Q3 2025 Group 1 Automotive Inc Earnings Call
Worded.
At this time I would like to turn the call over to Mr. Pete <unk> Shah.
Group one's senior Vice President manufacturer Relations and financial services. Please go ahead, Mr. <unk> Shah.
Thank you Jamie good morning, everyone and welcome to today's call. The earnings release, we issued this morning and a related slide presentation that include reconciliations related to the adjusted results. We'll refer to on this call for comparison purposes have been posted to group one's website.
Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's third quarter 2025 financial results conference call.
Please be advised that this call is being recorded.
Before we begin I would like to make some brief remarks about forward looking statements and the use of non-GAAP financial measures, except for historical information mentioned during the conference call statements made by management of roofing automotive are forward looking statements that are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95.
At this time I'd like to turn the call over to Mr. Pete dong Shaw Group 1, senior vice, president manufacturer relations and financial services. Please go ahead and Mr dong Shaw.
Thank you. Jamie. Good morning, everyone and welcome to today's call.
Forward looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results.
The earnings release, we issued this morning and a related slide, presentation, that include reconciliations related to the adjusted results. We will refer to on this call for comparison purposes have been posted to group 1's website.
Those risks include but are not limited to risks associated with pricing <unk>.
Volume inventory supply conditions of markets.
Successful integration of acquisitions and adverse developments in the global economy, and resulting impacts on demand for new and used vehicles and related services.
Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures, except for historical information. Mentioned during the conference call are statements made by management of Group 1 Automotive, which are forward-looking statements.
That are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call.
for looking statements of all both known and unknown risks, and uncertainties, which may cause the company's actual results in future periods to differ material from forecasted results,
As required by applicable SEC rules. The company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.
those risks include but are not limited to risk associated with pricing,
Participating with me on today's call Daryl <unk>, our President and Chief Executive Officer, and Dan Mchenry Senior Vice President and Chief Financial Officer, I'd now like to hand, the call over to Darryl.
Volume inventory, Supply conditions of markets successful Integrations of Acquisitions, and adverse developments, and the global economy and resulting impacts on demand for new and used vehicles and related services.
Good morning, everyone.
Let me start with a few highlights from the quarter before discussing our regional performance.
Those and other risks are described in the company's filings with the Securities and Exchange Commission, in addition, certain non-gaap Financial measures as defined under SEC rules may be discussed on this call.
<unk> delivered an all time record quarterly revenues driven by record results in parts and service and used vehicles, along with another quarter of very strong F&I performed in both the U S. K.
As required by applicable SEC, rules the company provides reconciliations of any such non-gaap Financial measures to the most directly comparable gaap measures on its website.
New vehicle.
<unk> gross profit performance was solid.
Participating with me on today's call Daryl kenningham, our president, and chief executive officer, and Daniel, McHenry, senior, vice, president and Chief Financial Officer. I'd now, like to hand the call over to Daryl.
And customer pay in both markets performed well supported by healthy repair order growth.
Good morning, everyone.
We've maintained cost discipline in the U S with good SG&A leverage less than 66% on an as reported and same store basis.
Let me start with a few highlights from the quarter before, discussing our regional performance.
Now turning to our U K operation.
The U K environment remains challenging with inflation wage and insurance cost pressures and the Bev mandate, which continues to compress margins.
Group 1 delivered record quarterly revenues driven by record results in parts and service and used vehicles, along with another quarter of a very strong F&I performance in both the U.S. and the U.K.
New V vehicle Prue, gross profit performance was solid.
While the broader Saar improved slightly in the quarter much of that growth was fleet driven and retail conditions remained soft.
And customer pay in both markets performed, well, supported by healthy repair order growth.
New lower cost entrants are seeing increasing market share performance with cost conscious consumers.
We've maintained cost discipline in the US with good sgna, leverage less than 66% on an as reported and same store basis.
However, this is not yet a significant factor in our business given our luxury leaning portfolio.
Now, turning to our UK operation.
Despite these headwinds there are some bright spots in our UK business. Our after sales business continues to expand with healthy healthy customer pay operations.
The UK environment remains challenging with inflation, wage and insurance cost, pressures. And the Bev mandate which continues to compress margins.
We are applying our U S. After sales playbook across our UK dealerships for example.
While the broader SAR, improves slightly in the quarter, much of that growth was Fleet driven and Retail conditions remain soft.
In the UK our stores now welcome walk in customers, which we had previously limited.
And we are fully reopened shop schedules cutting appointment wait times from nearly two weeks to just a few days.
New lower cost entrance are seeing increasing market share performance with cost-conscious consumers. However, this is not yet a significant factor in our business, given our luxury leaning portfolio.
And we're extremely pleased with the progress we're making in reshaping our U K after sales business.
Our after sales, business continues to expand.
New vehicle margins in the quarter remained steady year over year.
With healthy healthy customer pay operations.
Our used vehicle volumes in the UK were up nearly 4%.
Our UK used vehicle teams have been successful exercising discipline, and our aging and reconditioning processes.
We are applying our us after sales Playbook across our UK dealerships. For example, in the in the UK, our stores. Now welcome walk-in customers which we had previously Limited.
F&I also delivered an excellent quarter with same store PLO up a $155 or greater than 16% year over year.
And we have fully reopened shop schedules cutting appointment. Wait times from nearly 2 weeks to just a few days and we're extremely pleased with the progress we're making in reshaping our UK after sales business,
Our team is focused on improving product penetration, which has resulted in same store financing penetration increasing by over 4%.
New vehicle margins in the quarter remained steady year-over-year.
We're continuing to strengthen our business with initiatives to offset our cost increases.
Since the acquisition of Inchcape, we've implemented a series of head count reductions systems integration activities and selective franchise closures and divestitures to improve operational efficiency and to better align our cost structure with current market conditions are.
Are used vehicle volumes in the UK were up. Nearly 4% our UK used vehicle teams have been successful, exercising, discipline in our aging and reconditioning process.
We also delivered an excellent quarter with same-store Prue up.
155.
Greater than 16% year-over-year.
Our head count reductions have included approximately 700 positions across the U K.
is focused on improving product penetration, which has resulted in same-store financing penetration increasing by over 4%.
Responsible portfolio management has resulted in the closure of four dealerships and the termination of eight franchises.
We're continuing to strengthen our business with initiatives to offset our cost increase.
We're making meaningful progress on systems integration across our across our UK business. We've completed the consolidation of 11 Dms platforms, and we're rolling out a new business intelligence system now.
Since the acquisition of INK, we've implemented a series of headcount reductions, integration activities, and selective franchise closures and divestitures to improve operational efficiency, and to better align our cost structure with current market conditions.
We are also completing the final stages of our U S. U K systems integration review spanning approximately 90 different systems companywide.
