What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-14 compared with 2023-02-16 · 153 added, 115 removed, 205 unchanged (57% of the section changed)

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is a leading operator in the automotive retail industry.

Through our omni-channel platform, we sell new and used cars and light trucks;

Through our omnichannel platform, we sell and/or lease new and used cars and light trucks;

arrange related vehicle financing;

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provide automotive maintenance and repair services;

and sell vehicle parts.

We are a multinational organization, with operations in geographically diverse markets that extend across 17 states in the U.S.

and sell vehicle parts retail and wholesale.

We have operations in geographically diverse markets that extend across 17 states in the U.S.

and 34 towns and cities in the U.K.

As of December 31, 2022, our retail network consisted of 149 dealerships in the U.S.

and 55 dealerships in the U.K.

As of December 31, 2023, our retail network consisted of 144 dealerships and 28 collision centers in the U.S.

and 55 dealerships and 13 collision centers in the U.K.

Discontinued Operations

On November 12, 2021, we entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A.

(“Buyer”) to dispose of our Brazilian operations.

Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100% of the issued and outstanding equity interests of our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”).

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Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented.

Effective as of the fourth quarter of 2021, we are aligned into two reportable segments:

Effective as of the fourth quarter of 2021, we have two reportable segments:

Refer to Note 20.

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Dealership Operations

Our new vehicle revenues include new vehicle sales and new vehicle lease transactions, sold at our dealerships or via our digital platform, AcceleRide®.

Our new vehicle revenues include new vehicle sales and lease transactions, completed at our dealerships or via our digital platform, AcceleRide®.

We sell retail used vehicles directly to our customers at our dealerships and via AcceleRide® and wholesale our used vehicles at third party auctions.

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We offer a wide variety of third-party finance, vehicle service and insurance products in a convenient manner at competitive prices.

We showcase our products on menus that display pricing and other information, allowing customers to choose the products that suit their needs.

The following chart presents total revenues and gross profit contribution from our operations by new vehicles, used vehicles, parts and service and F&I for the year ended December 31, 2023 (“Current Year”):

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Business Strategy

Our business strategy is built upon our commitment to maximize the return on investment for our stockholders.

We intend to execute our business strategy by staying close to our core competencies and focusing on three key initiatives, each as further described below:

• organizational growth;

• teamwork and collaboration;

• aftersales excellence.

Key to the success of these initiatives, is our determination to be great partners to those around us, including but not limited to our customers, employees, vendors, OEM partners, philanthropic partners and the communities in which we do business.

Organizational Growth

In 2021 and 2022, the retail automotive industry experienced multiple merger and acquisition transactions aimed at further consolidation of the industry.

Our business strategy is built on our commitment to maximize the return on investment for our stockholders sustainably.

We intend to execute our business strategy, underpinned by the following four key components:

• Business growth through portfolio and operations optimization;

• Leading customer experience;

• Employer of choice;

• OEM Partner of choice.

Business Growth Through Portfolio and Operations Optimization

At Group 1, growing and improving our operations is fundamental to future success, driven by the following key activities:

• Mergers and Acquisitions

• Dispositions

• Operations optimization

In 2021 to 2023, the retail automotive industry experienced multiple merger and acquisition transactions.

Despite this increase in merger and acquisition activity, the industry remains fragmented to a significant degree.

We believe there will continue to be opportunity for consolidation within the industry.

Consistent with our acquisition activity completed in 2021 and 2022, we intend to pursue growth opportunities in 2023, specifically focusing on brands and dealerships that will provide attractive returns to our dealership portfolio.

We evaluate all brands and geographies to expand our portfolio, seeking to acquire dealerships in growth-positioned or economically stable markets, or that are economically accretive to our existing markets.

Acquisitions completed within our existing markets allow us to capitalize on economies of scale and provide for cost saving opportunities in key expense areas such as used vehicle sourcing, advertising, purchasing, data processing and personnel utilization.

Consistent with our acquisition activity completed in 2021, 2022 and 2023, we intend to pursue opportunities in growth-positioned or economically stable markets, or that are economically accretive to our existing markets in 2024 and beyond, specifically focusing on brands, large dealership operations and/or dealership clusters that will provide attractive returns to our portfolio.

