LAD Posts All-Time High Revenue in 2025 Even as Margins Narrow and Profits Face Pressure

It's not every day that an auto retailer logs $37.63 billion in annual revenue. Lithia & Driveway (LAD)—the global automotive retail giant—did just that for full-year 2025, notching a 4% increase over the previous year. Gains in used vehicle and aftersales businesses, plus an assertive $947 million in share buybacks, mark a story of both growth and resilience as margin pressures mount elsewhere in the business.

Used Vehicle Sales and Aftersales Power Growth While New Vehicle Margins Soften

The full-year revenue record was fueled by standout operational segments. Used vehicle revenues jumped 5.9% year-over-year, and aftersales posted a 7% increase. In the fourth quarter alone, used revenues rose 6.7%, while aftersales climbed an impressive 11.4%. On a same-store basis, used retail units grew 4.7% and aftersales gross profit surged by 9.8% for the quarter. Meanwhile, new vehicle revenue ticked up 2.1% for the year, but gross margins narrowed by 70 basis points to 6.3%, reflecting pricing headwinds in that segment.

Despite this momentum, quarterly profits reflected continued margin pressures. Fourth quarter adjusted net income attributable to LAD fell 21% to $162.2 million, and adjusted diluted earnings per share declined 12% to $6.74. Gross profit per new vehicle dropped 8.2% to $2,904 for the full year, while used vehicle gross profit per unit softened slightly to $1,756.

Share Repurchases and Financial Discipline Stand Out

Capital allocation remained disciplined. The company bought back $947 million worth of shares throughout 2025, reducing its share count by 11.4% (including 3.8% in Q4 alone). A $0.55 per share dividend for the fourth quarter highlights a continued commitment to returning value to shareholders.

Driveway Finance Delivers Record Results and Expansions Continue

One bright spot was the Driveway Finance Corporation, delivering a record $23 million in quarterly income—a $19 million jump over the prior year—and achieving a 15.0% penetration rate with high-quality borrowers (average FICO of 751).

On the expansion front, LAD acquired eleven stores during Q4 (across North America and the UK) expected to generate $1.6 billion in annual revenue. For the full year, acquisition targets totaled $2.4 billion in expected sales, partly offset by $1.3 billion in divestitures.

Liquidity and Leverage Remain Robust

LAD ended the year with approximately $1.5 billion in cash, marketable securities, and credit facility availability. Net debt to adjusted EBITDA ticked up to 2.92x, from 2.71x a year ago, reflecting continued investment in the business but maintaining manageable levels for such a large retailer.

Segment Outlook: Resilience and Caution in the Face of Margin Compression

LAD’s 2025 performance stands out for robust operational execution in areas under its influence: used vehicle growth, aftersales strength, cost management, and strategic capital allocation. However, the broader environment remains challenging, particularly with sustained softness in new car margins and higher selling, general & administrative expenses as a percent of gross profit (up from 67.5% to 68.8% year-over-year, adjusted).

CEO Bryan DeBoer remains confident in the company’s diversified, multi-channel model and disciplined approach to acquisition, positioning LAD well to navigate a market that isn’t lacking for challenges—or opportunities.

Key Takeaways for Investors and Market Watchers

The report casts LAD as a retailing heavyweight that’s not just weathering shifting headwinds—it’s actively gaining share and growing the bottom line in the categories where it can. While margin compression and new vehicle softness persist, robust aftersales, accretive acquisitions, and aggressive buybacks paint an overall picture of resilience and disciplined execution. Investors might want to watch how LAD manages potential future pressure on vehicle margins and capital costs, especially with rising leverage and a dynamic consumer environment.

LAD’s annual results highlight the power of diversification, scale, and strategic agility—qualities that may continue to define its trajectory in the evolving automotive sector.

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