Lithia Motors, Inc. (LAD): Business Model Canvas [Dec-2025 Updated]

You're looking for the blueprint behind Lithia Motors, Inc.'s (LAD) growth, and frankly, their model is a sharp mix of aggressive physical expansion and digital scale. After two decades analyzing these plays, I see a strategy that pairs massive dealership acquisitions-targeting $2.1 billion in annualized acquired revenue for 2025-with a disciplined focus on high-margin services, where aftersales alone chips in over 60% of net income. Plus, they are building out their captive finance arm, DFC, aiming for a $4.3 billion portfolio this year, all while managing over 450 physical stores and their Driveway.com e-commerce engine. See the full nine-block breakdown below to understand exactly how they connect their physical footprint to digital profit.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Key Partnerships

You're looking at the network that keeps Lithia Motors, Inc. running-the external relationships that fuel scale and profit. These aren't just vendors; they are essential components of the integrated ecosystem.

Automotive Manufacturers

The relationship with Original Equipment Manufacturers (OEMs) is foundational. Lithia Motors, Inc. maintains a broad portfolio to mitigate reliance on any single brand's performance or inventory cycle. As of September 30, 2025, the extensive footprint supports sales across 52 brands. This scale is critical for market coverage, especially in the U.S. and the growing UK operations.

The mix of brands is constantly being refined through acquisitions to align with regional demand, such as adding Mercedes-Benz and Subaru franchises in the Southeast in 2025. For instance, the company's electrified vehicle mix was 43% of total new car sales in Q3 2025, showing partnership alignment with OEM EV strategies. Also, the company operates 327 dealerships in the United States as of November 18, 2025.

Vehicle Financing Institutions

Financing is a key adjacency, and Lithia Motors, Inc. uses both captive and non-captive sources. The captive arm, Driveway Finance Corporation (DFC), is a major partner in this space. DFC originated $731 million in loans in the second quarter of 2025. The U.S. penetration rate for DFC reached 14.8% in Q2 2025, with a net interest margin of 4.6% in that period. Management has a clear target to increase this penetration rate to 20% of transactions, which directly enhances customer economics and provides a high-margin revenue stream.

Technology Providers

Digital integration is a core differentiator, relying on strategic technology partnerships. The integration of digital platforms and Pinewood AI is noted as a driver for SG&A leverage. The financial impact of this technology focus is visible through the investment in the related entity; unrealized gains on the investment in Pinewood Technologies Group PLC contributed $0.75 to diluted earnings per share for the first six months of 2025. The LAD digital ecosystem saw continued year-over-year growth to 12 million monthly unique visitors.

Dealership Sellers

The growth-by-acquisition strategy requires a constant pipeline of willing sellers. Lithia Motors, Inc. remains a disciplined acquirer, targeting specific markets like the Southeast and South Central regions. Management reiterated an expectation for $2 billion to $4 billion in annual acquisition revenues from future deals. So far in 2025, the company has been aggressive; as of October 14, 2025, the eighth acquisition of the year was completed, with year-to-date annualized revenue from new additions totaling $720 million.

Here's a look at the recent acquisition pace:

Metric	Value / Amount	Context / Date
Annualized Revenue Target (Future)	$2 Billion to $4 Billion	Reiterated guidance for future acquisitions.
Annualized Revenue Acquired (YTD)	$720 Million	As of October 14, 2025 (8th acquisition).
Acquisitions in 2025 (YTD)	8 stores	As of October 14, 2025.
Acquisitions in 2024	3 stores	Annual count.

Insurance Carriers

Partnerships with insurance carriers provide the necessary products for the Finance & Insurance (F&I) segment, which is highly lucrative. In the third quarter of 2025, F&I revenue grew 5.7% year-over-year. The profitability of the financing operations was strong, generating $20 million in Q2 2025, a 179% increase year-over-year. The gross profit per unit for F&I in the same-store segment was $1,841.