Acquisitions completed within our existing markets allow us to better capitalize on economies of scale and provide for cost saving opportunities in key expense areas such as used vehicle sourcing, advertising, purchasing, data processing and personnel utilization.

In addition to cost savings opportunities, scale enables us to make the EV, facility, compliance, real estate, and technology investments necessary to thrive in today’s retail automotive industry.

In addition to expanding our portfolio of dealerships through acquisitions, from time to time, we make decisions to optimize our portfolio by disposing of certain dealerships.

In some instances, we dispose of underperforming dealerships where we no longer believe opportunity exists for improvement.

In addition to expanding our portfolio through acquisitions, from time to time, we make decisions to optimize our portfolio by disposing of certain assets or operations.

In some instances, we dispose of underperforming dealerships which do not meet our return objectives.

We may also dispose of certain dealerships in order to complete strategic acquisition opportunities.

We may dispose of a less significant dealership to allow us to acquire a more substantial dealership within the same or another geographic area based on the ownership limitations in the respective franchise agreement.

Specifically, we may dispose of a less significant dealership to allow us to acquire a more substantial dealership within the same or another geographic area based on the ownership limitations imposed in the various franchise agreements.

Refer to Note 3.

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Discontinued Operations and Other Divestitures within the Notes to Consolidated Financial Statements within this Form 10-K, for additional information regarding our acquisitions and dispositions.

Teamwork and Collaboration

As a multinational automotive retailer, we seek to identify and implement operational improvements within our dealerships by leveraging the unique and varying experiences of our U.S.

automotive retailers.

has adopted EV technology at a much faster pace than the U.S., providing us the opportunity to develop best-in-class practices for servicing EV customers through our U.K.

Alternatively, our dealerships in the U.S.

were the first to adopt the use of AcceleRide® and likewise developed standard practices to enhance the customer experience with this technology.

With teamwork and collaboration, we are sharing these best-in-class standard practices across our U.S.

In addition to benefiting from our shared dealership experiences, we are capitalizing on technology advances in robotic process automation and artificial intelligence to improve our marketing, call center and back-office efficiency.

This effort, in recent years, has primarily focused on our U.S.

dealerships, from which we have gained valuable insight and knowledge.

In late 2022, we launched our first use of robotics within the back-office functions of the U.K.

This effort is expected to continue throughout 2023 as we leverage the already established processes developed in the U.S.

We continuously evaluate our processes to identify opportunities for process automation, enabling us to facilitate our customers’ vehicle inventory selection on a more expedited basis, process parts inventory and F&I products transactions quicker and price cars more competitively for our customers using the latest and most accurate information available.

We believe our continued focus on process automation, while collaborating across our global retail operations, is a key value differentiator within the industry for our stockholders.

Aftersales Excellence

We look to strengthen our aftersales excellence by further driving sustained growth in our higher margin parts and service operations.

Our success hinges on the retention and hiring of skilled service technicians and advisors and customer retention levels.

Many of our U.S.

service operations utilize a four-day work week for service technicians and advisors which allows us to expand our hours of operations during the week.

This change has resulted in increased service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities.

Operations optimization includes leveraging our dealership’s full potential and local scale advantage to improve operational efficiency.

This includes focusing on operational excellence at each dealership and other facilities, including, but not limited to, standardization of key common processes and taking advantage of shareable business resources.

We believe our operations optimization efforts will provide a strategic advantage by structurally lowering our operating costs.

Leading Customer Experience

Our customers drive what we do each day, and we seek to provide them with an industry-leading customer experience, both physically in our stores and digitally.

With our expansive portfolio of brands and service capabilities across significant geographical areas, we believe we can service the needs of each and every member of our customers’ families.

To drive the leading customer experience we endeavor to:

• Adopt new technology

• Drive process improvement

• Improve the customer aftersales journey

As new and innovative tools become available, we seek to quickly adopt those that provide a mutual benefit to our customers and Group 1.

Our digital platform, AcceleRide®, allows customers to shop for and purchase and/or lease new and used vehicles, including a full selection of finance and insurance options;

receive instant cash offers or trade-in of vehicles;

and schedule service appointments at the customers’ convenience.

