Item 1. Business
Item 1. Business
General
Group 1 Automotive, Inc. is a leading operator in the automotive retail industry. We sell and/or lease new and used cars and light trucks; arrange related vehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts retail and wholesale. We have operations in geographically diverse markets that extend across 17 states in the U.S. and 72 towns and cities in the U.K. 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
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 for additional information regarding business dispositions. Unless otherwise specified, disclosures in this Form 10-K reflect continuing operations only.
Dealership Operations
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. We sell replacement parts and provide both warranty and non-warranty maintenance and repair services at each of our franchised dealerships, as well as provide collision repair services at the 39 collision centers that we operate. We also sell parts to wholesale customers. Revenues from our F&I operations consist primarily of fees for arranging financing and selling vehicle service and insurance contracts in connection with the retail sale of a new or used vehicle. We offer a wide variety of third-party finance, vehicle service and insurance products in a convenient manner at competitive prices.
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”):
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The following chart presents our diversity of new vehicle unit sales by manufacturer for the Current Year:
The following table shows our new vehicle unit sales geographic mix for the Current Year and our franchise count as of December 31, 2024:
New vehicle unit sales geographic mix (%) Franchises
Region Geographic Market
U.S. Texas 33.5 % 70
Massachusetts 7.8 % 20
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
New Hampshire 2.3 % 5
South Carolina 2.1 % 6
New Jersey 2.0 % 8
Maine 1.5 % 6
Louisiana 1.3 % 6
Kansas 1.0 % 3
New York 0.8 % 2
Mississippi 0.4 % 1
Alabama 0.2 % 1
77.4 % 182
U.K. United Kingdom 22.6 % 153
100.0 % 335
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Business Strategy
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:
• Growth;
• Local Scale; and
• Full Rooftop Potential.
Growth
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. 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. 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 our franchise agreements.
Refer to Note 3. Acquisitions and Note 4. Discontinued Operations and Other Divestitures within the Notes to Consolidated Financial Statements, for additional information regarding our acquisitions and dispositions.
Local Scale
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.
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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.
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.
F&I
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.
Procurement
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 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.
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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. 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.
Competition
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 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. 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 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 OEM partners. Certain of our vehicle manufacturers in the U.K. 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 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
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. Our dealerships also compete with other automobile dealers, franchised and independent service center chains and independent repair shops for non-warranty repair and maintenance business. In addition, our dealerships sell replacement and aftermarket parts both locally and nationally in competition with franchised and independent retail and wholesale parts outlets. A number of regional or national chains offer selected parts and services at prices that may be lower than ours. Our collision centers compete with other large, multi-location companies, as well as local, independent, collision service operations.
F&I
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. 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.
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Manufacturers’ Relationships and Agreements
Each of our U.S. 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 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 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. 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 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. Under the terms of our dealership franchise agreements, the respective manufacturers are able to perform warranty, incentive and rebate audits and charge us back for unsupported or non-qualifying warranty repairs, rebates or incentives.
In addition to the individual dealership franchise agreements discussed above, we have entered into framework agreements in the U.S. with most major vehicle manufacturers and distributors. 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 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. Risk Factors.
Governmental Regulations
Automotive and Other Laws and Regulations
We operate in a highly regulated industry. A number of laws and regulations applicable to automotive companies affect our business and conduct, including, but not limited to our sales, operations, financing, insurance, advertising and employment practices. 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 business.
In general, the U.S. 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.
The U.K. generally does not have automotive dealership franchise laws and, as a result, our U.K. dealerships operate without these types of specific protections. However, similar protections may be available as a matter of general U.K. contractual law. In addition, our U.K. dealerships are subject to U.K. 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 network. 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.
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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. operations.
Data Privacy
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 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. 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.
Environmental and Occupational Health and Safety Laws and Regulations
Our business activities in the U.S. and the U.K. 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. 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 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. Failure to comply with these laws, regulations and permits may result in the assessment of sanctions, including administrative, civil and criminal penalties, the imposition of investigatory remedial and corrective action obligations or increase of capital expenditures, restrictions, delays and cancellations in permitting or in the performance or expansion of projects and the issuance of injunctions limiting or preventing some or all of our operations in affected areas. Additionally, certain environmental laws may result in imposition of joint and several strict liability, which could cause us to become liable as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. For instance, an accidental release from one of our storage tanks could subject us to substantial liabilities arising from environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage and fines or penalties for related violations of environmental laws or regulations.
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Properties that we now or have in the past owned or leased in the U.S. are subject to the federal Comprehensive Environmental Response, Compensation and Liability Act and similar state statutes. 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, 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. Laws and regulations protecting the environment are complex and generally become more stringent over time, which may result in increased costs for future environmental compliance and remediation. Comparable laws and regulations have been enacted in the U.K. Certain health and safety standards promulgated by the Occupational Safety and Health Administration of the U.S. Department of Labor and related state agencies also apply to our operations.
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 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.
The U.K. 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 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. 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. 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. Vehicle manufacturers in the U.S. 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. California and other states have indicated they would pursue more stringent CAFE and GHG standards than required by current EPA and NHTSA standards. Comparable laws and regulations have been enacted in the U.K, including updated standards for cars, vans and heavy-duty trucks for upcoming model years. Our OEMs require lead time to prepare new vehicle models and more stringent regulations could result in increased costs and time constraints or result in our OEMs deciding to increase production targets of EVs in anticipation of such regulations. These developments could also significantly increase our costs of operation as well as reduce our volume of business. For additional information, see Item 1A. 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.
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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
Our operations expose us to the risk of various liabilities, including:
• claims by employees, customers or other third parties for personal injury or property damage;
• natural disasters, such as hail, flood, tornadoes, hurricanes and wildfires; and
• 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.
The automotive retailing business is also subject to substantial risk of real and personal property loss as a result of significant concentration of real and personal property values at dealership locations. Under self-insurance programs, we retain various levels of risk associated with aggregate loss limits and per claim deductibles. 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 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.
For further discussion, refer to Item 1A. 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
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.
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, professional development opportunities, and leadership development training to meet employees’ needs. Employees have opportunities for various certification levels based on training completed and tenure. 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.
Seasonality
Our operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., we generally experience higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. 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.
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Internet Website and Availability of Public Filings
Our internet address is www.group1auto.com . We make the following information available free of charge on our website:
• Annual Report on Form 10-K;
• Quarterly Reports on Form 10-Q;
• Current Reports on Form 8-K;
• Amendments to the reports filed or furnished electronically with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act;
• Our Corporate Governance Guidelines;
• 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”);
• Our Code of Ethics for our Chief Executive Officer, Chief Financial Officer and Controller (“Code of Ethics”); and
• Our Sustainability Report.
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. The SEC also maintains a website at http://sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file and furnish electronically with the SEC.
References to the Company’s website in this Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website, and such information should not be considered part of this Form 10-K.
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