Asbury Automotive's Q4 2024: Navigating Contradictions in Stellantis Impact, Used Car Strategy, and Profit Margins

These are the key contradictions discussed in Asbury Automotive Group's latest 2024 Q4 earnings call, specifically including: Stellantis situation and gross profit units, used car business strategy, parts and service performance recovery, and new vehicle GPU expectations:



Revenue and Profit Growth:
- Asbury Automotive Group generated $4.5 billion in revenue for Q4 2024, representing an 18% year-over-year increase.
- The growth was driven by a strong performance in new vehicle sales, with same-store volume up 7% year-over-year, and an increase in gross profit per new vehicle.

New Vehicle Gross Profit Improvement:
- In Q4 2024, Asbury Automotive reported a same-store adjusted operating margin of 6% and an all-store adjusted operating margin of 5.7%.
- This improvement was attributed to increased efficiency, cost discipline, and strategic partnerships like the 4-store pilot with Tekion, which aims to simplify operations and lower costs.

Parts and Service Performance:
- Asbury's Parts and Service business saw a 11% increase in same-store gross profit, with the Customer Pay segment up 13%.
- The growth was driven by increased profitability in higher-margin segments and effective utilization of new tools for guest inspections, leading to better customer retention.

Revenue and Market Dynamics:
- Despite a challenging market, Asbury achieved record revenue, with new vehicle gross profit per vehicle expected to be in the $2,500 to $3,000 range in 2025.
- Stabilization in the market, new administration policies, and improving brand performance contributed to this positive outlook.