The segment's importance to the overall profit mix is clear:

• F&I revenue grew 5.7% in Q3 2025.
• Same-store F&I gross profit per unit was $1,841.
• Financing operations profitability increased 179% year-over-year in Q2 2025.

Finance: draft 13-week cash view by Friday.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Key Activities

You're looking at the core engine driving Lithia Motors, Inc. (LAD) right now-the specific actions they take every day to generate revenue and grow. It's all about scale, efficiency, and ecosystem integration.

Aggressive Dealership Acquisitions: Targeting $2.1 billion in annualized acquired revenue for 2025

Lithia Motors, Inc. (LAD) continues its consolidation strategy through targeted acquisitions. Management reiterated the full-year 2025 acquisition revenue target at approximately $2 billion. However, recent deals, including the acquisition in the Greater Toronto Area expected to add $100 million in annualized revenue, brought the year-to-date expected annualized revenue from acquisitions to $2.2 billion as of late 2025. The company targets assets at 15% to 30% of revenue or 3x to 6x normalized EBITDA with a 15% minimum after-tax hurdle rate for these purchases. This aggressive M&A pace is a primary driver of top-line expansion.

Omnichannel Retail Operations: Managing 450+ physical stores and the Driveway.com platform

The physical footprint remains massive, a key resource for the entire ecosystem. As of the end of 2024, Lithia Motors, Inc. operated 459 dealership locations across the United States, Canada, and the United Kingdom. The digital side, Driveway.com, is a major activity supporting this network. In the first quarter of 2025, Driveway.com generated an average of 1.9 million unique visitors per month. In 2024, customers purchased 133,000 vehicles through the company's digital ecosystem.

Here's a quick snapshot of the scale of the physical and digital operations:

Metric	Value	Context/Date
Physical Dealership Locations (End of 2024)	459	US, Canada, UK
Driveway.com Monthly Unique Visitors (Q1 2025)	1.9 million	Average
Vehicles Purchased via Digital Ecosystem (2024)	133,000	Total Year

Vehicle Lifecycle Services: Providing high-margin aftersales (service, parts, body work)

Focusing on recurring, high-margin business is a critical activity. In the third quarter of 2025, aftersales gross profit increased by 9.1% year-over-year. Aftersales margins expanded to 58.4% in Q3 2025, which is an increase of 280 basis points year-over-year. For the first half of 2025, this segment was responsible for over 60% of net profit.

The profitability breakdown for aftersales in Q3 2025 included:

• Customer pay gross profit up 9.2%.
• Warranty gross profit up 10.8%.

Captive Finance Origination: Growing the Driveway Finance Corporation (DFC) portfolio

Scaling the captive finance arm is a deliberate activity to capture more profit per transaction. In the third quarter of 2025, financing operations income for Driveway Finance Corporation (DFC) reached $19 million. The net interest margin (NIM) for DFC stood at 4.6% in Q3 2025, which was up 70 basis points year-over-year. The North America penetration rate for DFC achieved the 15% milestone ahead of plan, up from 14.5% in Q3. Year-to-date through Q3 2025, DFC generated $52 million in financing operations.

Digital Platform Development: Enhancing Driveway and Pinewood AI for operational leverage

Investing in technology to drive efficiency is a core activity. Lithia Motors, Inc. (LAD) is working to embed its digital capabilities across the enterprise. The company expects the full rollout of its Pinewood AI partnership to be complete by the 2027-2028 timeframe. This development is intended to help improve the North America adjusted SG&A to gross profit ratio, which stood at 64.8% sequentially in Q3 2025. Finance: draft 13-week cash view by Friday.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Key Resources

You're mapping out the core assets that power Lithia Motors, Inc. (LAD) right now, late in 2025. These aren't just assets; they're the engine behind their growth strategy, blending physical scale with digital integration. Honestly, the sheer size of their physical footprint combined with the captive finance arm is what makes their model so resilient.

