Zacks Industry Outlook Lithia Motors and Rush Enterprises
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 14 2024
0mins
Should l Buy LAD?
Source: NASDAQ.COM
Industry Challenges: The auto retail industry is facing a slowdown in vehicle sales, with new vehicle sales in the U.S. declining by 2% year-over-year and forecasts for 2024 being lowered, compounded by uncertainties surrounding EV policies under Donald Trump's presidency.
Resilient Companies: Despite these challenges, companies like Lithia Motors and Rush Enterprises are strategically expanding and focusing on shareholder value through buybacks and dividends, showing strong performance and growth potential amidst the industry's difficulties.
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Analyst Views on LAD
Wall Street analysts forecast LAD stock price to rise
8 Analyst Rating
6 Buy
2 Hold
0 Sell
Strong Buy
Current: 304.510
Low
310.00
Averages
388.00
High
500.00
Current: 304.510
Low
310.00
Averages
388.00
High
500.00
About LAD
Lithia Motors, Inc. is a global automotive retailer. The Company is engaged in providing an array of products and services throughout the vehicle ownership lifecycle. The Company offers convenient experiences through its comprehensive network of physical locations, e-commerce platforms, captive finance solutions and other synergistic adjacencies. The Company operates through two segments: Vehicle Operations and Financing Operations. Its Vehicle Operations consist of all aspects of its auto merchandising and service operations, including its retail automotive, recreational vehicles, and motorcycle franchises that sell new vehicles, used vehicles, parts, repair and maintenance services, and vehicle finance and insurance products. Its Financing Operations segment provides financing to customers buying and leasing retail vehicles from its Vehicle Operations. It operates approximately 464 locations representing 52 brands across the United States, the United Kingdom, and Canada.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lithia Motors CEO Expresses Caution on Selling Chinese Brands in the U.S.
- Market Access Challenges: Lithia Motors CEO Bryan DeBoer stated that while the company operates 10 stores selling Chinese brands in the UK, it currently does not plan to sell these brands in the U.S. due to the complexities of franchise rules, highlighting significant market entry barriers.
- Investment Return Considerations: DeBoer emphasized that potential costs, return on investment, and infrastructure needs are major hindrances, particularly as establishing new retail and service operations in the U.S. would require substantial investments, impacting the company's profitability.
- Global Market Dynamics: Chinese brands have seen their global market share increase by nearly 70% over the past five years, posing a threat to U.S. automakers, which necessitates that Lithia Motors closely monitor this trend to adjust its market strategy accordingly.
- Future Collaboration Potential: Although Lithia is not currently looking to sell Chinese brands in the U.S., DeBoer mentioned that the company is building relationships with several Chinese brands and will remain open to potential collaboration opportunities in the future, maintaining market flexibility.
See More
Lithia Motors Cautious on Selling Chinese Brands in U.S.
- Market Expansion Opportunity: Lithia Motors CEO Bryan DeBoer stated that while the company has 10 stores selling Chinese brands in the UK, it currently does not plan to sell them in the U.S. due to strict franchise laws and infrastructure needs.
- Return on Investment Considerations: DeBoer highlighted that entering the U.S. market would require establishing new retail and service operations, necessitating entirely new investments, especially since approximately 50% to 60% of the company's profits come from service and parts, complicating entry.
- Global Market Share Growth: Chinese automotive brands have seen their global market share jump nearly 70% in the past five years, posing a threat to U.S. automakers, particularly with brands like BYD and Nio anticipated to enter the U.S. market.
- Future Collaboration Possibilities: Although Lithia Motors is not planning to be early adopters in the U.S. market, DeBoer mentioned that the company is building relationships with several Chinese brands and will remain open to potential opportunities in the future.
See More
Lithia Motors Reports Mixed Quarter with Resilient Used Vehicle Sales
- Used Vehicle Sales Growth: Lithia Motors reported a 6.1% increase in used revenue on a same-store basis, indicating strong performance in its used vehicle segment despite a soft new vehicle market, which boosts investor confidence in the company's future prospects.
- Decline in New Vehicle Sales: New vehicle sales fell 5.7% year-over-year to $4.626 billion, which may pose challenges to the company's profitability moving forward, highlighting the need for strategic adjustments.
