Group 1 Automotive, Inc.

Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's first quarter 2025 financial results conference call. Please be advised that this call has been recorded. I would now like to turn the call over to Mr. Pete Dulong-Shaw, Group 1's Senior Vice President, Manufacturers Relations and Financial Services. Please go ahead, Mr. Dulong-Shaw.

Okay, and thank you, Jacob, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results that we will refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply, conditions of markets, successful integration of acquisitions, and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call, Darrell Kenningham, our President and Chief Executive Officer, and Daniel McHenry, Senior Vice President and Chief Financial Officer. Okay, so now I'll hand the call over to Darrell.

Thank you, Pete. Good morning, everyone. Thanks to our teams in the UK and the US, we were pleased with our performance in the first quarter. Let me start with our UK business. Our UK business is on a good track. In the first quarter, the UK market overall was up 6.4%, while the retail or private market was up 9.5%. Group 1 delivered record UK results in the first quarter, achieving our internal profit and cost targets. We're extremely pleased with the integration of our acquisitions in the UK, which has substantially grown our market presence there. We're back to pre-acquisition levels on SG&A as a percentage of gross profit and on track to take out 10% of our headcount and save north of 30 million pounds this year, most of it in the first half. In addition, we are aligning our business processes across our entire UK platform, including our used car pricing and acquisition processes, technician recruiting and compensation plans, customer contact centers, and finance and insurance products. Our team remains focused on managing our legacy business operations and our same-store SG&A leverage trended down year over year. We delivered improvement across many key financial and operating metrics. Record new and used vehicle volumes helped offset moderating new and used vehicle GPUs on a same store basis. Our used vehicle management has improved with better vehicle aging and significantly lower same store wholesale losses year over year. Technician productivity has improved and our total gross margins have expanded. We will continue to optimize our UK business. Thanks to our strong OEM engagement and acquisition approvability, in the quarter we added three Toyota and one Lexus dealership. At the same time, we undertook the strategic closure of eight standalone used vehicle sites and three less accretive franchise sites. This strategy mirrors the approach taken in the U.S. over the past two years, improving our performance and performance we believe, leading to higher shareholder returns. Now turning to our U.S. business. Our U.S. team managed the business very well in the first quarter. New and used vehicles and revenues sold were up on an as-reported and same-store basis. F&I performance performed well in the quarter, up $98 on a same-store basis. As used vehicle finance, vehicle service contract, and other product penetrations improved. We continue to view after sales as a differentiator at Group 1, and we were pleased with our performance in the quarter. Customer pay was up over 6% to go along with a nearly 30% increase in warranty revenue. We continue to believe that after sales is the most under-invested area of our business. By the end of the year, we will be nearly finished with our workshop air conditioning project, having invested over $25 million in our technicians. We are converting some of our collision footprint into traditional service operations, expecting to increase capacity where needed for the higher margin service business. Adding human capacity is a critical leverage point in driving continued performance growth. We ended the first quarter of 2025 with our U.S. technician headcount nearly 8% higher than the year-ago period. Given our flexible scheduling, all-day Saturday focus, and improving technician productivity, we still have significant capacity in our existing dealerships to increase our after-sales business, and we look to be even more aggressive in the future. In the U.S., in the first quarter, we didn't leverage SG&A as well as we could have. We had some creep in January and February in the variable part of our business, specifically compensation and outside services. As a result, we put some focus on it and saw some improvement in March, continuing to monitor it, and we'll take additional steps as needed. In the fourth quarter, we also kicked off a branding effort in the U.S. We're in a number of our dealerships. will be rebranded with a Group 1 name. This project, combined with our integrated marketing and customer data efforts, will open opportunities across our footprint. It's important to note that we continue to believe that the retail automotive business is a local business, and that's where we'll put our emphasis. We've learned a great deal about this model from our UK business, where all of our dealerships are already branded with a Group 1 name. Lastly, a few thoughts on the evolving US landscape and broader global backdrop. There's a great deal of conjecture about Washington and the impact the new administration's policies have on our trading partners, automotive retailers, OEMs, and consumers. That's an ever-moving target. In our view, the best way to capitalize on these changes is to ensure that Group 1 stays nimble and focused on execution. We continue to see demand across all lines of service. However, we are being cautious moving forward. Expectations are that new and used vehicle GPUs could remain elevated as inventories tighten from imposed tariffs. We have deferred some capital expenditure projects and have reevaluated some discretionary spending. We also have contingency plans in place Should we see a marked change in the competitive environment? Now shifting to capital allocation. We continue to balance acquisitions and dispositions with repurchasing our shares. In the first quarter of 2025, we acquired $100 million of revenues and bought back another 2% of the company for $122.8 million. At current valuation levels, we believe buying back stock at every opportunity makes sense, especially given our liquidity position. And we will continue to optimize our portfolios in the U.S. and the U.K. Testament to that is that since the beginning of 2023, we've bought assets generating $5 billion in annual revenue and disposed of assets generating billion dollars in revenue. Properly allocating our shareholders' capital will always be our highest priority. While we regularly evaluate other business adjacencies in this environment, we believe staying focused on the new vehicle retail franchise business is the best use of our shareholders' capital. We will continue to be acquisitive, but we are also being very measured in valuing acquisitions. engaging only in deals that we feel provide long-term value for Group 1 shareholders. And now I'll turn over the call to our CFO, Daniel McHenry, for an operating and financial overview.