Global Dealership Network

The physical presence remains a massive anchor for Lithia Motors, Inc. You see this network as the primary point of customer interaction, even as digital sales grow. The scale allows for significant inventory depth and local market share capture, which management has been focused on achieving through disciplined acquisitions.

The network scope includes:

• Over 450 physical locations across the U.S., Canada, and the U.K.
• 327 dealerships located specifically in the United States as of November 18, 2025.
• California holds the largest concentration with 55 dealerships.

Driveway E-commerce Platform

This is the proprietary digital ecosystem, often referred to alongside the Driveway and GreenCars brands, designed to unify the customer experience across online sales and service. It's the digital layer that connects the physical stores. While specific platform revenue isn't broken out, its integration supports the overall ecosystem performance, which drove Q3 2025 same-store revenue up 7.7% year-over-year.

Driveway Finance Corporation (DFC)

The captive finance arm, DFC, is a critical profit center, contributing to earnings resilience. Management has been focused on scaling this operation profitably. In Q3 2025, finance operations income hit $19 million, and they achieved a 15% North America penetration milestone ahead of schedule.

Here's a look at the financial scale and targets for this key resource:

Metric	Value/Target	Context/Date
Portfolio Target (as per outline)	$4.3 billion	Target for 2025
Reported Portfolio Size	$3.9 billion	As of Q4 2024/Early 2025
Q3 2025 Finance Operations Income	$19 million	Q3 2025
Q3 2025 Net Interest Margin (NIM)	4.6%	Q3 2025

Vehicle Inventory

Lithia Motors, Inc. maintains a large, diversified stock across new, used, and value autos to support its nationwide network and omnichannel sales. This inventory scale is essential for capturing market share in both physical and digital channels. The company's focus on used vehicles is evident, as used retail revenue increased 11.8% in Q3 2025.

The inventory holding is substantial:

• Lithia Auto Stores offer approximately 90,000 vehicles for sale.
• Used front-end Gross Profit Per Unit (GPU) was $1,767 in Q3 2025.

Proprietary Data & Systems

Operational efficiency is increasingly driven by proprietary systems, most notably the Pinewood Automotive Intelligence™ Platform. This system is central to their vision of becoming a fully integrated, data-driven retailer. The commitment to this technology is formalized through a five-year contract for deployment across the network.

The data and systems resource has specific financial and timeline metrics tied to the Pinewood AI rollout:

System/Metric	Value/Timeline	Detail
Pinewood AI JV Valuation	$150 million	Total valuation of the Joint Venture
LAD Stake Sale Value	$76.5 million	Value of Lithia's 51% stake sold to Pinewood.AI
Rollout Pilot Start	Second half of 2025	Pilot in Lithia's US stores
Full System Rollout Completion	End of 2028	Across all current and future US and Canada sites
Expected Annual Recurring Revenue from LAD	$40 million	Expected ARR from LAD post-full deployment

The integration of these systems is expected to support margin resilience, especially as the company navigates normalized Gross Profit Per Unit (GPU) figures, which stood at $4,109 in Q3 2025.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Value Propositions

You're looking at how Lithia Motors, Inc. captures customer value in late 2025. It's all about owning the entire journey, from the first click to the last oil change.

Full Vehicle Lifecycle Solution: Sales, financing, service, and parts throughout ownership.

Lithia Motors, Inc. focuses on keeping the customer within its ecosystem long after the initial sale. The aftersales segment is a major profit stabilizer; for instance, same-store aftersales gross profit grew by 8.5% year-over-year in the second quarter of 2025. To be fair, this segment is critical, now accounting for over 60% of the company's net income. This comprehensive approach ensures revenue capture across parts and service needs.

Seamless Omnichannel Experience: Buy online via Driveway or in-store at a local dealership.

The integration of digital and physical retail is a core value driver. The Driveway digital platform is seeing real traction, with its website averaging 1.3 million unique visitors per month in the second quarter of 2025. Customers purchased 90,000 vehicles through Lithia Motors, Inc.'s digital ecosystem in the first six months of 2025. This omnichannel sales approach was responsible for 25.5% of all vehicles sold during the second quarter of 2025.