These actions are improving visibility operational consistency and data led decisions across the organization.
And our responsible portfolio management has resulted in the closure of four dealerships and the termination of eight franchises.
In the third quarter, we formally notified Jaguar land Rover of our decision to exit this brand in the UK within 24 months.
We're making meaningful progress on systems integration across across our UK business. We've completed the consolidation of 11 DM platforms and we're rolling out a new business intelligence system. Now
We feel our efforts and some of our real estate can.
It can be more effectively utilized elsewhere.
We are also completing the final stages of our us UK systems integration review.
We are collaborating closely with our OEM partners at <unk> to achieve a positive outcome for them.
Spanning approximately 90 different systems companywide.
And for group one shareholders.
These actions are improving visibility operational consistency, and data-led, decisions across the organization.
It's our intention that this achieves a positive result for all concerned.
Due to this decision our UK portfolio was required to be tested for impairment.
In the third quarter, we formally notified Jaguar Land Rover of our decision to exit this brand in the UK within 24 months.
As a result, we took a $123 9 million asset impairment in the quarter.
We feel our efforts and some of our real estate.
Can be more effectively utilized elsewhere.
Also important to note. This decision was unrelated to the <unk> cyber attack.
Which separately impacted our UK profitability by approximately 3 million pounds during the quarter.
We are collaborating closely with our OEM Partners at jlr to achieve a positive outcome for them.
And for Group 1 shareholders.
Those actions reflect our commitment to optimize our portfolio control costs and focus our resources on winning through operational excellence.
It's Our intention you to that. This achieves a positive result for all concerned.
Due to this decision, the UK portfolio was required to be tested for impairment.
We will continue to refine the UK business, managing our head count right sizing, our network and prioritizing after sales and F&I, while leaning into our luxury platform and geographic diversity.
As a result, we took a $123.9 million asset impairment in the quarter.
Also important to note, this decision was unrelated to the JLR cyber attack.
This will position our UK business for long term success.
Which separately impacted our UK profitability by approximately 3 million pounds during the quarter.
Now turning to our UK operations, our U S teams continue to execute very well maintaining operational discipline and customer focus across our dealerships.
Those actions reflect our commitment to optimize our portfolio control costs and focus. Our resources on winning through operational excellence.
As a result, the business delivered another solid quarter of growth with healthy performance across all major lines.
We will continue to refine the UK business, managing our headcount, right? Sizing our Network and prioritizing after sales and fni.
Demand remained consistent throughout the quarter supported by balanced inventory levels and steady consumer interest.
While leaning into our luxury platform and Geographic diversity.
Which we believe to be relatively healthy in the U S.
This will position our UK business for long-term success.
Our used vehicle units sold nearly set a record only 40 units off of our all time quarterly volume record.
Now, turning to our UK operation, our us teams continue to execute very well.
Maintaining operational discipline and customer-focused our dealerships.
Our same store sales and used vehicle outpaced the industry.
<unk> was outstanding once again with an all time quarterly high Tru of nearly $2500 combined with an impressive 77% new vehicle finance penetration.
As a result, the business delivered another solid quarter of growth, with healthy performance across all major lines. Demand remained consistent throughout the quarter, supported by balanced inventory levels and steady consumer interest.
Which we believe to be relatively healthy in the US.
After sales achieved record quarterly revenue in quarter and gross profit.
Underscoring the strength and stability of this high margin business.
Our used vehicle. So units, sold nearly set a record only 40 units off of our all-time quarterly Vol record.
Our investment in our after sales operation continues to capture growth in our initiatives around flexible scheduling all day Saturday operations and technician productivity continue to create new capacity and improve retention across our U S stores.
Our same-store sales and used vehicle sales outpace the industry.
Fni was outstanding once again with an all-time quarterly High Prue of nearly 2500 combined with an impressive. 77% new vehicle, Finance rate.
Same store technician head count increased by over 4% due to our recruitment and retention efforts.
On the <unk> on a same store basis, our customer pay revenue increased nearly 8%.
After sales, achieved record quarterly, revenue, and quarter and gross profit underscoring. The strength and stability of this high margin business.
Warranty was up 16% versus the prior year comp, but saw 20% growth.
our investment in our after sales, operation continues to capture growth and our initiatives around flexible scheduling
We continue to believe in the potential of our after sales business and we also believe the capacity and productivity are the keys to success.
All day Saturday, operations and technician productivity continued to create new capacity and improve retention across our U.S. stores.
The overall U S environment remains dynamic with ongoing policy and trade uncertainty.
Same store, technician headcount increased by over 4% due to our Recruitment and Retention efforts.
We're maintaining a cautious but confidence stance balancing discipline in spending with targeted investment will receive long term return.
On same on a same store basis. Our customer pay Revenue, increased nearly 8%.
Our operational excellence excellence is a key advantage, giving us the ability to adjust quickly to changing conditions.
Warranty was up 16% versus a prior year comp that saw 20% growth.
Now a word about our capital allocation.
In August we added Mercedes Benz of Buckhead in Atlanta, Georgia to our portfolio.
We continue to believe in the potential of our after sales business and we also believe the capacity and productivity are the keys to success.
It is expected to be one of the best performing stores in the U S for Groupon.
The overall U.S. environment remains dynamic, with ongoing policy and trade uncertainty.
Is positioned in a growing market and consistent with our cluster strategy and our disciplined focus on pursuing only those opportunities that will create long term shareholder value.
We're maintaining a cautious but confident stance, balancing discipline and spending with targeted investment where we see long-term returns.
Just as importantly, we continue to Opportunistically buy back shares of our company.
Our operational excellence Excellence is a key Advantage, giving us the ability to adjust quickly to changing conditions.
now a word about our Capital, allocation
Since the beginning of 2022, we have repurchased nearly one third of the company's outstanding common shares.
In August, we added Mercedes Benz of bekhud in Atlanta Georgia to our portfolio.
The acquisition landscape has been fairly quiet in recent months and we continue to engage in researching opportunities in the U S. But we are holding on further UK acquisition.
It's expected to be 1 of the best performing stores in the US for Group 1.
Acquisition investment.
We expect consolidation to continue in the future in both markets and we believe we're well positioned with our OEM partners to capitalize on those kind of opportunities.
Just as importantly, we continue to opportunistically buy back shares of our company.
Now I will turn the call over to our CFO, Daniel Mchenry for an operating and financial overview.
Since the beginning of 2022, we've repurchased nearly one-third of the company's outstanding common shares.
Thank you Daryl and good morning, everyone.
In the third quarter of 2025 group, one automotive reported quarterly record revenues of $5 8 billion.
