Lithia Motors' Q4 2024: Key Contradictions in Used Inventory, Cost Targets, and U.K. Performance
Earnings DecryptWednesday, Feb 12, 2025 6:29 pm ET
4min read
These are the key contradictions discussed in Lithia Motors' latest 2024Q4 earnings call, specifically including: Used Inventory Management, SG&A Cost Reduction Targets, and U.K. Operations:
Revenue and Profitability Growth:
- Lithia Motors and Driveway recorded revenue growth of 20% for Q4 2024 compared to the previous year, reaching $9.2 billion.
- The increase was driven by the company’s integrated mobility ecosystem and effective strategies to serve customers across digital and physical channels, leveraging profit-generating adjacencies.
Operating Margin Improvement:
- The company achieved a year-over-year operating profit increase for the ninth consecutive quarter.
- This was attributed to market share gains, disciplined cost management, and cost-saving efforts totaling $200 million in annual savings.
Used Vehicle Market Trends:
- While new vehicle unit sales increased by 7.4% year-on-year, used vehicle units decreased by 4.3%, with used vehicle front-end GPUs stable at $19.59.
- The company believes there is potential for double-digit same-store sales growth in used cars in the future, indicating a focus on market share capture.
Service Segment Performance:
- Aftersales revenues increased by 3.4% year-on-year, with a gross profit margin of 55.8%.
- Growth in warranty work contributed significantly, with a 19.9% increase in gross profit year-over-year.
E-commerce Strategy and Customer Engagement:
- The company continues to refine its e-commerce strategies, with a focus on integrating them into omnichannel solutions to enhance customer engagement and unit sales.
- This includes the launch of the MyDriveway portal, offering customers over 250 functions for improved visibility and control in shopping and servicing.
Revenue and Profitability Growth:
- Lithia Motors and Driveway recorded revenue growth of 20% for Q4 2024 compared to the previous year, reaching $9.2 billion.
- The increase was driven by the company’s integrated mobility ecosystem and effective strategies to serve customers across digital and physical channels, leveraging profit-generating adjacencies.
Operating Margin Improvement:
- The company achieved a year-over-year operating profit increase for the ninth consecutive quarter.
- This was attributed to market share gains, disciplined cost management, and cost-saving efforts totaling $200 million in annual savings.
Used Vehicle Market Trends:
- While new vehicle unit sales increased by 7.4% year-on-year, used vehicle units decreased by 4.3%, with used vehicle front-end GPUs stable at $19.59.
- The company believes there is potential for double-digit same-store sales growth in used cars in the future, indicating a focus on market share capture.
Service Segment Performance:
- Aftersales revenues increased by 3.4% year-on-year, with a gross profit margin of 55.8%.
- Growth in warranty work contributed significantly, with a 19.9% increase in gross profit year-over-year.
E-commerce Strategy and Customer Engagement:
- The company continues to refine its e-commerce strategies, with a focus on integrating them into omnichannel solutions to enhance customer engagement and unit sales.
- This includes the launch of the MyDriveway portal, offering customers over 250 functions for improved visibility and control in shopping and servicing.
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