Group 1 Automotive Posts Record 2025 Revenue, Navigates Market Shifts with Portfolio Reshaping and Shareholder Returns
HOUSTON – Group 1 Automotive (NYSE: GPI) reported a year of record financial performance for 2025, powered by its parts, service, and finance divisions, even as the automotive retailer continued a strategic overhaul of its dealership footprint and prioritized capital returns to investors.
On the company's fourth-quarter and full-year earnings call, President and CEO Daryl Kenningham pointed to the "strength and resilience" of a diversified business model. For the full year, the company achieved an all-time high gross profit exceeding $3.6 billion, including a record $1.6 billion from parts and service, while selling 459,000 new and used vehicles.
CFO Daniel McHenry detailed Q4 2025 revenue of $5.6 billion and gross profit of $874 million. Adjusted diluted earnings per share came in at $8.49. The U.S. market showed strength broadly, though new vehicle sales dipped. Management acknowledged rising consumer affordability concerns, leading to a moderation in new vehicle gross profit per unit from recent peaks. The used vehicle market proved competitive, with per-unit profits under pressure from higher acquisition costs.
Two segments stood out as consistent performers. Finance and Insurance (F&I) remained a bright spot, with per-unit profit rising nearly 3% in Q4, aided by digital finance tools. The aftersales business—comprising parts, service, and collision repair—was again a key profit engine, with customer pay revenues and profits climbing by approximately 5% and 8%, respectively.
The UK operations presented a stark contrast, facing what Kenningham called a "challenging macro environment" marked by weak growth, inflation, and margin pressure from electric vehicle mandates. In response, Group 1 cut over 500 positions and is restructuring, including a potential exit from its Jaguar Land Rover (JLR) franchise. Despite these headwinds, the company is applying U.S.-style operational practices to its UK aftersales, seeing early benefits like increased technician headcount and reduced customer wait times.
Capital allocation was a major theme. In 2025, Group 1 was active on both sides of the ledger: acquiring premium-brand dealerships in high-growth U.S. markets and the UK, while disposing of 13 underperforming or non-core dealerships. The net effect is a reshaped portfolio aimed at higher profitability.
Shareholder returns took center stage. The company repurchased $555 million of its own stock in 2025 and had $350 million remaining under its authorized buyback plan at year-end. Kenningham emphasized a disciplined approach to leverage and acquisitions, vowing to remain "aggressive on buybacks as and when the time is right."
Looking ahead to 2026, management expressed cautious optimism. They see organic growth opportunities, particularly in UK aftersales, and anticipate a boost in premium used vehicle supply from increased lease returns later in the year. Technology investments, including AI for customer management and technician productivity, remain a ongoing focus to drive efficiency.
Analyst & Investor Commentary:
"The record results, especially in F&I and service, validate their diversified model," said Michael Thorne, portfolio manager at Horizon Capital. "The aggressive buyback and portfolio pruning show a management team keen on capital discipline and shareholder value, even if it means taking short-term impairment charges, like on those Audi stores."
"The UK situation is a mess they still haven't fully cleaned up," argued Sarah Chen, an independent auto retail analyst, offering a sharper critique. "Calling it the 'earlier innings' of restructuring after a year of heavy losses and brand exits is an understatement. They're playing catch-up in a market where new entrants are eating their lunch. The U.S. performance is carrying the entire company, and that's not a sustainable long-term strategy."
"As a long-term shareholder, I'm encouraged by the focus on what they can control," commented David Riggs, a private investor from Texas. "The dealership swaps—selling the underperformers and buying into stronger brands and markets—make strategic sense. The buybacks at these prices are also a strong signal of confidence from the board."
"The technician retention numbers and the growth in repair orders are the hidden gems here," noted Priya Sharma, a former service manager now consulting for dealerships. "It shows they're fixing the operational plumbing. In this business, if you can't keep your techs happy and productive, your service drive—which is their cash cow—dries up fast. Their focus there is spot on."