Lithia expects ‘really nice deals’ in Q4 will get company to $2 billion in acquired revenue for 2025

Key Takeaways

• Lithia Motors Inc. expects to add $2 billion in annual revenue from 2025 acquisitions.
• Lithia said on Oct. 28 that its U.S. acquisitions will add $1.16 billion in annual revenue and a combined $90 million in revenue from buying single U.K. Renault and Dacia locations.
• CEO Bryan DeBoer said Oct. 22 that Lithia anticipated a "strong finish, with some complementary acquisitions by year end." The company hadn't yet revealed it bought three Hyundai stores Oct. 20.
• Lithia seems poised to reverse a three-year decline in the amount of revenue the dealership group has been acquiring in the U.S.

Lithia Motors Inc. expects to add $2 billion in annual revenue by year’s end from dealerships acquired in 2025, CEO Bryan DeBoer said.

DeBoer told a third-quarter earnings call on Oct. 22 that Lithia anticipated a “strong finish, with some complementary acquisitions by year end.”

Six days later, Lithia revealed it already captured another $440 million in annual revenue with the Oct. 20 purchase of Anaheim Hyundai, Huntington Beach Hyundai and Garden Grove Hyundai, all in California, from Nouri/Shaver Automotive Group.

DeBoer told the call that Lithia was focused on U.S. deals, and so far this year it’s purchased $1.16 billion worth of revenue in U.S. dealership acquisitions compared with only $90 million in revenue from international deals. In August, Lithia bought two stores in Manchester, U.K. — one Renault and one Dacia.

Lithia hasn’t provided a breakdown on what remainder of that $2 billion projection would come from the U.S. But the company seems poised to reverse what has been a three-year decline in the amount of revenue gained in American deals.

“In North America, we’ve been real fortunate to be able to find a few deals in the first three quarters of the year,” DeBoer said during the call. “But we’ve got some really nice deals coming in Q4 and are pretty excited that you can find them in this type of market, especially the quality of the deals.”

Lithia already by that point disclosed its other fourth-quarter acquisition to date, Stivers Subaru in Decatur, Ga., from Johnny and Eddie Stivers of Stivers Automotive Group. That deal, estimated to be worth $100 million in annual revenue, closed Oct. 13.

The last two years saw Lithia execute two large U.K. deals — Jardine Motors Group in 2023, estimated at the time to be worth $2 billion in revenue, and Pendragon in 2024, estimated to be worth $4.5 billion. But the amount of revenue the group obtained through U.S. acquisitions has been declining from 2021, when Lithia purchased $6 billion in annual revenue from U.S. stores.

Lithia acquired just $1.3 billion in U.S. revenue in 2024, down from $1.6 billion acquired in 2023, and $3.5 billion in 2022, according to a third-quarter investor presentation.

Lithia has been putting significantly more of its capital toward share repurchases than acquisitions for much of 2024 and 2025, according to Lithia’s October investor presentation.

For example, in the 12-month span from the second quarter of 2024 to the end of the first quarter of 2025, Lithia used 43 percent of funds for share repurchases and 22 percent on acquisitions. During that 12-month span from the second quarter of 2023 to the first quarter of 2024, Lithia was spending just 2 percent of its funds on buybacks and 83 percent on acquisitions.

During the first three quarters of 2025, Lithia paid a net $417.6 million for dealerships after factoring in the cash acquired, but it had bought back $662.3 million in stock. DeBoer said Lithia focused on stock buybacks during the third quarter given the “meaningful discount” the stock price represented.

“Looking ahead, we’ll keep making incremental accretive decisions, buying back more when the discount is wide, funding selective acquisitions when returns are clear and more affordable, and continuing to invest in technology,” he said.

Erin Kerrigan, managing director of dealership sell-side firm Kerrigan Advisors in Incline Village, Nev., said in a statement Oct. 28 that sellers were “becoming more realistic” in what they expect to be paid for their dealerships.

“When sellers accept that 2024 and 2025 are likely the new normal upon which valuations will be set, they can usually get a deal done at a fair multiple,” Kerrigan said in the statement.

However, she also said in the statement “we are not seeing multiples decline.”

Her firm in August estimated the six publicly traded franchised dealership groups had averaged 6.2 times earnings for their acquisitions during the second quarter, slightly up from the first quarter. She said Lithia was paying the smallest premium of the six at an estimated 4.2 times earnings, “which has made it more difficult for them to make acquisitions.”

Lithia buys dealerships at 15 to 30 percent of revenue and three to six times normalized earnings before interest, taxes, depreciation and amortization, and it wants a 15 percent after-tax return at a minimum.

“It is important to note that our track record over the past decade has yielded high rates of return, nearly doubling these hurdle rates,” DeBoer told the call.

DeBoer called Lithia’s targets for a deal “a hard number. We don’t flex. ... We haven’t had to flex even over the last three or four years where earnings were elevated and, as such prices were elevated.”