Key Highlights

  • Revenue was USD 4.4 billion, down 8%, while new vehicle revenue fell 9% to USD 2.293 billion.
  • Net income fell 29% to USD 105 million, or USD 5.84 per diluted share; adjusted EPS was USD 6.16.
  • Parts and service gross profit fell 5% to USD 371 million, as 47 stores converted to Tekion in the quarter.
  • Net leverage stood at 3.5x with USD 1.0 billion of liquidity, and USD 278 million funded buybacks year to date.

Lower Volume Pressures Earnings

Asbury Automotive (NYSE:ABG) reported on Tuesday net income of USD 105 million, down from USD 147 million a year earlier, or USD 5.84 per diluted share against USD 7.52. Adjusted net income fell 21% to USD 111 million, or USD 6.16 per share, compared with USD 140 million and USD 7.17. The prior-year adjusted figures excluded a USD 27 million net gain on divestitures.

Gross profit was USD 732 million at a 16.6% margin, 14 basis points lower than a year earlier. Same-store new vehicle units fell 8%, and chief executive Dan Clara attributed 5 percentage points of that decline to electric vehicles. Electric vehicle sales fell 76% after tax credit eligibility ended in 2025. The average new vehicle selling price was flat at USD 52,427.

Service, Used Vehicles and Technology Change

Parts and service revenue was USD 644 million against USD 659 million a year earlier, and gross profit fell to USD 371 million from USD 389 million as the company converted 47 stores to the Tekion platform in the quarter. The last active stores moved over in October. In the longest-tenured Tekion markets, customer pay gross profit rose 7% and total parts and service gross profit rose 5%.

Used vehicle retail unit volume was 34,586, up 4.5% from the second quarter, and used retail gross profit rose 1% to USD 61.8 million. Finance and insurance gross profit per vehicle retailed was USD 2,176, or USD 2,450 on an adjusted basis, which excludes noncash deferrals tied to protection products. A senior finance executive said those deferrals remain a headwind into 2027.

Adjusted selling, general and administrative expense was 67.4% of gross profit. Management projects the ratio to reach the low 60% range by the end of 2027 as the platform matures.

Balance Sheet and Legal Items

Liquidity was USD 1.0 billion, and the transaction adjusted net leverage ratio was 3.5x. Management named a reduction below 3x by mid-2027 as a priority. Asbury repurchased about 1.35 million shares for USD 278 million through September, leaving USD 322 million on the authorization. Capital expenditures for 2026 are projected at USD 270 million to USD 275 million.

New vehicle inventory stood at 53 days of supply against 58 a year earlier, and management said it cut Stellantis inventory by about 1,000 units to manage floorplan costs. An FTC administrative proceeding against the company was dismissed in early October.

Dealership Metrics to Follow

Tracking points include adjusted selling, general and administrative expense relative to gross profit, parts and service gross profit growth after the conversion, and new vehicle gross profit per unit within the USD 2,750 to USD 3,000 target range, which stood at USD 2,949.

Further items are net leverage against the 3x goal, the effect of protection product deferrals, and electric vehicle volume as the 2025 comparison period passes.