Lithia & Driveway’s adjusted net income fell to $227.6 million in the second quarter, from $240.9 million a year earlier. Its adjusted earnings per share rose 9%, to $10.03. Both figures sit in the same July 29 earnings release, and the gap between them explains how America’s big publicly traded dealer groups are getting through a year of thinner car deals: they are making less money and dividing it among a lot fewer shares.
The six groups together earned $951 million in adjusted net income in the quarter, down 11% from $1.07 billion, according to the Q2 2026 public-dealer report from The Presidio Group, an advisory firm that represents dealers when they buy and sell stores. That is roughly $120 million less profit. Nobody escaped. By Presidio’s count, Penske Automotive Group fell 5%, Lithia 6%, AutoNation 10%, Asbury 14%, and Group 1 and Sonic about 23% each.
I read all six earnings releases alongside the Presidio report. The decline is real, and most of it comes from one place, the profit on each new car. The companies’ response tells you how long they expect that to last.
The dealer’s cut on a new car shrank by about $440
Gross profit per unit, or GPU, is the gap between what a store paid for a car and what it sold it for. It comes before salespeople’s commissions, advertising and the interest on the floorplan loan that finances the inventory sitting on the lot. Presidio put the six groups’ same-store new-vehicle GPU at $3,161 in the quarter, down 12.3% from a year earlier. Working backward, that puts last year’s figure near $3,600, so each new car brought in about $440 less. That’s The Auto Wire’s math, not Presidio’s. Same-store new-vehicle sales also slipped 2.5%.
The company filings show how wide the spread is. AutoNation’s same-store new GPU fell 15.5% to $2,359, according to its July 31 release. Asbury’s fell 18% to $2,896. Sonic’s fell 16% to $2,872. Group 1’s U.S. stores dropped 12.0% to $3,221. Penske, whose new retail figure was the highest of the six at $4,782, still gave up 10.4%.
Some of that decline is a hangover. Presidio said the year-over-year comparison was hurt by the tariff-driven sales surge in the second quarter of 2025. That was the spring when shoppers rushed to buy before import tariffs reached window stickers. A showroom full of people afraid prices are about to jump doesn’t need to discount, so that quarter’s margins were unusually fat. Measured against the quarters since, the picture is flat. Presidio described per-vehicle profit as stabilizing over the last few quarters, and Penske’s July 29 release said its new-vehicle GPU fell by $1 from the first quarter.
Group 1 chief executive Daryl Kenningham did not blame the calendar. “While our second quarter results softened due to consumer affordability issues,” he said in the company’s earnings release, Group 1 kept working on its long-term plans. Affordability is the harder problem, because it doesn’t go away when the comparison base gets easier. The average new car now costs more than $50,000, and a dealer can’t hold a fat margin on a car the customer can barely finance.
How AutoNation and Lithia turned lower profit into higher EPS
Earnings per share is profit divided by the number of shares. When a company buys back its own stock and retires it, the bottom of that fraction shrinks, and per-share earnings can rise while total profit falls.
AutoNation is the cleanest example. Adjusted net income fell 10%, to $187.8 million from $209.2 million. Adjusted EPS rose 2%, to $5.56 from $5.46. The difference is the share count. AutoNation’s weighted average diluted shares dropped to 33.8 million from 38.3 million, nearly 12% fewer in a year. The company spent $457 million on buybacks in the first half of 2026 and another $316.5 million buying four dealerships.
Lithia did the same thing at a larger scale. Its diluted share count fell 13.1%, to 22.5 million. It bought back about 854,000 shares in the second quarter alone, at a weighted average price of $284, for $242 million, and raised its quarterly dividend 23% to 70 cents. Asbury repurchased $278 million of stock in the first half, its July 28 release shows. Asbury’s adjusted net income fell to $125 million from $146 million, while adjusted EPS slipped only 8%, to $6.82. At Group 1 and Sonic, per-share earnings fell less than profit did, about 17% at each.
Buybacks return cash to shareholders, and they are a vote by management that the stock is cheap compared with the earnings it expects. They also spend the cushion. Presidio counted the peer group’s liquidity at $6.59 billion on June 30, down from $7.56 billion at the end of 2025. That is still well above the $4.04 billion the same companies held at the end of 2019. My read is that executives are betting thinner margins are the new normal and not the start of a slide. If they’re wrong, they will face the next downturn with less cash than they had in January.