The acquisition landscape has been fairly quiet in recent months and we continue to engage and researching opportunities in the us. But we are holding on further, UK, acquisition and acquisition investment.
Gross profit of $920 million.
Adjusted net income of $135 million.
We expect consolidation to continue in the future in both markets and we believe we're well positioned with our OEM Partners to capitalize on those kind of opportunities.
Adjusted diluted EPS of $10 45 from continuing operations.
Now, I'll turn the call over to our CFO, Daniel McHenry, for an operating and financial overview.
Starting with our U S operations performance was strong across all business lines, both reported and same store.
Thank you, Daryl and good morning everyone.
Revenue growth was broad based led by record quarterly <unk> in used vehicle parts and service and F&I.
In the third quarter of 2025, Group 1 Automotive reported quarterly record revenues of $5.8 billion.
Gross profit of 920 million.
Adjusted net income of 135 million.
New vehicle unit sales rose mid single digits on both a reported and same store basis, reflecting healthy demand and steady inventory flow.
And adjusted diluted EPS of 10.45 from continuing operations.
Starting with our us operations.
While new vehicle Gpus continue to moderate from the highs of the past few years, we have maintained strong operational discipline through effective cost management and process consistency.
Performance with strong across all business lines, both reported, and same store.
Expiring tax credits lead to increased bad deliveries in the quarter at lower GP used negatively affecting at U S. New vehicle Gpus by approximately 6%.
Revenue growth was broad-based led by record. Quarterly a records in used vehicle parts and service and fni.
New vehicle unit sales. Rose mid single digits on both a reported and same store bases reflecting, healthy demand and steady, inventory flow.
Our used vehicle operations performed well with record quarterly revenue and Gpus, holding up well with only a slight 3% decline on a same store and as reported basis.
While new vehicle gpus continue to moderate from the highs of the past few years.
We have maintained strong. Operational discipline.
Through effective cost management and process consistency.
These results reflect the benefits of our scale and operational flexibility combined with our team's focus on disciplined sourcing on pricing in a competitive market.
Expiring tax credits, lead to increased bad. Deliveries in the quarter at lower gpus negatively affecting uh, us new vehicle gpus by approximately 6%.
Our third quarter, F&I Gpus grew over 5% or $135 and $126 on a reported and same store basis versus the prior year comparable periods respectively.
Are used vehicle operations performed. Well with record, quarterly revenue and gpus holding up well with only a slight 3% decline on the same store and as reported bases
The performance by our F&I professionals has been outstanding to maintain GPU discipline.
These results, reflect the benefits of our scale and operational flexibility.
While driving higher product penetration across nearly all product categories.
Combined with our team's focus on discipline sourcing and pricing in a competitive market.
After sales once again stood out as a major contributor achieving record quarterly revenue and gross profit.
Gross profit continues to benefit from our efforts to optimize our collision footprint.
Our third quarter FNI GPUs grew over 5%, or $135 and $126 on a reported and same-store basis, versus the prior year comparable period, respectively.
Shifting collision space Opportunistically to additional traditional service capacity and.
The performance by fni professionals has been outstanding to maintain GPU discipline.
In closing collision centers, where returns do not meet our requirements.
While driving higher product penetration across nearly all product categories.
After sales remains one of our strongest engines of growth and stability.
after sales once again, stood out as a major contributor,
Overall, our U S business continues to perform exceptionally well demonstrating both the strength of the consumer demand and the effectiveness of our disciplined process driven operating model.
Achieving record quarterly revenue and growth profit.
Wrapping up the U S, let's shift to SG&A.
Gross profit continues to benefit from our efforts to optimize our Collision footprint.
Shifting collision space opportunistically to additional traditional service capacity.
While the U S. Adjusted SG&A as a percentage of gross profit increased 160 basis points sequentially to 65, 8%. We view this as a good performance.
And closing collision centers, where returns do not meet our requirements.
After sales remain one of our strongest engines of growth and stability.
We continue to focus on resource management and technology investments to maintain SG&A as a percent of gross profit below pre COVID-19 levels as vehicle Gpus further normalized.
Overall our us business continues to perform exceptionally well demonstrating, both the strength of the consumer demand and the effectiveness of our disciplined, process-driven operating model.
Wrapping up the us-led shift to sgna.
Turning to the UK.
Results reflected a challenging operating environment. However, same store revenues grew across almost every line of business.
While the US adjusted sgna as a percentage of gross profit increased 160 basis points, sequentially to 605.8% we view this as a good performance.
New vehicle same store volumes declined 4% in local currency Gpus moderated by 1% versus the prior year quarter, leading to 6% decline in local currency same store new vehicle revenues.
We continue to focus on resource management and Technology Investments to maintain sdna as a percent of gross profit below. Preco levels.
As Beckle gpus further normalized.
Turning to the UK.
Used vehicle same store revenues were up over 5% on a local currency basis with volumes up 4%.
Results of reflected a challenging operating environment. However, same store revenues grew across, almost every line of business.
However, same store Gpus declined by over 24% on a local currency basis, leading to similar decline in same store used vehicle GPU, reflecting the challenging used vehicle market in the U K.
After sales and F&I year over year growth in both revenue and gross profit.
% versus the prior year quarter leading to 6% decline in local currency. Same store new vehicle revenues.
After sales business remains an important stabilizer within the UK operations, along with F&I is a key area of focus as we work to enhance profitability.
Used vehicle. Same store revenues were up over 5% on the local currency basis, with volumes up 4%,
Same store F&I IPR you reached $1106.
With Azure reported and same store or you, both increasing more than 15% year over year.
However, same store gpus declined by over 24% on the local currency bases, leading to similar decline in same store, used speckled GPU reflecting the challenge in special Market in the UK.
After sales and F&I year-over-year growth in both revenue and gross profit.
On expenses.
SG&A increased from the prior period, reflecting cost inflation on integration related impacts as well as the lack of gross profit for the full quarter from our jail our operations due to the cyber attack.
The after sales business remains an important stabilizer within the UK operations, along with fni is a key area of focus as we work to enhance profitability.
Same store, fni P or U reach 1,110.
While we have executed targeted restructuring initiatives to improve efficiency and return the business to more sustainable cost levels.
With Azure reported and same store P or U both increasing more than 15% year-over-year.
Costs continue to increase some of the government imposed through increased payroll tax related charges.
During the quarter, we also incurred modest non recurring restructuring charges tie.
On expenses, SG&A increased from the prior period, reflecting cost inflation and integration-related impacts.
Due to our restructuring efforts.
As well as the lack of gross profit for the full quarter from our jail or operations due to the Cyber attack.
In response to current market conditions, we are taking further actions to reduce our corporate headcount by.