Thank you, Darrell, and good morning, everyone. In the first quarter of 2025, Group 1 Automotive reported quarterly record gross profit of $892 million. adjusted net income of $134.7 million, and quarterly adjusted diluted earnings per share from continuing operations of $10.17. Starting with our U.S. operations, revenue growth on our reported basis and same-store basis occurred across all lines of business, with new vehicle revenues leading the way at 9.4% and 7.4% respectively over a comparable prior year quarter. We experienced higher new vehicle units sold on a reported basis and a same store basis of 7.1% and 5.2% respectively. This reflects the resiliency of demand, our operational execution, and the value generated from the ability to drive incremental volume through our dealership acquisitions. At the same time volumes increase, we saw prices increase by 2.2% on a reported and same store basis, coupled with the decline in GPUs of 7.5% and 9.6% respectively. These dynamics of lower GPUs and higher volumes helped us hold same store and reported gross profit to a modest decline of less than 0.9% and 4.9% respectively versus the prior year comparable period. Much like new vehicles, we saw a similar pattern for used vehicles. Higher units sold, higher prices, and lower GPUs versus the prior year comparable period. GPUs were only down $55 and $66 on a reported and same store basis, or 3.1% and 3.8% respectively. We believe our ability to hold gross profit to modest declines while driving volume against higher prices versus the prior year comparable period is a testament to our process, discipline, and use of technology with pricing of used vehicles. Sequentially, units sold were up 2.4% and we were able to increase GPUs by $230 or 15.6% while prices fell 2.1%. Our first quarter F&I GPU of $2,426 is up $11 and $86 sequentially and year over year respectively. The performance by our F&I professionals has been outstanding to maintain GPU disciplines. Shifting gears to after sales. After sales revenues increased 7.3% and 5.6% on a reported and same store basis respectively. These revenue increases coupled with slight margin increases generated growth in gross profit of 8.5% and 6% on a reported and same-store basis respectively. Same-store customer pay and warranty revenues comprised of 70.8% of the total same-store after-sales revenues for the first quarter versus 67% for the prior comparable quarter. Warranty work is up virtually across all brands, However, Toyota and Honda have the largest year-over-year increase generated by some larger recalls ongoing in the first quarter. We expect this work to continue for some time given the nature of the repairs. In the case of Toyota, we're seeing increased work from the open Tundra engine recall. Wrapping up the U.S., let's turn to SG&A. US adjusted SG&A as a percentage of gross profit increased 228 basis points sequentially to 66.9%. We have refocused our efforts on operational efficiency and resource management to bring these metrics in line with historical levels. Turning to the UK, what an outstanding quarter. Acquisition activity fueled all-time quarterly growth in total revenues and gross profit, leading to a 92% and 109.6% year-over-year increase, respectively. We were pleased with the growth in gross profit of 8.7% on a same-store basis, thanks to improvement in new vehicles, after-sales, and F&I. Same-store retail gross vehicle units sold increased nearly 6% year-over-year, and GPUs decreased by 10.7%. The increased volume helped limit the decline in gross profit of approximately 5% on a constant currency basis. Same-store wholesale losses per unit improved to $8 from $842 loss compared to the prior year quarter, respectively. After sales is continuing to be in a positive growth path, with a 3.5% increase in same-store revenues on a constant currency basis and almost 6% increase in same-store gross profit on a constant currency basis over prior year quarter. Same-store adjusted SG&A as a percent of gross profit declined 78 basis points versus the prior year quarter. We will continue to focus on cost control and business process efficiency as we execute our business integration activities. We incurred 11.1 million of non-requiring restructuring costs in quarter one 2025 in relation to our ongoing UK restructuring plan. Turning to our balance sheet and liquidity. Our strong balance sheet, cash flow generation, and leveraged position will continue to support flexible capital allocation approach. As of March 31st, our liquidity of $1 billion comprised of accessible cash of $176 million and $819 million available to borrow on our acquisition line. Our rent adjusted leverage ratio as defined by our U.S. syndicated credit facility was 2.7 times at the end of March. Cash flow generation through the first quarter of 2025 yielded $138 million of adjusted operating cash flow and $105 million of free cash flow after backing out $33 million of CapEx. This capital was deployed in the same period through a combination of acquisitions, share repurchases, and dividends, including the acquisition of $100 million in revenues through March 31st $123 million, repurchasing approximately 287,000 shares at an average price of $428.33, and $6.6 million in dividends to our shareholders. Subsequent to the first quarter, we purchased 100,918 shares under a Rule 10b-5-1 trading plan, had an average price per common share of $385.28 for a total cost of $38.9 million. This has resulted in an approximate 3% reduction in our share count since January 1. We currently have $314 million remaining on our board-authorized common repurchase plan. As of March 31st, approximately 60% of our $5 billion in floor plan and other debt was fixed. This would result in an annual EPS impact of about $1.21 for every 100 basis point increase in the secured overnight funding rate. For an additional detail regarding our financial condition, please refer to the schedules of additional information attached to our news release, as well as of our investor presentation posted on our website. I will now turn the call over to the operator to begin the question and answer session. Operator.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the star keys. To withdraw your question, please press star, then two. We ask that you please limit yourself to one question and one follow-up. The first question comes from Rajat Gupta with JP Morgan. Please go ahead.

