−Removed: Except as set forth below, during the three months ended March 31, 2021, there were no changes to the Risk Factors disclosed in Item 1A.
+Added: Except as set forth below, during the six months ended June 30, 2021, there were no changes to the Risk Factors disclosed in Item 1A.
Risk Factors of our 2020 Form 10-K.
−Removed: We are subject to risks associated with our dependence on manufacturers for vehicle inventory.
−Removed: The success of our dealerships is dependent on the ability of our numerous vehicle manufacturers, whom we rely exclusively on for the manufacture and timely delivery of our new vehicle inventory.
−Removed: Our ability to sell new vehicles is dependent on our vehicle manufacturers’ ability to manufacture, allocate and deliver to our dealerships an adequate supply of high quality and desirable vehicle selections at the right time in order to satisfy customers’ ever-changing demands.
−Removed: Vehicle manufacturers may be adversely impacted by parts and raw material shortages, including semiconductor chips, if such shortages are not immediately resolved.
−Removed: Currently, vehicle manufacturers are producing and delivering fewer vehicles to our dealerships due to a global semiconductor chip shortage.
+Added: We are subject to risks associated with our dependence on manufacturer business relationships and agreements.
+Added: The success of our dealerships is dependent on vehicle manufacturers whom we rely exclusively on for our new vehicle inventory.
+Added: Our ability to sell new vehicles is dependent on a vehicle manufacturer’s ability to produce and allocate to our dealerships an attractive, high quality and desirable product mix at the right time in order to satisfy customer demand.
+Added: Manufacturers generally support their franchisees by providing direct financial assistance in various areas, including, among others, incentives, floorplan assistance and advertising assistance.
+Added: A discontinuation or change in our manufacturers’ warranty and incentive programs could adversely affect our business.
+Added: Manufacturers also provide product warranties and, in some cases, service contracts to customers.
+Added: Our dealerships perform warranty and service contract work for vehicles under manufacturer product warranties and service contracts and we bill the manufacturer directly as opposed to invoicing the customer.
+Added: In addition, we rely on manufacturers for various financing programs, OEM replacement parts, training, up-to-date product design, development of advertising materials and programs and other items necessary for the success of our dealerships.
+Added: Vehicle manufacturers may be adversely impacted by economic downturns or recessions, significant declines in the sales of their new vehicles, increases in interest rates, adverse fluctuations in currency exchange rates, declines in their credit ratings, reductions in access to capital or credit, labor strikes or similar disruptions (including within their major suppliers), supply shortages, rising raw material costs, rising employee benefit costs, adverse publicity that may reduce consumer demand for their products, including due to bankruptcy, product defects, litigation, ability to keep up with technology and business model changes, poor product mix or unappealing vehicle design, governmental laws and regulations, natural disasters or other adverse events.
+Added: In particular, all our OEMs are investing material amounts to develop electric and autonomous vehicles.
+Added: These investments could cause financial strain on our OEMs or fail to deliver attractive vehicles for customers which could lead to adverse impacts on our business.
+Added: The OEMs are also impacted by the COVID-19 pandemic’s impact on the economy, factory production, parts shortages, including semiconductor chips, and other disruptions.
+Added: These and other risks could materially adversely affect the financial condition of any manufacturer and impact its ability to profitably design, market, produce or distribute new vehicles, which in turn could have a material adverse effect on our business, results of operations and financial condition.
+Added: During the six months ended June 30, 2021 and through the date of this report, vehicle manufacturers are producing and delivering fewer vehicles to our dealerships due to a global semiconductor chip shortage.
The chip shortage is impacting the automobile industry’s new vehicle production which has decreased our new vehicle inventory.
+Added: Our new vehicle days’ supply of inventory was approximately 20 days for the quarter ended June 30, 2021, as compared to 52 days for the quarter ended December 31, 2020 and 61 days for the quarter ended June 30, 2020.
+Added: If new vehicle days’ supply of inventory continues to decline, it will impact our ability to satisfy customer demand.
It is impossible to predict with certainty the duration of the semiconductor chip shortage, but we expect our inventory levels to be low through the remainder of 2021.
If our manufacturers’ production remains at current reduced levels or continues to decline, diminishing our ability to meet the immediate needs of our customers, the semiconductor shortage could have a material and adverse impact on our financial and operating results.
+Added: Additionally, many U.S.
+Added: manufacturers of vehicles, parts and supplies are dependent on imported products and raw materials in their production.
+Added: Any significant increase in existing tariffs on such goods and raw materials, or implementation of new tariffs, could adversely affect our profits on the vehicles we sell.
+Added: Vehicle manufacturers may alter their distribution models.
+Added: Certain of our vehicle manufacturers serving the U.K.
+Added: market recently announced plans to explore an agency model of selling new vehicles.
+Added: Under an agency model, our franchised dealerships would receive a fee for facilitating the sale of a new vehicle to a customer but would no longer record the vehicle in inventory as has been historical practice.
+Added: The agency model, if adopted, would reduce revenues, although the other impacts to our U.K.
+Added: segment and consolidated results of operations remain uncertain.
+Added: We are uncertain if agency models will be widely adopted in the U.K.
+Added: and, if so, the impact to our results of operations.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.