By approximately an additional 10%.
while we have executed Target restructuring initiatives to improve efficiency and return the business to more sustainable cost levels,
And we are taking additional expense actions to save an expected $8 million in our stores.
Costs. Continue to increase.
Some of the government imposed through increased payroll tax related charges.
We will benefit from these savings in 2026.
We will also be executing additional restructuring plans in future periods as we exit select OEM sites.
During the quarter, we also incurred modest non-recurring. Restructuring charges tied to our restructuring efforts.
And connection to the notification with <unk>, we recognized a franchise rights impairment charge of $18 1 million, which is included in the impairment charge that Daryl mentioned earlier.
In response to current market conditions. We are taking further actions to reduce our corporate headcounts.
By approximately an additional 10%.
And we are taking additional expense actions to save and expect $8 million in our stores.
We are taking decisive actions in the UK to control costs strengthen operational efficiency and position the business for improved returns as market conditions stabilize.
We will benefit from these Savings in 2026.
We will also be executing additional restructuring plans in future periods. As we exit, select OEM sites.
Turning to our balance sheet and liquidity.
Our strong balance sheet cash flow generation and leverage position, we will continue to support flexible capital allocation approach.
In connection to the notification with jlr, we recognized a franchise rights and permanent charge of 18.1 million which is included in the impairment charge that Daryl mentioned earlier.
As of September 30th our liquidity of $1 billion was composed of accessible cash of $434 million.
And $555 million available to borrow on our acquisition line.
We are taking decisive actions in the UK to control costs, strengthen operational efficiency, and position the business for improved returns as market conditions stabilize.
Our rent adjusted leverage ratio as defined by our U S. Syndicated credit facility was two nine times at the end of September.
Turning to our balance sheet and liquidity.
Cash flow generation through the third quarter of 2025 yielded $500 million of adjusted operating cash flow.
Our strong balance sheet, cash flow generation and leveraged Position will continue to support flexible Capital, allocation approach.
And $352 million of free cash flow after backing out of $148 million of Capex.
As of September 30th, our liquidity of 1 billion was composed of accessible cash of 434 million and 5555 million available to borrow on our acquisition line.
This capital was deployed in the quarter through a combination of acquisitions share repurchases and dividends.
Including the acquisition of $210 million in revenues.
Our rent. Adjusted leverage ratio is defined by our us indicated credit facility was 2.9 times at the end of September,
82 million repurchasing approximately 186000 shares at an average price of $443 81.
Cash flow generation through the third quarter of 2025 yielded, 500 million of adjusted operating cash flow.
And $6 4 million in dividends to our shareholders.
And $352 million of free cash flow after buying at $148 million of capex.
Subsequent to the third quarter, we repurchased an additional 140000 shares under our rule <unk> one trading plan at an average price of $433 48.
This Capital was deployed in the quarter through a combination of Acquisitions, Sheri, purchases and dividends.
Including the acquisition of 210 million in revenues.
For a total cost of $60 9 million.
Resulting in an approximate 5% reduction in share count since January the first.
82 million uh repurchasing approximately 1, 186,000 shares at an average price of 4438.81.
We currently have $165 $4 million remaining on our board authorized common share repurchase program.
And 6.4 million in dividends to our shareholders.
For additional detail regarding our financial condition. Please refer to the schedules of additional information attached to the news release as well as the Investor presentation posted on our website.
Subsequent to the third quarter. We repurchased an additional 140,000 shares under a rule, 10B 51 trading plan at an average price of 433.48.
For a total cost of 60.9 million.
I will now turn the call over to the operator to begin the question and answer session.
Resulting in an approximate 5% reduction, in share accounts, since January the 1st.
Ladies and gentlemen, we will now begin the question and answer session to ask a question you May Press Star and then one on your telephone keypad. If you are using a speaker phone. We do ask that you. Please pickup your handset prior to pressing the keys.
Are you purchased program?
So withdraw your questions you May press star two.
We do ask that you please limit yourselves to one question and one follow up.
For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release, as well as the investor presentation posted on our website.
At this time, we will pause momentarily to assemble the roster.
I will now turn the call over to the operator to begin the question and answer session.
And our first question today comes from Bret Jordan from Jefferies. Please go ahead with your question.
Hey, good morning, guys.
Morning, Brett some of your peers have talked about our U S luxury trends softening could you sort of give us any color on what youre seeing at the consumer maybe luxury versus import versus domestic.
Ladies and gentlemen, we'll now begin the question-and-answer session. To ask a question, you may press star and then 1 on your telephone keypads. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys.
to withdraw your question, you may press star and 2
We do ask that you, please let yourselves to 1 question and 1 follow-up.
Demand trends in Gpus.
At this time, we'll pause momentarily to assemble the roster.
Brent I wouldn't say, what we've seen is material enough yet to call it a trend.
In our first question today comes from Brett, Jordan from Jeffrey's, please. Go ahead with your question.
Hey, good morning, guys.
A little bit of shift between some of the big banks Audi's certainly.
A challenge.
Im not sure Thats consumer related but.
We saw.
Little bit of inventory build in some of the luxury mix.
Morning. Brett, some of your peers have talked about a US luxury trend softening. Could you sort of give us any color on what you're seeing at the consumer? Um, you know, maybe luxury versus import versus domestic, um, you know, demand trends and GPUs.
In the third quarter.
I think the real tell will be fourth quarter, which typically is.
Yes.
The largest quarter of the year for the for the luxury mix and especially the Germans.
You know, Brad, I wouldn't say that what we've seen is material enough yet to call it a trend you see in a...
So.
A little bit of shift between some of the big Banks. Audi certainly.
Before I think we would say we see a softening there I would want to see how the fourth quarter kind of shakes out.
You know, a challenge. Um, I'm not not sure that's consumer related but uh,
Where the where that has to be honest with you and Peter Daniel May have another review based on their perspective.
um, you know, we saw our a little bit of inventory build in some of the luxury makes and the and the and the third quarter, um,
Yes, Brett this is Pete the long shot I would tell you that our <unk> business remains very very strong BMW dealerships did well in the quarter.
typically, I think the real tell will be fourth quarter, which typically is
you know, uh the the largest quarter of the year, for the for the luxury mix and especially the Germans and
Echo Daniels, our dental comment.
The Audi businesses certainly difficult.
Okay, and then a question on the <unk> exit I guess within 24 months.
So, um, you know, before I think we would say we see a softening there, I'd want to see how the fourth quarter kind of shakes out and.
It sounded as if you might be reallocating some of those properties to other brands or is this when you think about it.
Where that, where that heads, to be honest with you and and Peter, Daniel would may have another another view based on their perspective.
Yes, we own we own the vast majority of those that real estate.
And.
We've had.
Some reviews of how it might be used in better ways.
