What changed in this filing

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Item 1. Business

2025-02-14 compared with 2024-02-14 · 148 added, 184 removed, 174 unchanged (66% of the section changed)

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is a leading operator in the automotive retail industry.

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

We sell and/or lease new and used cars and light trucks;

arrange related vehicle financing;

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and 72 towns and cities in the U.K.

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

As of December 31, 2024, our retail network consists of 145 dealerships and 27 collision centers in the U.S.

and 114 dealerships and 12 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”).

On July 1, 2022, we completed the Brazil Disposal.

The Brazil Disposal Group met the criteria to be reported as discontinued operations.

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 have two reportable segments:

Refer to Note 20.

Segment Information within our Notes to Consolidated Financial Statements within this Form 10-K, for further information on our reportable segments.

Discontinued operations within the Consolidated Statements of Operations consists of activity associated with our Brazil operations, which were disposed of during the year ended December 31, 2022.

Refer to Note 4.

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

Discontinued Operations and Other Divestitures within the Notes to Consolidated Financial Statements for additional information regarding business dispositions.

Unless otherwise specified, disclosures in this Form 10-K reflect continuing operations only.

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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.

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”):

The following charts present 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, 2024 (“Current Year”):

The following chart presents our diversity of new vehicle unit sales by manufacturer for the Current Year:

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Massachusetts 7.8 % 20

Oklahoma 5.6 % 19

California 7.2 % 7

Oklahoma 5.0 % 19

Georgia 3.5 % 9

Maryland 3.5 % 7

Florida 2.7 % 5

New Mexico 2.4 % 7

Maine 1.8 % 6

New Jersey 2.2 % 8

New Hampshire 2.3 % 5

Florida 3.0 % 5

South Carolina 2.1 % 6

New Jersey 2.0 % 8

Maine 1.5 % 6

Louisiana 1.3 % 6

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New York 0.8 % 2

Alabama 0.4 % 1

Maryland 0.5 % 2

Mississippi 0.4 % 1

Alabama 0.2 % 1

United Kingdom 22.6 % 153

Business Strategy

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, 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.

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

We intend to execute our business strategy through three interrelated pillars:

• Local Scale;

• Full Rooftop Potential.

Allocating our shareholders’ capital in support of maximizing our return on investment is our highest priority.

When evaluating an acquisition, we run disciplined valuation models, with expectations based on our experience, incorporating growth and investment.

We then compare the projected acquisition return to the expected return of repurchasing shares of our common stock, repaying debt, or using the capital for other uses.

In 2024, we completed the acquisition of Inchcape Retail automotive operations (“Inchcape Retail”) in the U.K., consisting of 54 dealership locations, certain real estate and three collision centers (the “Inchcape Acquisition”).

The Inchcape Acquisition approximately doubled our portfolio across the U.K.

Consistent with our acquisition activity completed in 2022 through 2024, we intend to pursue opportunities in growth-positioned markets that are economically accretive to our existing markets.

Our focus is on brand, geographic fit, and large dealership operations and/or dealership clusters that will provide attractive returns to our portfolio.

Acquisitions completed within our existing markets or large dealership groups 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.

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

Acquisition success depends upon our relationship with our OEM partners.

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.

We seek to perform well in the markets in which we operate, generally meeting or exceeding OEM metrics on market share and customer retention.

Each OEM has acquisition eligibility criteria and our ability to meet these criteria across multiple brands provides an advantage to executing a growth strategy.

We believe we can buy nearly any brand, so we can be selective with our acquisition target criteria.

We believe we have access to a broader selection of assets and asset groups, some of which require the significant capital investment our scale allows, given our ability to operate successfully across multiple brand partners.

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.

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

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.

Acquisitions and Note 4.

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.

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

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

We believe capturing opportunities from building local scale will provide us a competitive advantage and leverage through greater market representation and facilitate an improved customer experience.

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

Using local scale, we will leverage our marketing prowess to drive business within our dealership clusters, while providing our customers a unique value proposition.

We are growing and developing our retail talent internally by creating retail training academies within cluster markets.

Our training is focused on creating consistent customer experiences across our rooftops.

In addition to the enhancement of customer experience, local scale also allows us to reimagine how we handle our used vehicle inventory, including reconditioning and vehicle positioning.