Wide Selection and Choice: Access to 52 OEM brands and diverse vehicle segments.

Scale provides selection, which is a key draw for customers seeking specific vehicles. Lithia Motors, Inc. operates a network of 448 stores globally. This network represents a wide array of manufacturers, offering access to 52 OEM brands for new vehicle sales. This breadth helps Lithia Motors, Inc. capture market share across import, luxury, and domestic segments, with new vehicle brands split approximately 42% import, 32% luxury, and 26% domestic in Q2 2025.

Convenience and Transparency: Simple, clear transactions for a better customer experience.

The emphasis on a simple, convenient, and transparent experience is delivered through the execution of the omnichannel model and the digital tools provided to the customer. The company is executing on its goal to be the largest automotive retailer in North America by revenue, ranking No. 124 on the 2025 Fortune 500 list.

Financing Accessibility: Captive finance solutions through DFC for various credit profiles.

Driveway Finance Corporation (DFC) is a significant growth adjacency, providing in-house financing options. DFC originated $731 million in loans during the second quarter of 2025, marking a 30.3% increase year-over-year in originations. The average percentage rate across these originations was 8.7% in Q2 2025. Management maintains a long-term target to increase penetration rates into the 15% to 20% range. The DFC portfolio is projected to expand to $4.3 billion with $50-60 million in income for the full year 2025.

Here's a quick look at some key operational metrics supporting these value propositions as of mid-2025:

Value Proposition Metric	Data Point	Period/Context
Global Store Count	448	Q2 2025
OEM Brands Represented	52	As Reported
Digital Monthly Visitors	1.3 million	Q2 2025 Average
Digital Channel Sales Units	90,000	First six months of 2025
Omnichannel Sales Mix	25.5%	Q2 2025 Vehicles Sold
DFC Quarterly Originations	$731 million	Q2 2025
Projected DFC Income	$50-60 million	Full Year 2025 Target

The aftersales segment provides stability, with its gross profit growing 8.5% year-over-year in Q2 2025. Also, the company repurchased $274 million worth of shares in the quarter, demonstrating conviction in its model.

Finance: draft updated DFC penetration forecast based on Q3 2025 results by end of January 2026.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Customer Relationships

Dedicated In-Store Sales Teams

Lithia Motors, Inc. operates a network of 448 stores globally as of Q2 2025, supporting traditional, high-touch interactions for complex vehicle transactions. The company's physical footprint provides access to 95% of the U.S. population within approximately 205 miles. This network has supported growth in market share, with new vehicle market share increasing from 0.4% in 2019 to 1.1%, and used vehicle market share growing from 0.6% to 1.9% by Q1 2025.

Digital Self-Service: Driveway.com for transparent, low-touch online purchasing

The Driveway digital platform averaged 1.3 million unique visitors per month in Q2 2025. Customers purchased 90,000 vehicles through Lithia Motors, Inc.'s digital platforms in the first six months of 2025. The omnichannel sales approach, integrating physical and digital, accounted for 25.5% of vehicles sold during Q2 2025.

Personalized Financing: Tailored offers via DFC and third-party lenders

Driveway Finance Corporation (DFC), the captive finance arm, originated $731 million in loans during the second quarter of 2025. This represented a 30.3% year-over-year rise in originations. U.S. penetration for DFC increased to 14.8% in Q2 2025. Lithia Motors, Inc. projects the DFC portfolio to expand to $4.3 billion for 2025, aiming for $50-60 million in income. The company has a stated long-term target to increase DFC penetration from 15% to 20%.

Loyalty Programs: Building repeat business through aftersales and service network

The focus on aftersales service is a key relationship driver. Lithia Motors, Inc.'s aftersales gross profit grew by 11.5% in Q2 2025. For the full year 2025, aftersales revenues are expected to increase by mid-single digits. The company's core values include to Earn Customers For Life.