The people with the best view of one of these businesses made a bigger bet. Penske Corporation and Mitsui & Co., which together owned 72.6% of Penske Automotive Group, agreed on Oct. 15 to buy out the remaining shareholders at $212 a share in cash. The deal values the company at about $16.3 billion including debt and is expected to close in the first quarter of 2027. Penske posted the smallest profit decline of the six. Its owners decided they wanted all of it. Our breakdown of the Penske deal covers who is lending the money.
AutoNation’s profit doubled and fell 10% in the same quarter
Every figure above is “adjusted,” and the label matters. AutoNation’s GAAP net income, the number the accounting rules require, more than doubled to $182.1 million from $86.4 million. That jump comes almost entirely from a year-ago charge. In the second quarter of 2025, AutoNation wrote down $141.3 million before taxes, mostly $71.7 million in franchise rights and $65.3 million in goodwill. Adjusted results strip that out, and on that basis profit fell.
Sonic shows the same split. It reported GAAP net income of $57.4 million against a loss of $45.6 million a year earlier, while its adjusted net income fell 23% to $58.3 million. Two honest headlines about the same company can point in opposite directions. Check which number a headline is using before deciding whether a dealer group had a good quarter.
Service bays and finance offices are carrying more of the load
When the sales floor slows down, dealers lean on parts and service, which bring in steady margins whether or not anyone buys a car. That growth is thinning out. Presidio measured same-store fixed-operations gross profit up 1.6% in the second quarter and 3.0% for the first half. The range ran from Penske’s 3.4% gain to a 0.1% decline at Group 1. AutoNation’s same-store after-sales gross profit rose just 0.1%. Its chief financial officer’s warning about that business knocked more than 10% off the stock in a day last month.
Sonic’s breakdown shows who is paying. Its franchised stores’ same-store parts, service and collision gross profit rose 2%. Within that, customer-pay work, the jobs owners pay for themselves, grew 1%, and warranty work, which the automaker pays for, grew 3%. Warranty volume follows recalls and covered failures, not owners’ willingness to spend. When it grows three times as fast as customer-pay work, more of the service drive’s growth is coming from the automaker’s checkbook than from the people driving the cars.
The finance office is holding steadier. Lithia’s same-store finance-and-insurance income per vehicle was $1,811, against $1,814 a year earlier, while its new-car GPU fell 11.8%. That makes the loan, the service contract and the tire-and-wheel package a bigger share of the dealer’s profit on every deal. AutoNation has gone further and become the lender. Its in-house AutoNation Finance had $2.59 billion in net auto loans on its books at June 30, up from $1.70 billion a year earlier, and set aside $20.1 million for credit losses in the quarter. A dealer group that holds its own loans keeps the interest and the risk. With repossessions climbing even among borrowers with good credit, the risk side of that ledger grows with every loan.
Costs are the other lever. Presidio found adjusted selling, general and administrative expenses fell to 69.0% of gross profit in the second quarter, from 71.6% in the first, with Group 1, Lithia and Asbury improving the most. Asbury CEO Dan Clara called the quarter “a significant milestone in our enterprise technology transformation,” a reference to the new systems running in its converted stores.
Third-quarter reports start Oct. 27
The next test arrives within days. Asbury reports on Oct. 27, Sonic on Oct. 29 and AutoNation on Oct. 30. The third-quarter comparison carries its own distortion. The federal clean-vehicle tax credit ended for vehicles acquired after Sept. 30, 2025, and buyers who wanted an EV rushed to beat that deadline. Stores with heavy EV sales will be measured against another inflated quarter.
The figure to watch is sequential new-vehicle GPU. If it holds near the low $3,000s, the year-over-year declines will shrink on their own by early 2027, and the buyback bet will look smart. If it keeps sliding, these companies will be absorbing a squeeze with less cash and fewer shares to spread it across. Penske will drop out of the public comparison once its deal closes, leaving five.
For shoppers, the $440 is real money, but it went to whoever was across the desk at the right moment, and not evenly. A smaller markup on the car doesn’t mean a cheaper deal if the rate, the service contract or the add-ons make up the difference in the finance office.
Did your last new-car deal feel better than the one you would have gotten a year ago, or did the savings on the sticker disappear by the time you signed the loan paperwork?