We are focused on reducing the cost and increasing throughput efficiency of our vehicle reconditioning operations, by establishing a more consistent approach to reconditioning.

Lower costs drive higher shareholder returns and faster reconditioning gives our staff back a valuable resource, time, which can be spent improving customer retention through more customer interaction.

Our business relies upon maximizing positive customer interactions to drive repeat and referral sales and service business.

Disciplined inventory positioning, using our dealership clusters to best position used vehicles, allows us to drive the highest value.

Full Rooftop Potential

We seek to optimize our operations at each of our rooftops including 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.

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.

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

We want to replicate and grow our best practices across rooftops.

Our scale amplifies the impact of replicating best practices and best practices lead to additional value extraction from existing stores and acquisition opportunities, which we believe to be a competitive advantage.

We are prioritizing five areas for development in 2025.

We are piloting programs that enhance the in-store and online F&I experience, allowing our customers to shop how they want, when they want, while improving the speed of service within our dealerships.

In addition, we believe we can extract further value from our top F&I performers by better managing their customer workflow, coupled with the assistance of virtual-based technology enhancements.

We believe our scale provides us an advantage in the form of leverage to further improve our dealership costs.

We continue to negotiate discounts, service level improvements and preferential pricing from suppliers to our dealerships through providers who can service multiple locations across more than one geographic market.

We also routinely evaluate dealership processes with the purpose of identifying best practices which can be shared amongst our dealership operations.

Used Vehicle Purchasing and Transfers

Used vehicle profits are dependent on sourcing and our ability to fairly value the purchases we make.

We have invested heavily in the technologies and processes we use to value used vehicle inventory.

We have partnered with service providers to enable us to generate the most competitive market pricing available, across our dealership network.

We sell multiple brands in most markets in which we operate through our franchised dealer network.

We have thousands of customers enter our stores daily.

We have invested in the people and processes at many of our stores to enable used vehicle sourcing directly from the service drive.

As a result, we are able to offer many of our customers a value for their car at every service visit, leading to significant organic sourcing.

We are perfecting these best practices for replication across our dealerships.

In addition to sourcing, we have the ability to leverage our clusters of dealerships to sell our vehicles in the most advantageous location.

We have developed disciplined processes to control the movement of our used vehicle inventory in order to maximize the selling price and throughput within our market clusters.

Customer Experience Center

We utilize central customer service centers to support our dealerships.

We are investing in and developing new ways to support our customers and their dealership experience.

We know that customers have challenges connecting with dealership personnel which is why we have developed processes to enable our centralized customer service centers to better assist our customers with their in-store needs.

Whether that be vehicle service status or the availability of advertised vehicles, we believe our centralized customer service centers can further assist customers, improving the customer experience, if they are provided with the necessary tools and data.

Talent Management, Succession Planning and Workforce Evolution

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.

We leverage our intracompany communication platform to bring our teams together digitally and provide our leadership team with the ability to interact in more frequent, engaging and 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.

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

We routinely provide leadership training to key management personnel at varying levels within the organization in support of our employees.

This training is designed to benefit the individual receiving the training as well as the workforce managed by those managers.

We are focused on attracting, developing, mentoring and retaining top talent.

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.

Investments in our facilities and planned investments provide our employees working environments to meet their needs and the needs of the future.

In addition to our broader workforce, we are focused on retaining and hiring technicians.

We believe we have sufficient facility capacity to support these technicians and do not view stall count as a limiter in growing our technician staffing.

We have several stores where our technician headcount exceeds the stall count.

Our scheduling methods and offering of a four day work week in many of our U.S.

shops allow us to maximize our stall and technician utilization.

Our technicians benefit from ongoing initiatives to provide air conditioning in shops with more difficult weather conditions, Group 1 training academies to support career growth and development and competitive wages and benefits.

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

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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.

recently transitioned to 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, incur loaner expense, or incur floorplan interest expense, as has been historical practice.

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.

In the used vehicle market, our dealerships compete both in their local markets 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

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Many financial institutions now offer their own menu of F&I products, providing an alternative to our product offering, which may reduce our profits from the sale of these products through reduced penetration.

In certain cases, our customers in the normal course of business can cancel previously purchased F&I products resulting in the charge back to us by the product provider of a portion of the profit earned on the sale of those products.