Yeah, Brett. This is uh Pete The Longshot I would tell you that our our Lexus business remains very very strong. Our BMW dealerships did well on the quarter um, you know, and I go Daniels or Daniel's comment the Audi business is certainly difficult.
Primarily automotive other brands potentially.
Some of them will stay Jr, and transitioned to another another owner.
Okay, and then a question on the jlr, exit, I guess, within 24 months. It, it sounded as if you might be, reallocating some of those properties to other brands or is this, you know, when you think about
And then others just through the consolidation we're going on in the UK with all the Oems might provide an opportunity for us and some of our cluster markets brands some of Thats still being determined but that is an outcome.
Business. Yeah, we we own, uh, we own the vast majority of those that real estate. Um, and, um, we've we've had, uh,
Possibility, yes, absolutely Brett Okay in the housekeeping I guess of the 124 million impairment <unk> of that was <unk>.
some reviews of how it might be used in in better ways.
So it's Daniel here Brad.
It's a combination there so in terms of our franchise rights.
$18 million at least <unk>, what that did was buy.
Primarily automotive, other brands potentially, um, some of them will stay JLR and transition to another owner. Um, and then others, just through the consolidation work going on in the UK with all the OEMs, it might provide an opportunity for us.
Terminating the <unk> franchise that triggered us to have to look at the a U K entity.
As a whole and it take a goodwill impairment.
Now that goodwill impairment is not just scale or Pacific, it's the entity as a whole so some percentage of the circa 100 million.
And some of our our cluster markets with other brands, some of that's still be determined. But that that is an outcome that that possibility. Uh yeah. Absolutely. Brett. Okay. And the housekeeping, I guess of the 124 million impairment 18 of that was jlr
Painting will be relating to <unk>.
So 18, plus some percentage of the total AD business unit.
Our next question comes from Rajat Gupta from Jpmorgan. Please go ahead with your question.
Thanks for taking the questions just to follow up on Brad's question.
So, uh, it's Daniel here, Brett. Uh, it it's a combination that. So in terms of our franchise rights, uh, 18 million, uh, was jlr now, what that did was buy? Um, terminating the jlr franchise, it triggered us to have to look at the, uh, UK entity, uh, as a whole and take a Goodwill, uh, empowerment. Uh, not that Goodwill impairment is
On the U K.
Reallocation of capacity question.
Or would you consider.
Not just Gail or Pacific. It's, it's the entity as a whole. So, some percentage of the Circa 100 million, uh, remaining, uh, will be relating to jlr,
Partnering with some of the Chinese brands here.
It looks like they're getting a lot of share.
So 18 plus some percentage of the total uh, business unit.
Putting some pressure on the legacy brands that you own.
Is there any thought process around that maybe increasing exposure there and I have a quick follow up.
Our next question, comes from rajat Gupta from JP Morgan, please. Go ahead with your question.
As a result barrel we are.
We have.
Met with some of the.
Chinese Oems about representing them.
And we can see we continue to consider that and review that.
Thanks for taking the question, uh, just to follow up on, breath question. Um, you know, on the UK, um, you know, just just, uh, reallocation of capacity question, uh, would you consider? Um, you know, partnering with some of the Chinese Brands here? Uh, clearly looks like, you know, they're getting a lot of share.
And we've also.
What did that part of the industry and where we believe it's going in the UK.
We believe for the next several years it will be primarily vast market.
Is there any thought process around maybe increasing exposure there? Uh, and I have a quick follow-up.
<unk> not luxury at some point certainly get the luxury business our focus in the UK is primarily luxury.
Raad Daryl. We are, um, we have uh,
But we have looked at it what we want to make sure that we.
Met with some of the uh, Chinese oems about representing them. Um,
Our comfortable with us.
The retail model is a good one for our shareholders.
The rooftop throughput at retail for the Chinese brands is still quite low.
And the economics around.
Each rooftop.
Arent.
And we can we continue to consider that and review that. Um, and we've also, um, looked at that part of the industry and where we believe it's going in the UK. Um, we believe for the next several years, it will be primarily Mass Market focused and not luxury at some point, but certainly get a luxury business.
Our other.
Our focus in the UK is primarily luxury.
Stores are to generate at this point, but we realize obviously, they're growing we want to make sure that we're positioned well to take advantage of that if there's if there is an opportunity we are having some active dialogue.
Got it got it that's helpful.
And then just on just on the use of Gpus in the U S.
It seemed like it pulled back quite a bit sequentially.
Also down year over year.
Um, but we have looked at it. What we want to make sure that we um are comfortable with, is that the retail model is a good 1 for our shareholders. Um, the the, the Rooftop, throughput at retail, for the Chinese Brands is still quite low and the economics around, um, each rooftop, um, aren't, um, aren't what our other. Um, uh,
I'm wondering if you could elaborate a little bit more on that was that just.
Some of the tariff tailwind from the previous quarter going away maybe some.
Uh huh.
Higher price inventory that came in the quarter.
Stores can generate at this point, but we realize, obviously they're growing. We want to make sure that we're, um, positioned well, to take advantage of that. If there's if there's an opportunity, we are having some active dialogue with
Or is there or is it just a sign of just more competitive landscape on the used car side any thoughts there would be helpful. Thanks.
That reside itself pizza longshore.
Got it, got it. That's that's helpful. Um and then you know just on just on the used gpus in the US. Um it seems like it pulled back quite a bit sequentially. Um also down here we are.
We've certainly seen stabilization through the used car.
And the used car business.
Does remain very competitive in the acquisition landscape of used cars I think we've done a really good job of maintaining discipline with our auction purchases. The majority of our cars come from trades and.
Uh, wondering if you could elaborate a little bit more on that was it just, you know, some of the Tariff uh, Tailwind from the previous quarter going away, maybe some, you know, uh, higher price inventory, that came with the quarter.
Uh, or is there or is it just a sign of just more competitive landscape, uh, on the used car side? Any thoughts? There would be helpful. Thanks.
And customer outside purchases, but it's it's a business right now that is dependent on how well you can acquire and how quickly you can turn I think we maintained at 30 days of 31 day supply again.
That's, uh, rajad. It's, uh, Pete dongsha. You know, we we've certainly seen stabilization through the used car, uh, in the used car business, but I, it does
We're comfortable with the performance of the used car operation in the current landscape.
Got it okay, great. Thanks for the color I'll jump back in queue.
Our next question comes from Jeff <unk> from Stephens, Inc. Please go ahead with your question.
Remain very competitive in the acquisition. Landscape of used cars. I think we've done a really good job of maintaining discipline. With our auction purchases, the majority of our cars come from trades. And, um,
Good morning, Thanks for taking my question.