A customer can step in and out of the buying process using AcceleRide®, while also working with a sales agent in one of our stores.

The digital and in-store experiences do not have to be mutually exclusive.

We continuously evaluate our processes to identify opportunities for automation, enabling us to facilitate our customers’ vehicle inventory selection on a more expedited basis, process parts inventory and F&I products transactions quicker and price cars more competitively for our customers using the latest and most accurate information available.

With a focus on the aftersales impact on the customer journey, we have and will continue to increase customer retention through more convenient service hours, training of our service advisors, selling service contracts with vehicle sales and customer relationship management software that allows us to provide targeted marketing to our customers.

Our online service appointment platform and centralized call centers have also improved the customer experience.

Improved aftersales customer retention should lead to future additional or replacement vehicle purchases, continuing the containment of the entire customer life cycle within our dealerships.

The complexity of vehicles, especially in the area of electronics, and technological advancements, are making it increasingly difficult for independent repair shops to maintain the expertise and technology to work on these vehicles.

Our service departments are equipped for any EV make and any model on the road today.

This provides us the opportunity to advance our market share well into the future.

Employer of Choice Within Automotive Industry

At Group 1, our employees are the cornerstone to our operations and business success.

We seek to be the employer of choice within the automotive industry, by focusing on:

• Talent Management and Employee Engagement;

• Providing Training and Development;

• Promoting Employee Safety and Well-Being;

• Market Competitive Compensation and Benefits.

To help our workforce feel heard and supported, we solicit employee feedback through multiple channels.

We leverage our intracompany communication platform, the Meta-based Workplace app, to bring our teams together digitally and provide our leadership team the ability to engage in more frequent, direct communication with our employees.

Our management team routinely visits our stores, meeting with and soliciting feedback from employees at all levels.

The results of the annual engagement survey and employee discussions inform our overall human capital management methods and other growth strategies.

We routinely create and offer department or job-specific training and professional development opportunities to meet employees’ needs.

In addition to providing career growth pathways for employees, annually our Board of Directors reviews management’s succession planning for key positions throughout the organization.

We believe that embracing DEI (“Diversity, Equity, and Inclusion”) allows us to attract and develop high-performing employees, which leads to a more engaged workforce and lower turnover.

We maintain policies and procedures to mitigate personnel health and safety risks and to help prevent accidents.

Partnering with health and safety expert, KPA, we take measures to ensure our working environments are safe and all employees receive department-specific training on how to avoid injury, report potential hazards and respond to emergencies.

In 2023, we hired a Health and Safety Manager for our U.S.

operations, to lead our health and safety initiatives.

We recognize the importance of providing support for our employees’ physical, mental and financial wellness.

Our market competitive pay and benefits packages include paid family leave, flexible work schedules and a comprehensive health and wellness program.

We offer medical, dental and vision insurance plans for employees and dependents, 401(k) matching and an employee stock purchase plan.

In select locations, Group 1 also offers commuter benefits that save employees commuting costs through subsidized public transportation and parking fees.

We continue to modify our benefits to maintain competitiveness and to better suit the needs of our diverse employees.

OEM Partner of Choice

We regard our OEMs as strategic partners and rely on them to deliver high-quality products and services for our customers.

Key to the success of our business is the determination to be great partners to our OEMs.

We work closely with our OEMs and regularly communicate with them regarding material sourcing, marketing, recalls, safety and other factors that influence our business relationship and the customer experience.

The automotive retail industry is highly competitive across all our service lines.

Consumers have a number of choices when deciding where and how to (i) purchase a new or used vehicle as well as select related vehicle financing and insurance products;

Consumers have a number of choices when deciding where and how to (i) purchase and/or lease a new or used vehicle as well as select related vehicle financing and insurance products;

(ii) purchase related parts and accessories;

and (iii) procure vehicle maintenance and repair services.

New and Used Vehicles Sales

We believe the principal competitive factors in the automotive retailing business are location, service, price, selection, online capabilities, established customer relationships, and reputation.

We believe the principal competitive factors in the automotive retailing industry are location, service, price, selection, online capabilities, established customer relationships, and reputation.