Manufacturers’ Relationships and Agreements

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dealerships operates under one or more franchise agreements with vehicle manufacturers or authorized distributors.

The franchise agreements grant the franchised automobile dealership a non-exclusive right to sell the manufacturer’s or distributor’s brand of vehicles and offer related parts and service within a specified market area.

The franchise agreements grant the franchised automobile dealership a non-exclusive right to sell the manufacturers or distributor’s brand of vehicles and offer related parts and service within a specified market area.

These franchise agreements also grant franchised dealerships the right to use the manufacturer’s or distributor’s trademarks in connection with their operations, and impose numerous operational requirements and restrictions relating to, among other things, inventory levels, working capital levels, the sales process, sales performance requirements, customer satisfaction standards, marketing and branding, facility standards and signage, personnel, changes in management, change in control and monthly financial reporting.

Most of our dealerships’ franchise agreements continue indefinitely and those with definite terms are renewed or superseded by a new agreement.

Each of our franchise agreements may be terminated or not renewed by the manufacturer for a variety of reasons, including unapproved changes of ownership or management and performance deficiencies in such areas as sales volume, sales effectiveness and customer satisfaction.

Most of our U.S.

dealerships’ franchise agreements continue indefinitely and those with finite terms are renewed or superseded by a new agreement.

In the U.K., many of our agreements have two-year rolling terms.

Each of our franchise agreements may be terminated or not renewed by the manufacturer for a variety of reasons, including network consolidation efforts, unapproved changes of ownership or management and performance deficiencies in such areas as sales volume, sales effectiveness and customer satisfaction.

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

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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.

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.

However, under the U.K.

Motor Vehicle Block Exemption Order 2023 (applicable until May 31, 2029) certain restrictions on dealerships are permissible in franchise agreements provided certain conditions are met.

In the U.K., the Financial Conduct Authority (the “FCA”) regulates financial services firms and financial markets, including our activities in acting as broker for the financing of vehicle sales.

In January 2024, the FCA announced that it planned to undertake a formal review into the historic use of discretionary commission arrangements (“DCA”s) amid concerns that the practice of linking brokers’ commissions to the interest rate charged to customers may have been unfair to customers, resulting in customers paying too much for their car loans.

Additionally in the U.K., on October 25, 2024, the U.K.

Court of Appeal issued a judgment in the three joint appeals for Johnson v Firstrand Bank Ltd, Wrench v Firstrand Bank Ltd and Hopcraft v Close Brothers Ltd (collectively, the “COA litigation”), finding that the claimants in those cases are entitled to be paid a sum equivalent to the undisclosed commission paid by their lenders to the dealerships from which they acquired their cars, plus interest.

Underlying the Court’s judgment were the findings that, among other things, brokers owe fiduciary and/or disinterested duties to customers, which, among other things, require disclosure to the customer of the rate and amount of the commission paid and the basis for its calculation.

As a result, the failure to provide such full commission disclosure effectively results in the failure to obtain a customer’s fully informed consent to the payment of commission.

The judgment also appears to extend beyond DCAs to address all commission disclosures generally.

Finally, the U.K.

Court of Appeal held where there is a failure to disclose, lenders and dealerships who acted as brokers are jointly and severally liable for the repayment of the commission.

After the U.K.

Court of Appeal denied an initial application for permission to appeal, the motor finance dealers involved requested, and were granted permission, to appeal the decision directly to the Supreme Court of the United Kingdom.

The Supreme Court of the United Kingdom is scheduled to hear the appeal on April 1 – 3, 2025.

The final outcomes of the FCA’s DCA review and the COA litigation, including the appeal thereof to the Supreme Court of the United Kingdom, are uncertain.

Any judicial outcome or regulatory redress scheme, which ultimately results in a wider legal or regulatory requirement to refund historical commissions paid to us, could materially and adversely affect our U.K.

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.

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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.

These regulations provide for various data protection requirements related to protection of customer’s PII, 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 organization violates the U.K.

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Our business activities in the U.S.

are subject to stringent federal, regional, state and local laws, regulations and other controls governing specific health and safety criteria to address worker protection, the release of materials into the environment or otherwise relating to environmental protection.

are subject to stringent federal, state and local laws, regulations and other controls governing specific health and safety criteria to address worker protection, the release of materials into the environment or otherwise relating to environmental protection.