- Capital Return Strategy: The company repurchased over 11% of its outstanding shares in 2025, demonstrating a commitment to effective capital allocation while maintaining a strong balance sheet, which enhances shareholder trust and confidence.
- Dividend Distribution: Lithia Motors approved a dividend of 55 cents per share, expected to be paid on March 20, 2026, reflecting the company's dedication to returning value to shareholders even amid profit pressures, thereby reinforcing market expectations of stability.
See More
Lithia & Driveway Declares Quarterly Dividend of $0.55
- Quarterly Dividend Announcement: Lithia & Driveway has declared a quarterly dividend of $0.55 per share, consistent with previous distributions, indicating the company's stable cash flow and profitability, which is likely to attract more income-focused investors.
- Yield Information: The forward yield of this dividend stands at 0.67%, reflecting the company's competitiveness in the current market environment, potentially enhancing investor interest in its stock.
- Shareholder Record Date: The dividend will be payable on March 20, with a record date of March 6 and an ex-dividend date also on March 6, providing shareholders with a clear timeline for investment decisions.
- Capital Allocation Changes: Changes in capital allocation at Lithia Motors suggest a strategic shift towards a more mature phase, which may impact future investment directions and shareholder return strategies.
See More
Lithia & Driveway Q4 Earnings Report Analysis
- Earnings Miss: Lithia & Driveway reported a Q4 non-GAAP EPS of $6.74, missing expectations by $1.36, indicating pressure on profitability that may affect investor confidence.
- Slight Revenue Growth: The company's Q4 revenue reached $9.2 billion, a 0.3% year-over-year increase, beating market expectations by $20 million, demonstrating some sales resilience in a competitive market.
- Net Income Decline: Adjusted net income for Q4 was $162.2 million, a 21% decrease from $204.2 million in the same period of 2024, reflecting rising costs and market challenges negatively impacting profitability.
- Capital Allocation Shift: Changes in Lithia & Driveway's capital allocation strategy suggest a potential shift towards a more mature strategy to navigate current market conditions and future growth demands.
See More
Lithia & Driveway Reports 2025 Financial Highlights
- Revenue Growth: Lithia & Driveway achieved a record revenue of $37.63 billion in 2025, reflecting a 4% increase, demonstrating strong growth in used vehicles and aftersales despite challenges in the new vehicle market, indicating successful diversification strategies.
- Profitability Decline: The diluted earnings per share for Q4 2025 was $5.72, a 28% decrease year-over-year, highlighting the pressures on margins and new vehicle sales, which may impact investor confidence moving forward.
- Acquisitions and Expansion: In Q4 2025, Lithia acquired 11 stores expected to generate $1.6 billion in annualized revenues, further solidifying its leadership in North America and the UK, enhancing future growth potential.
- Share Repurchase and Dividends: Lithia repurchased over 3 million shares in 2025, representing more than 11% of outstanding shares, and declared a dividend of $0.55 per share, reflecting strong capital management and commitment to shareholder returns.
See More
Lithia Motors CEO Expresses Caution on Selling Chinese Brands in the U.S.
- Market Access Challenges: Lithia Motors CEO Bryan DeBoer stated that while the company operates 10 stores selling Chinese brands in the UK, it currently does not plan to sell these brands in the U.S. due to the complexities of franchise rules, highlighting significant market entry barriers.
- Investment Return Considerations: DeBoer emphasized that potential costs, return on investment, and infrastructure needs are major hindrances, particularly as establishing new retail and service operations in the U.S. would require substantial investments, impacting the company's profitability.
- Global Market Dynamics: Chinese brands have seen their global market share increase by nearly 70% over the past five years, posing a threat to U.S. automakers, which necessitates that Lithia Motors closely monitor this trend to adjust its market strategy accordingly.
- Future Collaboration Potential: Although Lithia is not currently looking to sell Chinese brands in the U.S., DeBoer mentioned that the company is building relationships with several Chinese brands and will remain open to potential collaboration opportunities in the future, maintaining market flexibility.
See More
Lithia Motors Cautious on Selling Chinese Brands in U.S.
- Market Expansion Opportunity: Lithia Motors CEO Bryan DeBoer stated that while the company has 10 stores selling Chinese brands in the UK, it currently does not plan to sell them in the U.S. due to strict franchise laws and infrastructure needs.