New Vehicles Sales

In the new vehicle market, our dealerships compete with other franchised dealerships in their market areas, as well as auto brokers, leasing companies and internet companies that provide referrals to, or broker vehicle sales with, other dealerships or customers.

Our new vehicle dealer competitors also have franchise agreements with the various vehicle manufacturers and, as such, generally have access to new vehicles on the same terms as we do.

Our principal new vehicle dealer competitors also have franchise agreements with the various vehicle manufacturers and, as such, generally have access to new vehicles on the same terms as we do.

We do not have any cost advantage in purchasing new vehicles from vehicle manufacturers, and our current franchise agreements do not grant us the exclusive right to sell a manufacturer’s product within a given geographic area.

Several companies are currently manufacturing EVs for sale primarily through the internet, under a direct to consumer model, without using the traditional dealer-network or are considering such a strategy, including some of our manufacturer partners.

Several companies are currently manufacturing EVs for sale primarily through the internet, under a direct-to-consumer model, without using the traditional dealer-network or are considering such a strategy, including some of our OEM partners.

Certain of our vehicle manufacturers in the U.K.

recently transitioned or have announced plans to explore an agency model for selling new vehicles.

Under an agency model, our franchised dealerships receive a fee for facilitating the sale of a new vehicle to a customer but no longer record the vehicle sales price as revenue, record vehicles in inventory or incur floorplan interest expense, as has been historical practice.

The agency model, if adopted by other manufacturers, would reduce revenues.

Used Vehicle Sales

In the used vehicle market, our dealerships compete both in their local market and nationally with other franchised dealers, large multi-location used vehicle retailers, local independent used vehicle dealers, automobile rental agencies and private parties for the supply and resale of used vehicles.

Parts and Service

We believe the principal competitive factors in the parts and service business are the quality of customer service, the use of factory-approved replacement parts, familiarity with a manufacturer’s brands and models, location, price, the availability and competence of technicians, and the availability of training programs to enhance such expertise.

We believe the principal competitive factors in the parts and service business are the quality of customer service, timeliness of service, the use of factory-approved replacement parts, familiarity with a manufacturer’s brands and models, location, price, the availability and competence of technicians, and the availability of training programs to enhance such expertise.

In the parts and service market, our dealerships compete with other franchised dealers to perform warranty maintenance and repairs, conduct manufacturer recall services and sell factory replacement parts.

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Our collision centers compete with other large, multi-location companies, as well as local, independent, collision service operations.

We believe the principal competitive factors in the F&I business are convenience, interest rates, product availability and affordability, product knowledge and flexibility in contract length.

We believe the principal competitive factors in the F&I business are convenience, interest rates, product availability and affordability, product knowledge, flexibility in contract length and ease of consumer understanding.

We face competition in arranging financing for our customers’ vehicle purchases from a broad range of unaffiliated third-party financial institutions.

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In most cases, manufacturers have renewed the franchises upon expiration so long as the dealership is in compliance with the terms of the agreement.

From time to time, certain manufacturers may assert sales and customer satisfaction performance requirements under the terms of our framework or franchise agreements.

We work with these manufacturers to address any performance issues.

We diligently work with our manufacturers to address any performance issues.

Our dealership service departments perform vehicle repairs and service for customers under manufacturer warranties.

We are reimbursed for the repairs and service directly from the manufacturer.

Some manufacturers offer rebates to new vehicle customers that we are required, under specific program rules, to adequately document, support and collect.

We are reimbursed for those repairs and service by the manufacturer.

Some manufacturers offer rebates to new vehicle customers, which we are required, under specific program rules, to adequately document, support and collect.

In addition, some manufacturers provide us with incentives to order and/or sell certain models and/or volumes of inventory over designated periods of time.

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These agreements impose a number of restrictions on our operations, including our ability to make acquisitions and obtain financing, and on our management.

These agreements also impose change of control provisions related to the ownership of our common stock.

These agreements also contain change of control provisions related to the ownership of our common stock.

For a discussion of these restrictions and the risks related to our relationships with vehicle manufacturers, please refer to Item 1A.

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These laws and regulations include state franchise laws and regulations, consumer protection laws and other extensive laws and regulations applicable to new and used motor vehicle dealers.

Additionally, in every jurisdiction in which we operate, we must obtain various permits and licenses in order to conduct our businesses.