I was wondering if Daniel or Darryl if you wouldn't mind, just giving some detail on the parts and service in the U S and the dynamics here customer pay up eight warranty up 16.
And can and customer outside purchases. But it's um, you know, it's it's a business right now that is dependent on how how well you can acquire and how quickly you can turn. I think we maintained a 30 days of 31 day supply again. So we're comfortable with the performance of The Used Car operation in the current landscape.
As we go forward is there anything that would skew the gross margin percentage, which obviously.
Okay, great. Thanks for the caller. I'll jump back in you.
Flows into gross profit dollars just now.
Now the dynamics and we're lapping lapping some tough compares now just any color would be helpful.
Our next question comes from Jeff. Lick from Stevens Inc. Please go ahead with your question.
Well the encouraging thing Geoff this is Daryl and I am sure Daniel has a comment the encouraging thing is our customer count grew.
In the UK grew almost 6% year over year in the U S grew three.
So we're really pleased that we're adding.
Customers to our through our shops, not just dollars and so.
We feel like our CP business is still healthy and we.
I feel like Theres, a lot of opportunity there warranty is really tough to predict sometimes obviously.
Uh good morning. Yeah, thank you for taking my question. Um, I was wondering uh Daniel or Daryl if you wouldn't mind count or just giving some detail on the parts and service in the US and the Dynamics here you know customer pay up 8 warranty up 16 there's just as we go forward, you know is there anything that would skew the you know the gross margin percentage which obviously would flows into gross profit dollars, just the Dynamics and we're Ling lapping, some tough Compares. Now to any color would be helpful
And we don't see any reason for necessarily a mix change one thing that is happening.
As.
<unk>.
I mean, our margin mix change I should say.
As the collision business is getting.
Getting weaker.
Sure.
That can affect margin because a lot of the.
Our wholesale parts sales go to the collision industry and.
Well the encouraging thing Jeff. This is Daryl and I'm sure Daniel has a comment and encouraging thing. Is our our our customer count grew um in the UK it grew almost 6% year-over-year in the US grew uh 3. Uh, so we were really pleased that we're adding uh you know, customers to our to our shops, not just dollars. And so um we feel like our CP business is is still healthy and we still like there's a I feel like there's a lot of opportunity there, you know, warrant.
So overall after sales margin may be helped.
<unk>.
By that on a percentage basis so.
If the wholesale parts continue to decline so.
They reached equation sector, but on CP and on warranty, we haven't seen that I know theres been some discussion on.
Warranties really tough to predict sometimes obviously. Um, and we don't see any reason for necessarily A, a mixed change. Um, 1 thing that is happening is, um, you know, the the uh, uh, I mean a margin Mix Change. I should say uh, is the is the Collision business is uh, you know, it's getting weaker in. Um,
Margin.
Percentages.
Some of the industry, but we havent necessarily seen that we don't necessarily.
Really predict that either so Daniel I don't know if you have anything to add Jeff. The only thing that I would add around with customer pad style says continues to be strong U S specific withdrawn by about 8%.
That can affect margin because a lot of the the our wholesale parts sales, go to the Collision industry. And um so overall after sales margin may be helped.
Year on year in terms of warranty and we have grown by just over 16% year on year.
As we talked about in the earnings call collision is down.
We've closed a number of our smaller collision centers, turning those into customer pay.
Work.
And it's down about 11% in the quarter.
And as a result of that is that our margin mix as a total company is trading upwards in our margin mix is has gone up from about 54% to 55, 2% in the quarter.
Steve on the market.
<unk> margin was up year over even better for us so those warranty margin.
Just a quick follow up I think this is one for Pete.
Slide 14, you guys do a good job of always disclosing the retention by model year, which I don't think your peers necessarily disclose that could you talk a little bit about.
I believe you guys are well well north of what would be typical in gist.
By some of the industry. But, you know, we haven't necessarily seen that. We don't necessarily uh, really predict that either. So, Daniel, I don't know if you have anything to add Jeff, you know. The only thing that I would add around was, you know, customer pays Daryl, says continues to be strong us specific. We've grown by about 8%, uh, year on year, uh, in terms of warranty, we've grown by, uh, just over 16% year on year. Now, the as we talked about in the earnings call, uh, Collision is down. Uh, we've closed a number of our smaller collision centers, turning those into customer pay um uh work. Um and it's down about 11% on the quarter. Uh, not the result of that is that our our margin mix is as a total company is uh, trading upwards, and our margin makes is has gone up from about 54% to 55.2% in the quarter.
The dynamics there.
Margin was.
This is on parts and service overview.
Yes retention yes.
CP margin was up year-over-year uh for us. And and so it was warranty Market.
I think what.
We're working on and it starts it starts with the sale and then you take a look Jeff it our overall consistency with vehicle service contracts maintenance.
We are completely focused on getting our customers back into our shops, and we do that through constant follow up we do that by.
Just a quick follow up. I think maybe this is 1 for Pete on on your slide. 14. You you guys do a good job of always disclosing the the retention by model year which you know, I think your peers necessarily disclose that. Could you talk a little bit about
I, I believe you guys are well, well, north of what would be typical and just the, the D Dynamics there.
Ensuring the pricing was right, making sure the schedules are wide open for appointments and I think that when you take a look at the trend we've had over the years.
This is on parts and service over you.
Yeah, retention.
We've done a remarkable job with it and this is where we've landed at 68 plus percent.
Jeff one of the things that we focus on.
Way we measure.
Retention is two visits or other people measure. Additionally, Oems all measured differently.
Yeah, I think, you know what, what we're working on—and you know, it starts, it starts with the sale. And then you take a look, Jeff, at our overall consistency with vehicle service contracts maintenance. We are completely focused on getting our customers back into our shops, and we do that through constant follow-up. We do that by...
We wanted to standard.
Remember, we can use inside group won across all our stores.
The key in the future is the average mileage goes up the age of the cars is still going on.
Average mileage and our service drives almost 70000 miles.
The key for us to continue to grow customer pay is.
And reaching those higher mileage older vehicles and.
One of the keys to doing that is when we.
Vertically integrated in our own data management for our customers.
Starting about a year ago. So that we now have a much clearer view a much better view of where our customers are going.
When they are likely to need service mix using propensity modeling and things like that that help us do that and so we.
Ensuring the pricing is, Right. Making sure the schedules are wide open for for appointments and I think that when you take a look at the, the trends we've had over the years and we've we've done a remarkable job with it. And this is where we've landed at, you know, 68 plus percent Jeff 1 of the things that we focus on. Um, you know the way we measure um retention is 2 visits in a year. Other people measure it differently. Oems all measure, it differently. We wanted a standard. Um number we could use inside Group 1 across all our stores and um you know the key in the future is the average mileage goes up. The age of the cars are still going up, you know, our average mileage and our service drives is almost 70,000 miles. And really, the key for us to continue to grow, customer pay is um, in reaching those.
