he said. The retailer opened four AutoNation USA stores during the quarter, three in Florida and one in Nevada, Manley said. The company expects AutoNation Finance’s penetration rate to surpass 90% of originations in 2025, Szlosek said. Meanwhile, Driveway Finance Corp. (DFC), Lithia Motors ’ finance arm, originated $493 million in loans in Q1 compared with $428 million in Q4 and $630 million in Q1 2023, according to the company’s April 24 earnings release. DFC’s net charge-off rate was flat sequentially and YoY at 2.4%, according to Lithia’s earnings presentation. DFC-originated loans are about three times more profitable for the retailer than loans not originated through the captive, Tina Miller , Lithia’s senior vice president and chief financial officer, said during the company’s earnings call, adding that the captive’s penetration rate rose to 11.7% from 10% in Q4. Finance and insurance (F&I) revenue and F&I gross profit per unit (GPU) increased at most major retailers in Q1 but declined at some. Sonic Automotive ’s F&I revenue was nearly flat YoY at $169 million in Q1. Asbury Automotive F&I revenue up 10% F&I revenue rose 10% year over year to $189.7 million; F&I GPU ticked down 3.6% YoY to $2,259; F&I revenue accounted for 4.5% of total revenue and 24.2% of gross profit; New-vehicle sales tallied 40,677 units, up 17.9% YoY; Used-vehicle retail sales increased 19.7% YoY to 39,489 units; New-vehicle inventory grew to 54 days’ supply compared with a days’ supply of 30 a year prior, while used-vehicle inventory was flat YoY at a 27-day supply; and Floorplan interest expense totaled $22.8 million compared with $600,000 a year prior. Asbury leverages its floorplan offset accounts to manage interest expense, Michael Welch , senior vice president and chief financial officer, said during the company’s April 25 earnings call. “Through the years, we've balanced the impact of rising inventory levels with the opportunity cost of deploying the cash to more creative activities,” he said. AutoNation F&I revenue steady F&I revenue ticked up 0.7% YoY to $334.7 million; F&I GPU decreased 3.5% YoY to $2,615; F&I revenue accounted for 5.2% of total revenue and 27.9% of gross profit; New-vehicle retail sales totaled 58,863 units, up 6.9% YoY; Used-vehicle retail sales inched up 2.3% YoY to 69,121 units; New-vehicle inventory climbed to 44 days’ supply compared with 25 days a year prior, while used-vehicle inventory sat at a 31-days’ supply, up two days YoY; and Floorplan interest expense totaled $49.4 million, up 82.3% YoY. Group 1 Automotive F&I revenue up 14% F&I revenue rose 14.4% YoY to $188.9 million; F&I GPU ticked up 4.1% YoY to $2,020; F&I revenue accounted for 4.2% of total revenue and 2.5% of gross profit; New-vehicle sales tallied 44,302 units, up 11.7% YoY; Used-vehicle retail sales increased 8.2% YoY to 49,183 units; New-vehicle inventory in the U.S. sat at 43 days, up compared with 27 days in Q1 2023, while used-vehicle inventory was up one day YoY to a 26-day supply; and Floorplan interest expense totaled $20.5 million, up 62.7% YoY. Lithia Motor’s F&I revenue up 7% F&I revenue rose 7% YoY to $340.6 million; F&I GPU decreased 17% YoY to $1,811; F&I revenue accounted for 4% of total revenue and 25.5% of gross profit; New-vehicle sales climbed 26.4% YoY to 85,683, units; Used-vehicle retail sales increased 31.1% YoY to 102,436 units; New-vehicle inventory sat at a 60 days’ supply, up 9 days YoY, while used-vehicle inventory rose five days YoY to a 58-day supply; and Floorplan interest expense was $60.7 million, up 119.1% YoY. Penske Automotive F&I revenue flat F&I revenue dipped 0.4% YoY to $206 million; F&I GPU ticked up 3% YoY to $1,719; F&I revenue accounted for 3.2% of total revenue and 19.5% of gross profit; New-vehicle sales tallied 48,667 units, up 2.1% YoY; Used-vehicle retail sales ticked up 2.1% YoY to 69,265 units; New-vehicle inventory rose one day YoY to 40 days, while used-vehicle inventory sat at a 36 days’ supply compared with a 48 days’ supply in Q1 2023; and Floorplan interest expense totaled $44.8 million, up 60.6% YoY. Sources: Q1 2024 company earnings reports

AutoNation, Lithia captive originations up sequentially

Retailers’ F&I revenue mixed in Q1

Under the Hood: CFPB research exposes pricing confusion

American Honda CPO vehicle sales growth outpaces industry at 16%

Related Posts

CPS’ originations fall 12.3% in Q3

Vroom subsidiary UACC’s originations up 7%

Open Lending certified loans fall 13%

American Honda CPO vehicle sales growth outpaces industry at 16%

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Driving Innovation in Automotive Refunds: How Onbe and Allied Solutions Are Modernizing the Payment Experience

Navigating the Margin Squeeze: EVs, Tariffs & Pricing — A Q&A with Earnix

Enhancing credit approaches to boost conversion and dealer loyalty

Welcome Back!

Retrieve your password