Additionally, in every jurisdiction in which we operate, we must obtain various permits and licenses in order to conduct our business.

In general, the U.S.

jurisdictions in which we operate have automotive dealership franchise laws, providing that, notwithstanding the terms of any franchise agreement, it is unlawful for a manufacturer to terminate or not renew a franchise unless “good cause” exists.

It generally is difficult, outside of bankruptcy, for a manufacturer to terminate, or not renew, a franchise under these laws, which were designed to protect dealers.

jurisdictions in which we operate have automotive dealership franchise laws, which generally provide that it is unlawful for a manufacturer or distributor to terminate or not renew a franchise unless “good cause” exists.

As a result, it generally is difficult, outside of bankruptcy, for a manufacturer or distributor to terminate, or not renew, a franchise under these laws, which were designed to protect dealers.

generally does not have automotive dealership franchise laws and, as a result, our U.K.

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antitrust rules prohibiting certain restrictions on the sale of new vehicles and spare parts and on the provision of repairs and maintenance.

As a matter of 2020 EU law, authorized dealers are generally able to, subject to manufacturer facility requirements, relocate or add additional facilities throughout the EU, offer multiple brands in the same facility, allow the operation of service facilities independent of new car sales facilities and ease restrictions on cross supplies (including on transfers of dealerships) between existing authorized dealers within the EU.

However, certain restrictions on dealerships may be permissible, provided the conditions set out in the relevant EU Block Exemption Regulations are met.

formally exited the EU on January 31, 2020, and the EU and the U.K.

reached an agreement in principle as set out in the EU-U.K.

Agreement, which became provisionally applicable on January 1, 2021.

Agreement commits the parties to maintaining antitrust/competition law based on the common principles underlying the respective competition frameworks, and envisages cooperation and coordination between the U.K.

and EU competition authorities.

Similarly, as of January 1, 2021, the relevant EU Block Exemption Regulations remain in effect under domestic U.K.

law, as amended in accordance with the U.K.

competition framework.

In July 2022, the Competition and Markets Authority of the U.K.

published proposed recommendations broadly similar to the Block Exemption Regulations currently in effect, but these may be further amended, revoked or extended by subsequent U.K.

We are subject to numerous laws and regulations designed to protect information of clients, customers, employees and other third parties that we collect and maintain.

Some of the more significant regulations that we are required to comply with include the EU’s General Data Protection Regulation (“GDPR”) and, the California Consumer Privacy Act (“CCPA”) and the Federal Trade Commission (“FTC”) Safeguards Rule.

For instance, authorized dealers are generally able to, subject to manufacturer facility requirements, relocate or add additional facilities, offer multiple brands in the same facility, allow the operation of service facilities independent of new car sales facilities and ease restrictions on cross supplies (including on transfers of dealerships) between existing authorized dealers within the EU.

However, under the EU Motor Vehicle Block Exemption Regulation, which was retained in U.K.

law following U.K.’s exit from the EU on January 31, 2020, certain restrictions on dealerships are permissible in franchise agreements provided certain conditions are met.

In October 2022, the Competition and Markets Authority of the U.K.

published recommendations to introduce an updated U.K.

equivalent broadly similar to the EU Motor Vehicle Block Exemption Regulations.

Motor Vehicle Block Exemption Regulation is applicable until May 31, 2029.

We are subject to numerous laws and regulations designed to protect the information of clients, customers, employees and other third parties that we collect and maintain.

Some of the more significant regulations that we are required to comply with include the U.K.’s General Data Protection Regulation (“U.K.

GDPR”) and, the California Consumer Privacy Act, as amended and enhanced effective January 1, 2023 by the California Privacy Rights Act (as so amended, the “CCPA”), and the Federal Trade Commission (“FTC”) Safeguards Rule.

These regulations provide for various data protection requirements related to protection of customer’s personally identifiable information, notice requirements related to data breaches and obligations to inform a consumer, at or before collection, of the purpose and intended use of the collection, and to delete a consumer’s personal information upon request.

If an EU or non-EU organization violates the GDPR, the organization can be fined up to 4% of annual global turnover or 20 million euros, whichever is greater.

Our dealerships in California are required to comply with the CCPA, which became effective in January 2020.