We have to be able to reach deeper into that ownership cycle as time goes and where we are.
higher mileage, older vehicles and
We're really working hard on that and really working hard.
Well the results show thank.
Thank you for taking my question and best of luck in the next quarter.
One of the keys to doing that is when we, uh, vertically integrated our own data management. Our customers, um, starting about a year ago.
Thank you.
Our next question comes from Daniela.
<unk> from Morgan Stanley. Please go ahead with your question.
Great. Thank you.
One on forward demand kind of pass through the peak tariff here from April we're now seeing Oems revise up their guidance is clearing the bar on these improved gross tariff impact are you seeing any de contenting or changing in pricing on new model year vehicles in excess of the normal price hikes and how are you thinking about that.
So that we now have a much clearer view, much better view of where our customers are going. And and when they're likely to need service next using propensity modeling and things like that, that help us do that. And so, um, we have to be able to reach deeper into that ownership cycle as time goes and and we're, we're really working hard on that. Really working hard.
Well, the results show. Um, thank you for taking the question, and best of luck in the next quarter.
Thank you.
Going into next year.
Our next question comes from Daniela.
We haven't seen anything in excess of normal price hikes Daniela.
Hagen from Morgan Stanley, please go ahead with your question.
<unk> seen a little re contenting.
Not I wouldn't I would say it's normal.
Okay.
Theres hasnt been any broad announcements about major pricing.
There's been a couple of specific pricing actions with smaller Oems.
As we think about it.
Great. Thank you. Um, so 1 on forward demand, we've kind of passed through the peak tariff fear from April. We're now seeing oems revised up. Their guidances clearing the bar on these improved, gross, tariff impacts. Are you seeing any deck contenting or changing in pricing on new model, year vehicles in excess of the normal uh price hikes and and how are you thinking about that going into next year?
And then more discussions we have with our OEM partners as they are taking a longer view on it and they're going to try to recover the tariff impacts over a longer period of time and some of the they will absorb most of it in general.
We haven't seen anything in excess of normal price, hikes Daniela. We've, um, seen a little recent Ting, um,
Uh, not I wouldn't I wouldn't say it's normal.
um,
<unk>.
Yeah.
Uh, there hasn't been any broad announcements about major pricing.
We're seeing very little very little pricing that can be attributable to tariffs.
Um, there's been a couple of specific pricing actions with smaller oems.
Tariff increases and I think that will continue to be honest with you unless something radically changes with with the tariffs.
We think thats, probably what will happen and Pete Pete may have some more.
I think that you discovered it and the only thing I would add is.
When you take a look at the financial services companies.
The strength of the financial services companies can bring down those some of those additional costs through.
Leasing or Sabine rates, which bodes well for those Oems that have strong financial services companies.
Got it that's helpful. And then one more maybe for you our captive lenders or are captive lenders are really.
A real advantage refilling.
Pricing, that can be attributable to to tariff increases. And I think that will continue to be honest with you unless something radically changes with with the tariffs. Um, we think that's probably what will happen and, and Pete, Pete may have some more know. I think Daryl you you discovered it. The only thing I would add is, um,
They drive loyalty they drove finance attachment.
And Thats, a real key for Groupon.
You take a look at the financial services companies, and the strength of the financial services companies can bring down those additional costs through.
Absolutely absolutely and then in that vein on auto credit, obviously, theres a lot of headlines out there.
Obviously group once he is much higher on the credit quality curve, but just as investors continue to focus on risks to the consumer have you seen any change in consumer behavior in the last few weeks starting.
Leasing or submitting rates which bodes well for those oems that have strong financial services companies.
Got it, that's helpful. And then one more, maybe, Pete, for you. Our captive lenders are really...
<unk> fourth quarter.
We have not seen a change in consumer behavior and actually we're seeing increased penetration rates on new and used.
A a real Advantage we feel like and we you know, they drive loyalty, they drive Finance attachment. Um and that's that's a real key for Group 1.
And then.
Most of the headlines are centered around the deep subprime, which we don't plan.
Out there. And, um,
So.
Our channel checks the majority of our lenders prior to this call and.
Yes.
The business continues to be robust and there is still a lot of appetite with the lenders.
Obviously Group 1 SKU is much higher on the credit quality curve, but just as investors, continue to focus on risk to the consumer. Have you seen any change in consumer behavior in the last few weeks? Starting the the fourth quarter?
Mkay car loans with us and our customers.
We have not seen a change in consumer behavior and you know, actually we're seeing increased penetration rates on new and used.
you know, and then
Great. Thank you.
And our next question comes from Glenn Chin from Seaport Research. Please go ahead with your question.
Most of the headlines are centered around the Deep subprime which we don't play in. Um so you know, a channel check
Hi, good morning folks thank you.
I guess, just a couple of questions on the U K. So just frothy on the macro I mean this used to be.
Let's take $2 5 million unit market.
Can I just ask.
The majority of our lenders prior to this call and the uh the business continues to be robust and there's still a lot of appetite with the lenders to make car loans with us and our customers.
Where do you see it settling out.
Great. Thank you.
What needs to be done.
<unk> proven I mean is it.
Lower energy costs for government incentives and.
And our next question comes from Glenn chin from Seaport research. Please go ahead with your question.
Because we need to get worse before it gets better.
It doesn't need to get worse before it gets better.
Has to happen is the throughput through per rooftop has to.
Grow the margins were steady year over year.
<unk> business is healthy.
We've got work to do on cost as we've mentioned.
And the Oems are all working to try to rationalize their networks to a level that.
Uh good morning, folks. Thank you. Um I guess just a couple of questions on on the UK. So just broadly on the macro. I mean this used to be a close to 2 and a half million unit Market. Um can I just ask where you see it settling out and and what needs to be done?
<unk> today's saar of around $2 million.
To improve it. I mean is it um lower energy costs or government incentives and
Rather than the $2 5 million that you referenced Glenn.
Does it need to get worse before it gets better?
So as.
As we take.
Rooftops outlets should improve the throughput of the remaining <unk>.
It works and they're all working feverishly on that some of them are.
It doesn't need to get worse before it gets better. Um, what has to happen is the throughput through per rooftop has to grow. The margins were steady year-over-year. The after sales business is healthy.
Our.
In our opinion, taking a healthier approach than others.
Groups like Volkswagen group's like Mercedes Benz groups like BMW or are doing a really great job working with their with their dealer partners to try to effect.
And I think their outcomes are going to be really good really healthy.
But that's a real key.
As to try to get the.
The throughput per rooftop up to a better level and then while we while we continue to take costs out.
