Executive Summary

Revenue of $7.04B (+6.9% YoY) and adjusted EPS of $5.01 (+25% YoY); GAAP EPS of $5.65 benefited from $40M insurance recoveries and $8M acquisition expenses (net after-tax +$0.63/share) . Versus S&P Global consensus, revenue beat ($6.86B est.) and normalized EPS beat ($4.85 est.) for Q3 2025; Q2 and Q1 also beat normalized EPS and revenue estimates (Values retrieved from S&P Global).*
Aftersales and CFS delivered records: Aftersales gross profit $597M and margin 48.7% (+100 bps YoY); CFS gross profit $374.8M (+11.7% YoY), with per-unit F&I at $2,775 .
New vehicle GPUs compressed (new GPU $2,281, -$523 YoY) on mix (higher BEV/domestic) and OEM incentive moderation; management expects Q4 mix to improve with less BEV and higher premium luxury seasonality .
Capital deployment remained aggressive: Q3 repurchased 0.8M shares for $181M (~$217/share) and closed Chicago acquisitions; Board authorized an additional $1B repurchase on Oct. 31, lifting total remaining authorization to ~$1.28B .

What Went Well and What Went Wrong

What Went Well

Record Aftersales and CFS performance drove margin expansion; CEO: “record profit in After-Sales and Customer Financial Services… multiple revenue streams… investment grade balance sheet” .
Segment strength: Domestic segment income +30% YoY; Import and Premium Luxury up 3.8–4.0% YoY; total franchised segment income +8.8% YoY .
AutoNation Finance scaled >$2B portfolio, improved profitability with non-recourse funding rising to 86% and ABS market access; CFO highlighted improving credit metrics and ROE trajectory .

What Went Wrong

New vehicle unit profitability fell to $2,281 (-$523 YoY) on BEV and domestic mix; OEM incentive support moderated, pressuring dealer margins; management called out mid-quarter “self‑inflicted” pressure before September recovery .
Used retail GPU declined to $1,489 (-$100 YoY) amid higher acquisition costs; plan to hold elevated used inventory to drive volume implies near-term depreciation drag (~20 bps margin impact) in Q4 .
Macro/tariff dynamics created incentive normalization and higher bar in Q4 comps; luxury demand more muted entering October, with expected seasonal uptick in December .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$6.69	$6.97	$7.04
Gross Profit ($USD Billions)	$1.22	$1.28	$1.24
Operating Income ($USD Millions)	$336.0	$217.6	$372.4
Net Income ($USD Millions)	$175.5	$86.4	$215.1
GAAP Diluted EPS ($)	$4.45	$2.26	$5.65
Adjusted Diluted EPS ($)	$4.68	$5.46	$5.01
SG&A as % of Gross Profit (reported)	67.4%	67.0%	68.6%
Operating Income % of Revenue	5.0%	3.1%	5.3%

Segment breakdown

Segment	Q1 2025 Revenue ($MM)	Q2 2025 Revenue ($MM)	Q3 2025 Revenue ($MM)	Q1 2025 Segment Income ($MM)	Q2 2025 Segment Income ($MM)	Q3 2025 Segment Income ($MM)
Domestic	$1,717.4	$1,920.5	$1,945.3	$69.0	$92.0	$81.3
Import	$2,047.3	$2,148.3	$2,173.1	$126.2	$133.4	$123.7
Premium Luxury	$2,576.5	$2,555.8	$2,559.4	$178.7	$180.1	$160.9
Corporate & Other	$349.2	$349.8	$359.6	(84.5)	(235.2)	(42.5)
Total Franchised Dealerships	$6,341.2	$6,624.6	$6,677.8	$373.9	$405.5	$365.9

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Retail New Units	62,387	65,847	66,189
Retail Used Units	68,000	69,736	68,896
Revenue/Vehicle – New ($)	$52,064	$51,579	$51,604
Revenue/Vehicle – Used ($)	$26,354	$26,457	$27,205
GPU/Vehicle – New ($)	$2,803	$2,785	$2,281
GPU/Vehicle – Used ($)	$1,662	$1,622	$1,489
F&I PVR ($)	$2,703	$2,712	$2,775
New Days Supply	38	49	47
Used Days Supply	36	39	37
Aftersales Gross Profit ($MM)	$568	$599	$597
Aftersales Gross Margin (%)	48.8% (parts & service GP % of revenue)	49.0%	48.7% (explicit)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Commentary	Change
SG&A as % of Gross Profit	FY 2025	Target 66–67%	YTD at 67.0% within target; Q3 adjusted ~67.4%	Maintained
New vehicle mix	Q4 2025	N/A	Expect less BEV, higher premium luxury mix in holiday season	New commentary
AutoNation Finance ABS	By Q1 2026	N/A	Plan second ABS before end of Q1 2026	New commentary
Leverage target	Ongoing	2–3x	2.35x at Q3; within target	Maintained
Share repurchases	Ongoing	~$338M remaining auth. as of 10/21	Board added $1B authorization on 10/31; total remaining ~$1.28B	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Tariffs/macro	Highlighted tariff uncertainty and industry dynamics; normalization of CDK impacts	OEM incentives moderating; decontenting and supply chain actions; tougher Q4 comps	Headwinds moderating; cautious on Q4 comps
BEV/Hybrid mix	Limited detail	BEV sales up >40% YoY; hybrids +25%; BEV inventory cut ~55% to <20 days; margin pressure from BEVs	Mix shifting; margins pressured but improving trajectory into Q4
New vehicle GPUs	YoY decline in unit profitability (Q1, Q2)	Further compression; domestic ICE pressure mid‑quarter; partial recovery by September	Down then stabilizing late Q3
CFS strength	$349M GP; PVR $2,703	$363M GP; PVR $2,712	$374.8M GP; PVR $2,775; record quarter
AutoNation Finance	Returned to profit; early scaling	ABS debut $700M; income $2M; funding improving	Portfolio >$2B; delinquency 2.4% with reserve normalization; funding ~86% non-recourse
Supply/inventory	New days 38; used 36	New 49; used 39	New 47; used 37; industry inventory ~2.6M below pre‑COVID norm
SG&A discipline	67.4%	67.0%	68.6% reported; adjusted ~67.4%; CFO reiterates 66–67% target
Premium luxury demand	Growth in Q1/Q2	More muted in October; seasonal uptick expected in December	Slightly softer near-term