The CCPA also allows the California Attorney General to bring actions against non-compliant businesses with fines of $2,500 per violation or, if intentional, up to $7,500 per violation.

If an organization violates the U.K.

GDPR, the organization can be fined up to 4% of annual global turnover or 20 million euros, whichever is greater.

The CCPA allows the California Attorney General to bring actions against non-compliant businesses with fines of $2,500 per violation or, if intentional, up to $7,500 per violation and permits a private right of action for certain violations of laws.

The FTC Safeguards Rule contains procedural, technical and personnel requirements that financial institutions, including dealers, must satisfy to meet their information security obligations.

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We contract for recycling and/or disposal of used fluids, filters and other waste materials generated by our operations.

These laws, regulations and controls may impose numerous obligations on our operations including the acquisition of permits to conduct regulated activities, the imposition of restrictions on where or how to manage or dispose of used products and wastes, the incurrence of capital expenditures to limit or prevent releases of such material, and the imposition of substantial liabilities for pollution resulting from our operations or attributable to former operations.

These laws, regulations and controls may impose numerous obligations on our operations including the acquisition of permits to conduct regulated activities, the imposition of restrictions on where or how to manage or dispose of used products and wastes, the incurring of capital expenditures to limit or prevent releases of such material, and the imposition of substantial liabilities for pollution resulting from our operations or attributable to former operations.

For example, in the U.S., most of our dealerships utilize storage tanks that are subject to testing, containment, upgrading and removal regulations under the federal Resource Conservation and Recovery Act, analogous state statutes and their implementing regulations.

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is similarly committed to the Paris Agreement, and the U.K.

announced in late 2020 that it plans to ban sales of new gasoline and diesel-powered vehicles after 2030.

Additional regulation of GHG emissions from the vehicles could increase the cost of vehicles sold to us.

announced that it plans to ban sales of new gasoline and diesel-powered vehicles after 2035.

Similar planned bans have been announced in California, New Mexico, Massachusetts and New York.

Additional regulation of GHG emissions from the vehicles could increase the cost of the vehicles sold to us.

Government bans or restrictions on certain vehicle types could impact the mix of vehicles that we offer for sale.

Consumer concerns regarding climate change could also alter consumer preferences and adversely affect our ability to market and sell vehicles.

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Risk Factors within this Form 10-K.

The EPA proposes higher emissions standards each year and beginning with model year 2027, there is expected to be new battery durability requirements and changes to certain existing air emissions credit programs.

These regulations could increase or accelerate the adoption of certain emissions reducing technologies, and further market penetration for hybrid, plug-in and battery-electric vehicles.

For example, should the proposed regulations be enacted, the EPA projects that at least 60% of new light-duty passenger vehicles sold in the U.S.

would be battery-electric by 2030.

The EPA also estimates that the regulations, if finalized, would increase costs for auto manufacturers and reduce consumer repair costs for covered vehicles.

The EPA projects the regulations to become final during 2024.

Insurance and Bonding

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In certain cases, we insure costs in excess of our retained risk under various contracts with third-party insurance carriers.

Although we believe our insurance coverage is adequate, we cannot assure that we will not be exposed to uninsured losses that could have a material adverse effect on our business, results of operations and financial condition.

Although we believe our insurance coverage is adequate, we cannot be assured that we will not be exposed to uninsured losses that could have a material adverse effect on our business, results of operations and financial condition.

We are also subject to potential premium cost fluctuations and changes in loss retention limits with the annual renewal of these programs.

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We engage in activities aimed at listening to our employees and addressing their concerns.

In turn, our employees deliver exceptional service to our customers, and ultimately achieve exceptional results for our investors.

In turn, our employees deliver superior service to our customers, and ultimately achieve exceptional results for our investors.

We solicit employee feedback through multiple channels such as employee surveys and town halls.

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The results inform our overall human capital management methods and other growth strategies.

In 2022, we launched an all-in-one communication platform that keeps our employees across the U.S.

In 2022, we launched the Meta-based Workplace app, an all-in-one communication platform that keeps our employees across the U.S.

up to date on the latest company news and brings our teams together digitally.

