LKQ's Q2 2025 Earnings: Unpacking Contradictions in Used Car Prices, Tariffs, and European Market Dynamics

Used car pricing and repairable claims, tariff pass-through and impact on margins, European market challenges and cost-cutting measures, competition and market share in Europe, private label growth and margin impact are the key contradictions discussed in LKQ Corporation's latest 2025Q2 earnings call.



North America's Market Performance:
- LKQ's North America's organic revenue fell by 2.2% per day, although it outperformed repairable claims by 650 bps.
- The decline was due to a continued decline in repairable claims and rising insurance premiums, although the company's hard parts business in Canada showed margin enhancement.

Europe's Operational Challenges:
- Europe's organic revenue decreased by 4.9% or 3.8% on a per-day basis, primarily due to difficult economic conditions and increased competition.
- The decrease in revenue was exacerbated by customer experience issues and operational challenges, but the company is working to regain market share and customer confidence.

Strategic Review and Cost-cutting Initiatives:
- LKQ is implementing additional cost-cutting measures, primarily in Europe, with a goal to cut another $75 million in costs.
- This is part of a broader strategic review aimed at simplifying operations and accelerating the company's simplification strategy to enhance margins.

Specialty Segment Recovery:
- The Specialty segment's organic revenue was largely flat year-over-year, marking an improvement from previous quarters.
- This recovery is attributed to improved trends in July and better-than-expected performance, indicating optimism for the back half of the year.