CRM and Data-Driven Marketing: Leveraging customer data for targeted outreach

Lithia Motors, Inc. is leveraging scale to increase value by implementing automation in service centers and utilizing customer data collected through its digital ecosystem for targeted marketing. The integrated mobility ecosystem encompasses physical locations, the Driveway consumer portal, and GreenCars.

Key Customer Relationship Metrics (2025 Data)

Metric	Value/Period	Source Context
Total Global Stores	448	Q2 2025
Driveway.com Monthly Unique Visitors	1.3 million	Q2 2025 Average
Digital Channel Vehicle Sales (H1 2025)	90,000 units	First six months of 2025
DFC U.S. Penetration Rate	14.8%	Q2 2025
DFC Quarterly Loan Originations	$731 million	Q2 2025
Projected DFC Portfolio	$4.3 billion	For 2025
Aftersales Gross Profit Growth	11.5%	Year-over-year in Q2 2025

The company's total revenue for the trailing twelve months (TTM) was reported at $37.61 Billion USD.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Channels

You're looking at how Lithia Motors, Inc. gets its product and services to the customer in late 2025. It's a blend of massive physical presence and aggressive digital expansion, which is key to their strategy as the largest automotive retailer by revenue. For the third quarter of 2025, total revenue hit a record $9.7 billion.

Physical Dealerships: Primary channel for sales, service, and parts across 450+ locations

The foundation remains the physical footprint. As of November 18, 2025, Lithia Motors, Inc. operates 327 dealerships in the United States alone. Globally, the company operates 459 locations across the US, Canada, and the United Kingdom as of the end of 2024, offering 52 brands of new vehicles across its network. This density is strategic; the network provides access to 95% of the U.S. population within approximately 205 miles. The focus on network density continues, evidenced by recent M&A activity, such as the acquisition of Fines Ford in the Greater Toronto Area, which is expected to add $100 million in annualized revenue. The overall target for annual acquired revenue remains between $2 billion and $4 billion.

Here's a look at the scale and recent growth supporting this channel:

Metric	Value/Amount	Context/Date
Total Global Dealership Locations	459	As of December 31, 2024
US Dealership Locations	327	As of November 18, 2025
New OEM Brands Offered	52	Current Network Offering
Year-to-Date Expected Annualized Revenue from Acquisitions	$2.2 billion	As of December 2, 2025
Target Annual Acquired Revenue	$2 billion to $4 billion	Ongoing Strategy

Driveway.com: E-commerce platform for end-to-end online vehicle transactions

The digital arm, Driveway.com, is fully integrated with the physical network, allowing for omnichannel transactions. Customers purchased 90,000 vehicles through the digital ecosystem in the first six months of 2025. This platform supports buying, selling, financing, or setting up service online, leveraging the expertise of over 295+ retail locations in the US and Canada. The digital engagement is substantial; the platform averaged 1.3 million unique visitors per month in the second quarter of 2025. This omnichannel approach accounted for 25.5% of all vehicles sold during Q2 2025. The strength of the core business and the ecosystem translated to same-store total revenue growth of 7.7% in Q3 2025.

The digital channel's contribution to overall sales volume is growing:

• Customers purchasing vehicles via the digital ecosystem (H1 2025): 90,000 units.
• Monthly Unique Visitors (Q2 2025 average): 1.3 million.
• Share of Total Vehicles Sold via Omnichannel (Q2 2025): 25.5%.
• Same-Store Total Revenue Growth (Q3 2025): 7.7%.

Driveway Finance Corporation (DFC): Direct channel for captive financing and insurance products

Driveway Finance Corporation (DFC) is a critical adjacency, capturing more of the customer's spend across the vehicle lifecycle. As of Q1 2025, DFC had built a portfolio of $3.1 billion with an overall APR exceeding 9%. The profitability of this segment is accelerating. For the second quarter of 2025, financing operations income was reported between $15 million and $18 million, representing a year-over-year increase between 110% and 155%. By Q2 2025, U.S. penetration for DFC reached 15%. The segment delivered $20 million in segment income in Q2 2025. Management noted that over 60% of net profit now comes from aftersales and adjacencies like DFC, supporting a more resilient earnings model.