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Training and Development

We offer a variety of training courses and professional development opportunities to employees based on job categories, including a management training program and a technician training program.

We routinely create and offer department or job-specific training and professional development opportunities to meet employees’ needs.

In addition to job specific courses, we also offer leadership training.

Employees have opportunities for various certification levels based on training completed and tenure.

Diversity, Equity and Inclusion (“DEI”)

We have also developed a management training program and a technician training program to attract talent to the automotive industry.

In addition to providing career growth pathways for employees, annually our Board of Directors reviews management’s succession planning for key positions throughout the organization.

We maintain a DEI council that is chaired by our Chief Diversity Officer.

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Each area has an employee chairperson, as well as an executive sponsor.

In addition, employees participate in on-going diversity and inclusion training programs which were specifically developed for the Company.

In addition, employees participate in various diversity and inclusion training programs which were specifically developed for the Company.

Environmental, Social and Governance (“ESG”)

We are committed towards a more sustainable future by working to improve various aspects of our business in the ESG areas most relevant to us, our stakeholders and our industry.

With oversight from our Board of Directors, in 2021 we performed a thorough review of our business operations pertaining to:

Beginning in 2021 we performed a thorough review of our business operations pertaining to:

hiring practices, equal pay, promotional practices, health and safety, health insurance, community impact and environmental impact.

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This effort included a detailed desktop study reviewing key material topics relevant to the automotive industry, an analysis of survey responses from our internal and external stakeholders, and interviews with executive leaders across our business and our Board members.

With the aide of the assessment results, the Company placed priority on pressing ESG issues and designated resources for their management and disclosure.

With oversight from our Board of Directors, management annually reviews the Company’s ESG priorities and designates resources for their management and disclosure.

Environmental

Our commitment to sustainability includes reducing our impact on the environment and doing our share to contribute to a healthier planet.

We look for opportunities to reduce our energy consumption, eliminate waste, and accommodate the growing EV market.

One of our principal business activities is the construction and operation of new and remodeled dealership facilities.

We continue to invest in numerous initiatives to improve our carbon and broader environmental footprint as we strive to be good stewards of the environment, such as climate control thermostats and LED lighting to improve our energy efficiency, solar panels to increase our usage of renewable energy, and up-to-date waste management systems to improve our handling of chemicals and other byproducts from our dealerships’ operations.

We are continuously working with our OEM partners and third-party construction consultants to enhance the buying experience in our facilities.

In 2021, we established a team responsible for driving capital allocation recommendations for the expansion of the EV infrastructure in our dealerships.

EV chargers, lifts, shop equipment and battery storage facilities are all critical elements to address the emerging market for EVs.

We work closely with our manufacturing partners to market these vehicles and play a large role in servicing them.

We are certified to repair and service EVs, including Tesla EVs at select locations.

We also provide EV batteries and parts.

We are committed to supporting our customers who currently own EVs and those that purchase EVs in the future.

We maintain a human capital strategy that supports a diverse and inclusive workforce with equal opportunity.

The Company offers programs for training and career advancement, strong benefits, incentives, and health, safety and wellness initiatives.

Our commitment to sustainability centers on seeking to reduce waste and our collective environmental impact.

We look for opportunities to reduce our energy consumption, eliminate waste and accommodate the growing EV market and continue to invest in numerous initiatives to improve our carbon and broader environmental footprint.

These opportunities include technological solutions such as:

climate control thermostats and LED lighting to improve energy efficiency, solar panels to increase our use of renewable energy and updated waste management systems to improve handling of chemicals and other byproducts from our dealerships’ operations.

To prevent any adverse impact on the environment and to protect local water supplies, all of our U.S.

service centers utilize oil water separators to properly manage wastewater.

In addition, all U.S.

dealerships that feature car wash services have processes in place to maximize water recycling between uses.

locations, we manage recycling of waste materials.

We also recycle IT hardware, tires, oil, paint and damaged automotive parts.

The widespread adoption of EVs has accelerated in recent years.

We are certified in EV service and repair.

We have equipped our facilities with EV charging equipment, specialized lifts, EV-specific shop equipment and battery storage to sufficiently cater to the emerging EV market.

We maintain a human capital strategy that supports a talented, diverse and inclusive workforce with equal opportunity.