Our operations involve the use, handling and storage of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and fuel.

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These statutes can impose strict and joint and several liability for cleanup costs on those that are considered to have contributed to the release of a hazardous substance, including for historic spills that occurred prior to our ownership of our properties even if we did not know of, or did not cause the release of such hazardous substances.

We also are subject to the Clean Water Act, analogous state statutes, and their implementing regulations which, among other things, prohibit discharges of pollutants into regulated waters without permits, require containment of potential discharges of oil or hazardous substances, and require preparation of spill contingency plans.

We also are subject to the Clean Water Act, analogous state statutes, and their implementing regulations which, among other things, prohibit discharges of pollutants into regulated waters, require containment of potential discharges of oil or hazardous substances, and require preparation of spill contingency plans.

Air emissions from some of our operations, such as vehicle painting, may be subject to the federal Clean Air Act and analogous laws.

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Department of Labor and related state agencies also apply to our operations.

The threat of climate change continues to attract considerable attention in the U.S., U.K.

In recent years, the threat of climate change has attracted considerable attention in the U.S., U.K.

and elsewhere globally.

As a result, numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government, in locations affecting our business, to monitor and limit existing emissions of greenhouse gas (“GHG”), as well as to restrict or eliminate such future emissions.

Gas and diesel-powered automobiles are one source of GHG emissions and in the recent past, the U.S.

Environmental Protection Agency (“EPA”), together with the National Highway Traffic Safety Administration (“NHTSA”), implemented GHG emissions limits on vehicles manufactured for operation in the U.S.

On January 20, 2021, President Joe Biden issued an executive order recommitting the United States to participation in the Paris Agreement, which is a United Nations-sponsored, non-binding agreement for nations to limit their GHG emissions through individually determined reduction goals every five years after 2020.

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

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

As a result, numerous proposals have been made at the international, national and state levels of government, in locations affecting our business, to monitor and limit existing emissions of greenhouse gas (“GHG”), as well as to restrict or eliminate such future emissions.

In December 2023, the United Arab Emirates hosted the 28th session of the Conference of the Parties where parties signed onto an agreement to transition “away from fossil fuels in energy systems in a just, orderly and equitable manner” and increase renewable energy capacity so as to achieve net zero by 2050, although no detailed timeline for doing so was set.

Subsequent conferences have sought to build on the Paris Agreement, a United Nations-sponsored, non-binding agreement for nations to limit their GHG emissions through individually determined reduction goals every five years after 2020, by calling for various countries to phase out fossil fuels and subsidies related to the same, though none have been legally binding.

President Donald Trump issued a series of executive orders since taking office in January 2025, including an executive order withdrawing from the Paris Agreement.

Refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Events, for additional information regarding these executive orders.

is committed to the Paris Agreement, and 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.

Additional regulation of GHG emissions 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.

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These developments could increase our costs of operation as well as reduce our volume of business.

The full impact of these actions is uncertain at this time, though these international agreements have the potential to result in increased pressure from financial institutions and other stakeholders to eliminate or reduce fossil fuel use and GHG emissions related to the same.

Gas and diesel-powered automobiles are a source of GHG emissions and in the recent past, the U.S.

Vehicle manufacturers in the U.S.

are also subject to regulations by the EPA and the NHTSA that establish corporate average fuel economy (“CAFE”) standards applicable to light-duty vehicles.

are subject to regulations by the EPA and the NHTSA that establish corporate average fuel economy (“CAFE”) standards applicable to light-duty vehicles.

These agencies have finalized more stringent standards for both heavy-duty and light-duty vehicles and for increased fuel economy for vehicles in upcoming model years.

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For additional information, see Item 1A.

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.

Risk Factors.

On March 20, 2024, the EPA finalized new emissions standards for light and medium-duty vehicles, including passenger cars, vans, pickups, sedans and sport utility vehicles for model years 2027 through 2032 and beyond.

The final rule sets new, strict standards intended to reduce air pollutant emissions, including GHG emissions;

however, the new standards are now subject to legal challenge.

The EPA projects the final rule will accelerate the transition to, and availability of, clean vehicle technologies, including hybrid EVs and plug-in hybrid EVs.