GreenCars.com: Specialized digital channel for electric and sustainable vehicles

GreenCars.com focuses on the growing segment of electrified vehicles. While specific revenue for GreenCars.com isn't isolated, the overall trend in the network is clear: electric vehicles represented 43% of new car sales in the third quarter of 2025. This channel acts as an authoritative educational resource, supporting dealerships in driving consumer adoption of hybrids, plug-in hybrids, and all-electric vehicles. The company is clearly positioned to capture demand in this evolving area.

Regional Hubs: Centralized inventory and logistics to support the network density

The strategy relies on leveraging the national retail footprint for sales and distribution, which requires robust logistics supported by regional hubs. The acquisitions, like the one in the Southeast, are specifically noted to increase network density in that region. This infrastructure allows for the movement of inventory across the network, supporting both physical sales and the digital fulfillment needs of Driveway.com, which includes home delivery options.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Customer Segments

You're looking at the specific groups Lithia Motors, Inc. (LAD) targets across its massive retail footprint. It's not just one type of buyer; it's a full spectrum, from those needing the newest luxury ride to those prioritizing value and digital convenience. Honestly, the data shows a clear strategic pivot toward digital and value segments.

New Vehicle Buyers

This segment seeks the latest models across import, luxury, and domestic brands. You see Lithia Motors, Inc. (LAD) managing a diverse portfolio here. For instance, in the second quarter of 2025, the new vehicle brand mix was split, with 42% being import brands, 32% luxury, and 26% domestic brands. The momentum in this area is steady, with same-store new vehicle retail revenue growing 5.5% year-over-year in the third quarter of 2025. Still, profitability per unit is under pressure; the new vehicle gross profit per unit (GPU) fell to $2,867 in Q3 2025, down 10.8% year-over-year. Also, electrified vehicles are a growing part of this segment, making up 43% of the total new car mix as of Q3 2025.

Used Vehicle Consumers

This is a diverse group, spanning from certified pre-owned (CPO) to value autos, and Lithia Motors, Inc. (LAD) is clearly accelerating here. The focus on value is evident, as value autos (average selling price $14,864) delivered the highest return on investment (ROI) at 138% in Q2 2025. Used retail revenue climbed 11.8% in Q3 2025, and the Value Autos used-car segment specifically increased unit sales by 22.3% year-over-year in the third quarter of 2025. To be fair, the GPU in this segment also saw pressure, declining 4.8% year-over-year to $1,767 in Q3 2025. Management noted that 74% of used car sourcing came directly from consumers in Q3 2025, which is a key operational metric.

Here's a quick look at the vehicle mix based on Q2 2025 data:

Vehicle Category	Mix Percentage	Average Selling Price (ASP)
CORE vehicles	60%	$29,093
Value Autos	Remainder	$14,864

Luxury and Premium Buyers

Lithia Motors, Inc. (LAD) serves this high-end market through specific, high-profile stores. The recent acquisition of Porsche Beverly Hills and Santa Monica Audi is projected to generate nearly $450 million in annual revenues alone. These stores operate in the premier luxury automotive market. The company's overall new vehicle brand mix in Q2 2025 included 32% luxury brands, and historically, brands like BMW/Mini are among the top three revenue drivers for the group. The total expected annualized revenue acquired year-to-date as of November 2025 is $2.1 billion, with these luxury additions being a meaningful part of that growth.

Digital-First Customers

These consumers prefer completing the transaction entirely online via Driveway. The omnichannel approach is clearly paying off; 25.5% of all vehicles sold were transacted through digital platforms in Q2 2025. In the first six months of 2025, customers purchased 90,000 vehicles through Lithia Motors, Inc. (LAD)'s digital platforms. The Driveway.com platform averaged 1.3 million unique visitors per month in Q2 2025. Furthermore, about half of those digital sales were financed through Driveway Finance Corporation (DFC), which is targeting increased penetration from 15% to 20%. DFC originated $731 million in loans in Q2 2025, with U.S. penetration at 14.8%.

