Group 1 Automotive Full Year 2024 Earnings: Revenues Beat Expectations, EPS Lags

Group 1 Automotive (GPI) reported its full year 2024 earnings on February 14, 2025, with revenues beating expectations but earnings per share (EPS) falling short. The automotive retailer, with operations primarily in the U.S. and the U.K., saw its total revenue increase by 11.5% to $19.9 billion, driven by acquisitions and growth across most revenue streams. However, new vehicle retail gross profit per unit (PRU) fell by 19% year-over-year, and used vehicle retail average sales price (ASP) dropped by 2.9%. Despite these challenges, the company's share repurchase program and focus on full rooftop potential helped mitigate the decline in PRU and ASP.

The company's revenue growth was driven by several key factors:

1. Acquisitions: The Inchcape acquisition doubled GPI's U.K. dealership footprint, adding 54 locations and promising scale for synergies and cost efficiencies. Additionally, the company acquired four Mercedes-Benz dealerships and a BMW/MINI dealership in the U.K., further expanding its presence.
2. Growth across revenue streams: Revenue growth was seen across most revenue streams, except for used wholesale. New vehicle retail sales rose 13.7%, used retail sales increased by 8.5%, and parts & service grew by 12%.
3. Expansion into new markets: The company expanded its operations across the broader U.K. market, providing additional scale and geographic diversification.

However, the company faced challenges in integrating its new dealerships, particularly in the U.K. The integration process carried some incremental SG&A expenses through the fourth quarter, but ultimately positioned GPI to capture the full value of the acquisition.

To mitigate the decline in PRU and ASP, GPI employed several strategies:

1. Acquisitions and Expansions: The company expanded its footprint through acquisitions, providing scale and potential synergies to offset the decline in PRU and ASP.
2. Focusing on Full Rooftop Potential: GPI invested in 'full rooftop potential', focusing on F&I, procurement, used vehicles, customer experience, and talent. These initiatives aimed to improve operational efficiency and customer experience, critical for long-term competitiveness in a transforming auto retail landscape.
3. Share Repurchase Program: The board increased the share repurchase authorization to $500 million, with $476 million remaining available. This move signals management's confidence in the valuation and commitment to shareholder returns.

Despite these challenges, GPI's revenue growth and strategic initiatives position the company well for long-term success. As the automotive industry continues to evolve, GPI's focus on acquisitions, expansion, and operational efficiency will be crucial in maintaining its competitive edge.