- Return on Investment Considerations: DeBoer highlighted that entering the U.S. market would require establishing new retail and service operations, necessitating entirely new investments, especially since approximately 50% to 60% of the company's profits come from service and parts, complicating entry.
- Global Market Share Growth: Chinese automotive brands have seen their global market share jump nearly 70% in the past five years, posing a threat to U.S. automakers, particularly with brands like BYD and Nio anticipated to enter the U.S. market.
- Future Collaboration Possibilities: Although Lithia Motors is not planning to be early adopters in the U.S. market, DeBoer mentioned that the company is building relationships with several Chinese brands and will remain open to potential opportunities in the future.
See More
Lithia Motors Reports Mixed Quarter with Resilient Used Vehicle Sales
- Used Vehicle Sales Growth: Lithia Motors reported a 6.1% increase in used revenue on a same-store basis, indicating strong performance in its used vehicle segment despite a soft new vehicle market, which boosts investor confidence in the company's future prospects.
- Decline in New Vehicle Sales: New vehicle sales fell 5.7% year-over-year to $4.626 billion, which may pose challenges to the company's profitability moving forward, highlighting the need for strategic adjustments.
- Capital Return Strategy: The company repurchased over 11% of its outstanding shares in 2025, demonstrating a commitment to effective capital allocation while maintaining a strong balance sheet, which enhances shareholder trust and confidence.
- Dividend Distribution: Lithia Motors approved a dividend of 55 cents per share, expected to be paid on March 20, 2026, reflecting the company's dedication to returning value to shareholders even amid profit pressures, thereby reinforcing market expectations of stability.
See More
Lithia & Driveway Declares Quarterly Dividend of $0.55
- Quarterly Dividend Announcement: Lithia & Driveway has declared a quarterly dividend of $0.55 per share, consistent with previous distributions, indicating the company's stable cash flow and profitability, which is likely to attract more income-focused investors.
- Yield Information: The forward yield of this dividend stands at 0.67%, reflecting the company's competitiveness in the current market environment, potentially enhancing investor interest in its stock.
- Shareholder Record Date: The dividend will be payable on March 20, with a record date of March 6 and an ex-dividend date also on March 6, providing shareholders with a clear timeline for investment decisions.
- Capital Allocation Changes: Changes in capital allocation at Lithia Motors suggest a strategic shift towards a more mature phase, which may impact future investment directions and shareholder return strategies.
See More
Lithia & Driveway Q4 Earnings Report Analysis
- Earnings Miss: Lithia & Driveway reported a Q4 non-GAAP EPS of $6.74, missing expectations by $1.36, indicating pressure on profitability that may affect investor confidence.
- Slight Revenue Growth: The company's Q4 revenue reached $9.2 billion, a 0.3% year-over-year increase, beating market expectations by $20 million, demonstrating some sales resilience in a competitive market.
- Net Income Decline: Adjusted net income for Q4 was $162.2 million, a 21% decrease from $204.2 million in the same period of 2024, reflecting rising costs and market challenges negatively impacting profitability.
- Capital Allocation Shift: Changes in Lithia & Driveway's capital allocation strategy suggest a potential shift towards a more mature strategy to navigate current market conditions and future growth demands.
See More
Lithia & Driveway Reports 2025 Financial Highlights
- Revenue Growth: Lithia & Driveway achieved a record revenue of $37.63 billion in 2025, reflecting a 4% increase, demonstrating strong growth in used vehicles and aftersales despite challenges in the new vehicle market, indicating successful diversification strategies.
- Profitability Decline: The diluted earnings per share for Q4 2025 was $5.72, a 28% decrease year-over-year, highlighting the pressures on margins and new vehicle sales, which may impact investor confidence moving forward.
- Acquisitions and Expansion: In Q4 2025, Lithia acquired 11 stores expected to generate $1.6 billion in annualized revenues, further solidifying its leadership in North America and the UK, enhancing future growth potential.
- Share Repurchase and Dividends: Lithia repurchased over 3 million shares in 2025, representing more than 11% of outstanding shares, and declared a dividend of $0.55 per share, reflecting strong capital management and commitment to shareholder returns.
See More