The Company offers programs for training and career advancement, strong benefits, incentives, and health, safety and wellness initiatives as described above within Human Capital .

In addition, the Company has a history of philanthropy and volunteerism.

We actively contribute to our local communities in different and meaningful ways.

Our efforts include employee volunteering, donations to local causes, support to educational programs and hosting community gatherings at our dealerships.

In 2023, the role of Corporate Communication and Community Engagement Manager was created to align our efforts across the Company.

Our focus is centered around helping children, fostering education and addressing the needs of first responders and the homeless.

Our Board of Directors has four standing committees to assist in fulfilling its responsibilities:

the Audit Committee, the Compensation & Human Resources Committee, the Governance and Corporate Responsibility Committee and the Finance/Risk Management Committee.

Our Governance and Corporate Responsibility Committee advises the Board of Directors on appropriate corporate governance guidelines and has direct oversight of our ESG policies and practices.

Other Board of Directors’ committees also play a role in ESG, having oversight responsibilities across areas such as cybersecurity, human capital management, health & safety and corporate risk management.

In addition, our management team and cross-functional subject matter experts are responsible for the implementation of our ESG strategy, initiatives and communications.

We believe the composition of our Board of Directors is critical to our success.

As the Company continues to evolve, so do the perspectives, skills and experiences that the Board of Directors seeks in its director nominees.

Since 2016, we have welcomed five new independent directors, each of whom brings extensive experience and fresh perspectives to enrich the Board of Directors’ dialogue and enhance its ability to effectively oversee our business.

One-third of our directors are women, all of whom serve as committee chairs, and two of our members are non-U.S.

the Audit Committee, the Compensation and Human Resources Committee, the Governance and Corporate Responsibility Committee and the Finance/Risk Management Committee.

Our Governance & Corporate Responsibility Committee advises the Board on appropriate corporate governance guidelines and has direct oversight of our ESG policies and practices.

Other Board committees also play a role in ESG:

our Finance/Risk Management Committee oversees our Enterprise Risk Management processes and cybersecurity matters, our Compensation & Human Resources Committee oversees human capital management and health and safety matters and our Audit Committee oversees financial reporting, legal and regulatory compliance risks.

Additionally, our management team and cross-functional subject matter experts are responsible for the implementation of our ESG strategy, initiatives and communications.

To improve business performance, better serve our customers and communities and enhance our competitive advantage, Group 1 is focused on hiring and developing a talented, diverse workforce.

This starts with our Board.

As Group 1 continues to evolve, so do the perspectives, skills and experiences the Board seeks in its director nominees.

We believe the composition of our Board is critical to our success.

As such, one-third of our directors are women, all of whom serve as committee chairs.

Much of our Board of Directors’ oversight work is delegated to various committees, which meet regularly and report back to the full Board.

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We use an internal process to help identify if we have enough controls in place to properly manage each risk.

In late 2022, we appointed a Compliance Officer to oversee compliance across the organization.

As the compliance leader, this individual is responsible for establishing standards and implementing procedures to ensure that the compliance programs throughout the organization are effective and efficient in identifying, preventing, detecting and correcting noncompliance with company policies, applicable laws and regulations.

Our operating results are generally subject to seasonal variations, as well as changes in the economic environment.

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Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in foreign currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in our revenues and operating income.

The shortage of new vehicle supply, led by a global semiconductor and other parts shortage, as well as the current rising inflation and increasing interest rate environment, has and could continue to lead to a deviation from historical seasonal variations.

A shortage of new vehicle supply in 2022 and much of 2023, led by a global semiconductor and other parts shortage, as well as high inflation and high interest rates led to a deviation from historical seasonal variations.

As a result, historical seasonal variation patterns may not be an appropriate indicator of current and future trends in seasonal variations.

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• Our Corporate Governance Guidelines;

• The charters for our Audit, Compensation and Human Resources, Finance/Risk Management and Governance & Corporate Responsibility Committees;

• The charters for our Audit, Compensation & Human Resources, Finance/Risk Management and Governance & Corporate Responsibility Committees;

• Our Code of Conduct for Directors, Officers and Employees (“Code of Conduct”);

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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.

What changed 10-K

Item 1. Business