Christopher Bottiglieri's questions to LITHIA MOTORS (LAD) leadership • Q3 2025
Question
Christopher Bottiglieri asked for clarification on the 74% self-sourcing rate for used vehicles, comparing it to pre-COVID levels and inquiring about the contribution of private party procurement. He also questioned Driveway Finance Corporation's (DFC) net losses as a percentage of managed receivables and the allowance for the end of the quarter as a percentage of ending receivables, seeking insight into conservatism or concerns about the subprime market.
Answer
Bryan DeBoer, President and CEO, stated that pre-COVID self-sourcing was in the low 70th percentile, with private party procurement (buying directly from consumers without a trade-in) growing from 3-4% pre-COVID to 8-10% now, largely driven by Driveway's ability to procure thousands of cars monthly. Chuck Lietz, Senior Vice President of Driveway Finance, addressed DFC's performance, noting that first payment defaults are down year-over-year, delinquency rates are down sequentially, and default rates are at or below each credit segment year-over-year after seasonal adjustments. He expressed comfort with the current provision level, stating it's sufficient to cover future losses, and emphasized DFC's credit discipline despite a 33% increase in originations.