President Donald Trump issued a series of executive orders since taking office in January 2025, including executive orders impacting environmental regulations.

Refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Events, for additional information regarding these executive orders.

Insurance and Bonding

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• claims by employees, customers or other third parties for personal injury or property damage;

• weather events, such as hail, flood, tornadoes and hurricanes;

• natural disasters, such as hail, flood, tornadoes, hurricanes and wildfires;

• potential fines and civil and criminal penalties resulting from alleged violations of federal and state laws, regulatory requirements and other local laws in the jurisdictions in which we operate.

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For further discussion, refer to Item 1A.

Risk Factors, within this Form 10-K.

Human Capital

People make up the foundation of everything we do at the Company.

Our core values — Integrity, Transparency, Professionalism, Teamwork and Respect — define our culture and help us attract and retain talented employees.

As of December 31, 2023, we ha d 16,011 e mployees (full-time, part-time and temporary), of which 12,493 w ere employed in the U.S.

a nd 3,518 in the U.K.

Risk Factors.

Human Capital Management

Our human capital strategy is focused on attracting, developing, motivating and retaining top talent that will drive our success, enabling us to deliver market-leading business results.

We strive to solidify Group 1 as the preferred employer of choice in automotive retail.

We also believe that our workforce should be representative of the communities we serve.

We foster a workplace culture around our core values of integrity, transparency, professionalism, teamwork and respect.

As of December 31, 2024, we had 20,413 employees (full-time, part-time and temporary), of which 13,398 were employed in the U.S.

and 7,015 in the U.K.

Employee Engagement

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

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.

Our annual employee survey provides our management team with valuable insight into employees’ perception of workplace culture and progress on our corporate mission.

E mployee engagement is key to driving long-term business success and supporting our way towards becoming a truly customer-centric organization, which drives value for our investors.

The annual Group 1 “Your Voice Matters” Engagement Survey has become our primary employee listening platform for gathering feedback and promoting a performance-based culture.

That feedback provides us with valuable insight into employees’ perception of workplace culture and progress on our corporate mission.

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

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.

The platform offers our executive team the ability to engage in direct and more frequent, real-time communication with our employees.

The features of the platform include targeted announcement capabilities, company documents like policies, guidelines and benefits plans, and quick access to employee and department directories.

We believe that working together is critical to prepare for coming opportunities and changes affecting us internally and externally.

We maintain programs that offer safety and health and wellness initiatives.

We provide competitive pay and employee benefits, routinely benchmarking ourselves against peers and the broader industry.

Training and Development

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.

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

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

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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.

The council’s mission is to foster a diverse and inclusive culture where employees of all backgrounds are respected, valued and developed.

We enhance employee engagement in DEI by offering training, recruitment and career path development where a sense of belonging is apparent throughout the organization.

The council has four primary areas of focus:

Talent Acquisition, Talent Development, Community Building and Women in the Workplace.

The council consists of a diverse group of employees, providing representation across the organization.

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

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.

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.

Building off this analysis, we performed a second assessment in 2022.

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 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 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 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.

All committees have significant roles in carrying out the risk oversight function.

Each committee is comprised entirely of independent directors (except the Finance/Risk Management Committee) and oversees risks associated with its respective area of responsibility.

At the corporate level, we established a Safety and Risk Steering Committee, which reviews the effectiveness of the Company’s risk management system, including a review of policies and profiles of financial and non-financial risks.

We track and identify new and emerging risks, and to the extent they affect or could potentially affect our business, we develop action plans with assigned sponsors to address and mitigate that risk.

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

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.

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.

Internet Website and Availability of Public Filings

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• Our Sustainability Report.

Within the time period required by the SEC and the NYSE, as applicable, we will post on our website any modifications to the Code of Conduct and Code of Ethics and any waivers applicable to senior officers as defined in the Code of Conduct or Code of Ethics, as applicable, as required by the Sarbanes-Oxley Act of 2002.

Within the time period required by the SEC and the New York Stock Exchange, as applicable, we will post on our website any modifications to the Code of Conduct and Code of Ethics and any waivers applicable to senior officers as defined in the Code of Conduct or Code of Ethics, as applicable, as required by the Sarbanes-Oxley Act of 2002.

We make our filings with the SEC available on our website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.

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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