Um, we've got work to do on costs as we've mentioned, um, and the oems are all working to try to rationalize their networks, to a level that, you know, meets today's sorrow of around 2 million, um, rather than, you know, the 2 and a half million that you reference Glenn. So as um as we take um a rooftops out that should improve the throughput of the remaining networks and they're all working feverishly on that. Some of them are are
Continue to do them focus on that Daniel May have something that Glen is couple of things that I would add if you look at the forward looking sarkar for the U K, it's pretty static I'd over the last for the next five years in terms of approximately $2 million I think the important thing for us as a company is the premium sector.
Within that $2 million remains pretty constant with a little uptick over the next.
Five year period.
Terms of.
The U K government at this moment in time, there continued to be taxing the both the consumer and the business.
Priority heavily.
<unk>.
In our opinion, taking a a healthier approach than others. Um you know groups like Volkswagen groups like Mercedes Benz groups like BMW or are doing a really great job working with their, with their dealer Partners to try to affect that. And I think their outcomes are going to be really good, really healthy. Um, but that's, that's a real key. Uh, is to try to get the uh, the, the throughput per rooftop up to a better level. And then while we while we continue to take costs out and we'll continue to do that in focus, on that Daniel may have something to add Glenn. There's a couple of things that I would add if you look at the forward, uh, looking Star card for the UK. It's, it's pretty static right? Over the last 5 in the next 5 years, in terms of approximately, uh, 2 million, uh, I
I can't really see that changing in the short term, but as Daryl to rightly says there is a lot that we can still do.
<unk> cost and equally so we bought a lot of stores over the last 18 months and we are working on portfolio rationalization, which I think will make the business a much stronger business coming out of that in 18 months time.
And can you with respect to that rationalization going or can you give us a feel or some perspective on.
How much more needs to be done I E check $124 million in impairments this quarter, how much more needs to go.
In terms of impairment that we've taken impairment for J LR as.
Franchise.
And we took effectively a goodwill impairment on our whole company.
18 months time.
I look at our forward looking projections for that.
I would say it would be fairly confident all things being equal.
And can you, with respect to that rationalization, Daniel, give us a feel or some perspective on?
We have taken the impairment that that's required for us to take as a company in terms of other things that we would dispose off typically theyre going to be smaller stores.
Uh, how much more needs to be done? I mean, you took $124 million in parents this quarter. How much more does it need to go?
Our underperforming stores that have little or no goodwill attributed to those stores certainly in terms of franchise rights. So I wouldn't expect there to be any additional impairment.
And equally so we've totally empire to Jaguar land Rover franchise than we will be able to sell loads for some element.
Goodwill or some element of value add so we should see some upside coming out of that.
Glenn if you look at how we've managed our portfolio in the U S. Over the last four years, we've sold smaller underperforming stores in the U S or divest of those or close some of those and so it's a similar approach that we're taking in the UK.
Yes portfolio rationalization, we're optimistic.
I should say.
Yes.
I guess just one last question on <unk>, So what is different about the.
In terms of empowerment, you know, that's we've taken in apartments for your jlr as a franchise. And uh, we, we took effectively a Goodwill and permanent on our whole company. You know, if I look at, you know, our forward-looking projections, uh, for that, um, I would say I would be fairly confident, uh, all things being equal, uh, that we've, you know, taken the empowerment that that's required, uh, for us to take as a company in terms of other things that we would dispose of typically, they're going to be smaller stores. Uh, are underperforming stores that have little or no Goodwill attributed uh, to those stores certainly in terms of of of franchise rides, uh, so I wouldn't expect there to be any additional impairment, um, equally. So, you know, we've totally empowered the Jaguar Land Rover franchise and, you know, we will be able to sell those for some element, uh, of of Goodwill or, or some element of value. Uh, so
So we should see some upside coming out of that.
The franchise in the U K versus in the U S or your stores for that matter do you have a different view of the ALR franchise in the U S.
Or do you look at where some of our U K.
And Glenn, if you look at how we've managed our portfolio in the U.S. over the last four years, we've sold smaller, underperforming stores in the U.S., or divested of those, or closed some of those. And so it's a similar approach that we're taking in the U.K.
So our stores are there they are close to London.
In London had some of the highest theft issues and.
Yeah portfolio. Rationalization we're optimizing it. I should say. Um yeah, we're like
The insurance, which reflect to ensure ability.
On those vehicles and saw the order Bank Australia.
Just what? Just 1 last question on on jlr. So what is different about?
Very quickly in those brands.
And then.
And the ZIP codes right around lumber and so that was and that didn't recover really Glenn.
The franchise in the UK versus in the US or your store is for that matter. Do you have a different view of the jlr franchise in the US?
And so when you when you look at that and then you look at how much those stores are contributing are losing.
And what we really firmly believe at group. One is we've got to put our focus and attention and efforts in the areas that are going to drive the best shareholder return for our.
Well, when you look at where some of our UK, um, JLR stores are, they're close to London. Um, and London had some of the highest theft issues in the uh, insurance, which affected insurability.
On those vehicles. And we saw the order Banks dry up.
For our.
Very quickly in those brands.
Constituencies and so.
When we looked at it necessitate and it wasn't an overnight decision. Obviously it was something we have considered for some time, we just felt like our efforts are better with <unk>.
And then um, uh, in those zip codes right around London. And so, you know, that was and that didn't recover really Gwen. Um, and so when you when you look at that and then you look at how much those stores are contributing or losing.
Some of our other partners and we are.
Also hope and believe in and.
In my conversations with the Oems on this.
They can go get partners that they feel like they can be successful with but given the real estate that we have with <unk> and given the location of those those sites and.
um and what we really firmly believe that group 1 is we've got to put our focus and attention and efforts in the areas that are going to drive the best shareholder return for
our for our constituencies and so, um,
The.
The outlook in general of it we felt like our efforts, we're going to be much better utilizing the returns much better.
When we looked at it, assessed it, and it wasn't an overnight decision, obviously, it was something we've considered for some time.
And our other brands.
Okay very good thank you.
And ladies and gentlemen, with that we'll conclude today's question and answer session. We do thank you for joining today's presentation. You may now disconnect your lines.
We just felt like our efforts are, are better with, you know, some of our over other partners. And we also, you know, hope and believe. And um in my conversations with the OEM on this that that, you know, they can go get partners that they, they feel like they can be successful with. Um, but given the real estate that we have with jlr and given the location of those those sites. And um just the um
the Outlook in general that we felt like our our efforts were going to be much better utilized in the returns much better in in our other brands.
Okay, very good. Thank you.
And ladies and gentlemen, with that, we'll conclude today's question and answer session. We do thank you for joining today's presentation. You may now disconnect your lines.