Public dealership groups Q2 revenue rises

Lithia Motors’ same-store F&I operations produced an average $2,146 in gross profit per vehicle during the second quarter, up 14 percent from a year earlier but down 4.7 percent from the first quarter.

Lithia CEO Brian DeBoer attributed the decline in the group’s F&I results to the success of Lithia’s captive, Driveway Finance Co. Business simply shifted from one part of the balance sheet to another, he indicated. In a government filing, Lithia said the growth of Driveway Finance offset higher revenue from selling service contracts.

DeBoer said on a July 20 earnings call Driveway Finance “posted another strong quarter.” The subsidiary wrote more than 14,500 loans and financed $483 million during the second quarter, DeBoer said. Driveway Finance Vice President Chuck Lietz said it was used in 9.7 percent of second-quarter transactions, up from 6.2 percent in the previous quarter — enough to make Lithia increase its full-year penetration estimate from 7 percent to between 9 to 10 percent of transactions.

Lithia can see a role for Driveway Finance in 15-20 percent of sales — which could be highly lucrative. Lietz said Driveway Finance deals tend to be three times as profitable as the indirect loans Lithia arranges.

Lithia, of Medford, Ore., is No. 2 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 260,738 new vehicles in 2021.

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