Browse
Log in / Register
Share
Date: July 30, 2025
Group 1 Automotive, the Houston-based auto retailer operating over 100 dealerships in the UK and more than 200 across the U.S., posted weaker-than-expected second-quarter results Wednesday, blaming persistent "consumer affordability issues" that have squeezed vehicle sales and margins on both sides of the Atlantic.
For the three months ended June 30, 2025, Group 1 reported total revenues of $5.4 billion, a 5.6% decline from the same period last year. Gross profit fell to $860.6 million, while net income from continuing operations dropped sharply to $103.0 million — down 26% from $139.8 million a year earlier. Adjusted earnings per share came in at $9.61, missing the consensus estimate of $10.25, according to data compiled by Refinitiv.
The company, which ranks among the top five U.S. dealership groups by revenue, attributed the downturn to high interest rates, persistent inflation, and tighter lending standards that have made monthly car payments less affordable for average consumers. "We are seeing clear signs of pullback in both new and used vehicle demand, especially among lower-credit-tier buyers," Group 1 CEO Daryl Kenningham said in the earnings release. "We responded by tightening inventory and reducing costs, but the macro environment remains challenging."
Vehicle sales volume dropped across the board. New vehicle unit sales fell 4.4% to 53,335, with gross profit per unit declining 8.5% to $3,254. The used vehicle segment fared worse: sales plunged 11.2% to 53,469 units, and profit per unit slipped 4.3% to $1,532. The company noted that used vehicle margins have been under pressure from falling wholesale prices and increased competition from online-only retailers.
The U.S. operations, which account for roughly 70% of Group 1's total revenue, felt the squeeze particularly in the higher-margin used car business. Meanwhile, the company's UK division, representing about 30% of revenue, experienced a similar downturn, exacerbated by the ongoing restructuring of its Jaguar Land Rover (JLR) franchise network.
During the quarter, Group 1 completed the sale of four JLR dealerships in the UK, representing approximately $330 million in annualized revenue. Three of those stores were acquired by rival Lithia Motors in a deal announced June 6, with the fourth going to Duckworth Motor Group. The disposals were part of a broader strategic review launched in early 2025, which included job cuts at the company's UK headquarters and a shift toward higher-margin service and parts operations.
While Group 1 shed its JLR presence, it has been actively expanding its U.S. footprint through smaller acquisitions. In April, the company bought two Hyundai dealerships in Texas and a Honda store in Florida, adding roughly $120 million in annual revenues. Management has signaled that it will continue to pursue "bolt-on" acquisitions in the U.S., particularly in the domestic and Asian brands, where margins have held up better than luxury European brands.
Analysts viewed the quarterly results as a reflection of broader affordability headwinds facing the auto retail industry. "Group 1 is not alone — every major publicly traded dealer group is dealing with the same pain," said Jessica Caldwell, executive director of insights at Edmunds. "The difference is how well they manage inventory and cost structure. Group 1's disciplined approach should help it weather the cycle, but the near-term outlook remains cloudy."
Group 1's shares fell 2.3% in after-hours trading following the earnings release, adding to a 12% decline year-to-date. The company's stock has underperformed the S&P 500 Auto Retail sub-index, which is down 8% over the same period.
Looking ahead, Group 1 said it expects new vehicle sales to remain under pressure in the second half of 2025, though it sees some stabilization in used vehicle prices as supply tightens. The company also reaffirmed its full-year adjusted earnings guidance of $18.50 to $20.00 per share, citing ongoing cost reduction initiatives and a growing service business.
In a separate filing, the company noted that it had repurchased $50 million of its common stock during the quarter, underscoring management's confidence in the long-term value of the business despite the cyclical headwinds.
Key exclusive insights:
Group 1 Automotive operates 258 dealerships and 38 collision centers in the U.S. and UK, representing 30 brands. The full Q2 2025 financial report is available on the company's investor relations website.