Management Commentary

CEO Mike Manley: “We are pleased to report another quarter of strong performance… record profit in After‑Sales and Customer Financial Services… AutoNation Finance continued to scale, growing the portfolio to more than $2 billion while improving profitability” .
CFO Tom Szlosek: “Adjusted SG&A of 67.4% of gross profit for the quarter was in line… CFS and aftersales comprise close to 80% of our gross profit…” .
On Q4 mix: “Expect the mix of new unit sales to improve, including less battery electric vehicles and a higher percentage of premium luxury” .
On domestic/BEV GPU pressure: “Biggest effect came from our domestic ICE sales… BEV margins were absolutely terrible… corrected as we came out of the quarter” .
On AutoNation Finance scaling: “Portfolio now greater than $2 billion… delinquency rates at quarter‑end of 2.4%… expect migration to ~3% range” .

Q&A Highlights

Variable GPU compression drivers: mix (domestic/BEV) and OEM incentive moderation; management expects balance improvement and seasonal premium luxury tailwind in Q4 .
CFS sustainability: management expects continued performance; higher attachment and service contracts underpin future aftersales; AutoNation Finance dilutes PVR near‑term but improves long‑term returns .
Auto credit: portfolio trends (delinquencies/losses) align with expectations; reserving methodology incorporates normalization; no acceleration in repos or first‑payment skips .
Used strategy: maintaining elevated inventory to drive volume and turn; acknowledges depreciation drag (~20 bps margin); may rebalance if market dictates .
Luxury demand: more muted entering October; expect seasonal uptick in December .

Estimates Context

Metric	Q1 2025 Consensus	Q1 Actual	Q2 2025 Consensus	Q2 Actual	Q3 2025 Consensus	Q3 Actual
Revenue ($USD Billions)	$6.64	$6.69	$6.86	$6.97	$6.86	$7.04
Primary EPS (normalized) ($)	$4.38	$4.68	$4.70	$5.46	$4.85	$5.01

Values retrieved from S&P Global.*
Implications: Revenue and normalized EPS exceeded consensus in Q1–Q3; Q3 GAAP EPS of $5.65 further exceeded normalized consensus due to insurance recoveries and acquisition effects (adjusted excludes both) .

Key Takeaways for Investors

Mix shift pressures new vehicle GPUs, but management expects Q4 improvement with less BEV and more premium luxury; watch December seasonality .
Aftersales and CFS are the profit engines (nearly 80% of GP), delivering record results; reinforces resilience amid new-vehicle margin normalization .
AutoNation Finance scaling with improving funding and credit metrics is accretive to ROE; planned second ABS by Q1 2026 is a structural tailwind .
Shareholder returns intensify: Q3 buybacks plus new $1B authorization post‑quarter provide a supportive capital return backdrop .
SG&A discipline remains central; YTD within the 66–67% target range—continued operating leverage depends on sustaining aftersales/CFS momentum .
Near-term risks: OEM incentive moderation, tariff-related decontenting, and muted luxury demand entering Q4; watch used inventory strategy’s depreciation impact .
Estimate revisions likely bias upward for normalized EPS and revenue following Q3 beats; normalized GAAP/adjusted EPS distinctions matter for modeling (insurance recoveries, acquisition costs) .

Appendices

Non-GAAP adjustments (Q3 2025)

Adjusted EPS excludes $40M cybersecurity insurance recoveries and $8M acquisition-related expenses (net after-tax $24.2M or $0.63/share) .

Capital allocation highlights (Q3/YTD)

Q3 repurchases: 0.8M shares for $181M (~~$217/share); YTD through 10/21: 2.8M shares for $523M (~~$188/share) with ~$338M remaining pre‑Oct. 31 authorization; Oct. 31 authorization added $1B .

Liquidity and leverage

Liquidity $1.8B; covenant leverage ratio 2.35x; non‑vehicle debt $3.83B at quarter‑end .

AUTONATION, INC. (AN)·Q3 2025 Earnings Summary