• Digital sales penetration (Q2 2025): 25.5% of vehicles sold.
• Vehicles purchased digitally (H1 2025): 90,000 units.
• Driveway.com monthly unique visitors (Q2 2025): 1.3 million.
• DFC loan origination (Q2 2025): $731 million.

Commercial and Fleet Buyers

Lithia Motors, Inc. (LAD) serves businesses requiring vehicle management and bulk purchases through its broader ecosystem. The company explicitly includes fleet management offerings within its comprehensive network. The Financing Operations segment supports these retail purchases and leases. While specific unit or revenue figures for pure commercial/fleet sales aren't broken out separately from the main Vehicle Operations segment, the overall structure supports this need through its scale and financing capabilities. The company is one of the largest global automotive retailers, operating 448 stores globally as of mid-2025, which provides the necessary infrastructure to handle fleet needs.

Finance: draft 13-week cash view by Friday.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Cost Structure

You're looking at the hard numbers driving Lithia Motors, Inc.'s operational expenses as of late 2025. The cost structure is dominated by inventory, but overhead and strategic technology spending are also major factors.

Vehicle Acquisition Costs: Largest cost of goods sold for new and used inventory.

The cost of sales, which primarily reflects vehicle acquisition, was up 5.4% year-over-year in the third quarter of 2025. This is the single largest outflow, directly tied to the volume and pricing of the vehicles Lithia Motors, Inc. moves through its network. The company is still pursuing aggressive growth, targeting $2 billion in acquisition revenue for the full year 2025.

Selling, General, and Administrative (SG&A): Salaries, advertising, and operational overhead.

SG&A expenses for the third quarter of 2025 hit $998 million, marking a 5.8% increase compared to the prior year period. Management is focused on SG&A discipline, though same-store SG&A as a percentage of gross profit was 67.1% in Q3 2025, up from 65.1% in Q3 2024. Adjusted SG&A as a percentage of gross profit for the quarter stood at 67.9%.

Real Estate and Facility Costs: Expenses for the 450+ physical dealership locations.

Lithia Motors, Inc. maintains a massive physical footprint. As of December 31, 2024, the company operated 459 dealership locations across the United States, Canada, and the United Kingdom. By November 18, 2025, there were 327 Lithia Motors dealerships specifically in the United States. These facilities drive significant fixed costs related to property, leases, and local overhead.

Interest Expense: Cost of floor plan financing and corporate debt for acquisitions.

Financing the inventory is a critical variable cost. For the third quarter of 2025, floor plan interest expense declined $19 million year-over-year, a positive result attributed to lower inventory balances and slightly lower interest rates. However, the overall debt load supporting the acquisition strategy remains substantial; long-term debt as of September 30, 2025, was $6.97 billion.

Technology Investment: Continuous spending on Driveway and Pinewood AI development.

Strategic investment in digital retail is ongoing. Lithia Motors, Inc. recently monetized a portion of its technology investment by selling its 51% majority stake in the North American joint venture to Pinewood.AI for $76.5 million, valuing the JV at $150 million. A five-year contract secures the rollout of the Pinewood Automotive Intelligence™ platform across all US and Canada dealerships by the end of 2028. Projected annual recurring revenue from Lithia for this platform is expected to reach approximately $60 million by 2028. The pilot program in US stores was set to begin in the second half of 2025.

Here's a quick look at the key cost-related metrics from the latest reporting period:

• Q3 2025 Revenues: $9.67 billion or $9.7 billion.
• Q3 2025 SG&A Expenses: $998 million.
• Long-Term Debt (Sept 30, 2025): $6.97 billion.
• US Dealership Count (Nov 18, 2025): 327.
• Pinewood.AI JV Sale Value: $150 million.

You can see the breakdown of these major cost components and related financial health indicators in the table below:

Cost Component / Metric	Value / Amount	Reference Period / Context
Total Revenues	$9.67 billion	Q3 2025
Cost of Sales Change	Up 5.4%	Year-over-year, Q3 2025
SG&A Expenses	$998 million	Q3 2025
Adjusted SG&A as % of Gross Profit	67.9%	Q3 2025
Floor Plan Interest Expense Change	Declined $19 million	Year-over-year, Q3 2025
Long-Term Debt	$6.97 billion	As of September 30, 2025
Pinewood.AI JV Valuation	$150 million	Transaction context, June 2025

What this estimate hides, for instance, is the precise allocation between new versus used vehicle acquisition costs, which is a key driver of gross margin. Finance: draft 13-week cash view by Friday.

Lithia Motors, Inc. (LAD) - Canvas Business Model: Revenue Streams

You're looking at how Lithia Motors, Inc. (LAD) brings in its money, and honestly, it's a diversified machine built around the entire vehicle ownership lifecycle. The revenue streams are layered, which helps them weather the ups and downs of the new car market.

New Vehicle Sales: Largest top-line revenue component

New vehicle sales still form the foundation of the top line, even with the focus shifting elsewhere. For the third quarter of 2025, this segment delivered $4.63 billion in retail revenue on a same-store basis. You saw 96,639 new retail units move, with the average selling price (ASP) landing at $47,913. To be fair, the gross margin in this area is thin, contracting to just 6% in Q3 2025, which is why the other segments are so critical for overall profitability.

Used Vehicle Sales: High-volume segment with strong growth

This is where the momentum is clearly visible, especially as customers look for value. Same-store used retail revenue was up a strong 11.8% in Q3 2025. The total used vehicle retail revenue for the quarter hit $3.1 billion. They moved 109,097 units, and the ASP here was $28,381. This segment is definitely helping capture demand when new vehicle affordability is a concern.

Here's a quick comparison of the two major vehicle sales components from Q3 2025:

Revenue Stream	Q3 2025 Revenue (Billions USD)	Q3 2025 Units Sold	Q3 2025 Average Selling Price (USD)
New Vehicle Retail Sales	$4.63	96,639	$47,913
Used Vehicle Retail Sales	$3.1	109,097	$28,381

Aftersales Revenue: The profit engine

Aftersales-that's service, parts, and body work-is the recurring revenue stream that provides stability. This area is now contributing over 60% of Lithia Motors, Inc.'s net income. In Q3 2025, same-store aftersales revenue grew 3.9% year-over-year, but the real story is the profit: same-store aftersales gross profit rose a hefty 9.1%, pushing the margin up to 58.4%. That margin expansion is key; it shows operational excellence in a macro-resistant area.

Finance & Insurance (F&I)

F&I revenue is the income generated from arranging third-party financing and insurance products for customers buying vehicles. Same-store F&I revenue saw growth of 5.7% in the third quarter. The F&I revenue for the quarter was reported at $378.6 million. This stream, along with the captive finance arm, helps smooth out the volatility from vehicle unit sales.

Driveway Finance Corporation (DFC) Income

The captive finance arm, Driveway Finance Corporation (DFC), is a targeted growth area. Management projected that DFC income would generate between $50-60 million for the full year 2025. They are actively looking to increase penetration rates, aiming for 20% penetration going forward. This is a high-quality earnings mix component that compounds cash flows.

You can see the mix of the key non-vehicle revenue streams from Q3 2025 below:

• Aftersales Revenue (Q3 2025): $1.04 billion.
• Finance & Insurance Revenue (Q3 2025): $378.6 million.
• Projected DFC Income (Full Year 2025): $50-60 million.
• Aftersales Net Income Contribution: Over 60%.

Finance: draft the 13-week cash view by Friday, focusing on the impact of the Q3 gross profit margins.