Great. Thanks for taking the question. I just had one question firstly on the pre-buy comment in the slide deck. Is there any way for us to estimate how much of the volume like late March, what you might be seeing there in early April is driven by pre-buy versus what you feel is like normal business course And then anything, you know, that you've seen since the pre-buy started, you know, maybe last week, last couple weeks, you know, has the traffic sustained? You know, have you started to see it slow down? Any color you can give there on how things have trended and just what our expectations are, you know, for the remainder of the year, both the new and used cars. And I had one quick follow-up on SG&A.

Good morning, Rajat. This is Daryl. I'll speak to March. My estimate is in the last 10 days of March or so, we saw probably a 5% improvement in our traffic counts. And we saw grosses firm some during that time period. Being the end of a quarter, sometimes it's harder to tell. you know, what is driven by the end of quarter activity on OEM incentives, things like that with their targets. Generally, our estimate was about a 5% lift in those last 10 days or so.

Roger, this is Daniel here. One thing I would add to that is, you know, a big part of our portfolio, as you know, is Toyota Lexus. You know, when you look at the day supply that we ended the quarter in for Toyota and Lexus at, you know, 12 and 5 days respectively, We didn't actually have that much inventory in those two brands in particular going into that final buying period anyway. So I think what we sold in those brands in particular, we probably would have sold anyway.

Our margin patterns, Rajat, at least on new cars, didn't differ materially between the third month of the quarter in Q1 versus... Q4 of last year or Q3 of last year. So, you know, you always get a little bump in the third month of the quarter. We got a little bump in Q1. We got a little bump in Q4, but it wasn't anything materially different.

Anything on April? Like, you know, how has April shaped out so far? You know, we did notice, like, from our checks, like, early April was strong, but maybe things have cooled off in recent weeks. Any comment on that?

Well, I think your read's probably pretty good. The thing that I'm watching is our inventories. They were a little tight at the end of March, and some of the OEMs are being a little cautious about allocations right now. Nobody's taking any drastic steps, but we ended the quarter around 20,000 units of inventory, which is the lightest it's been in over a year. So we're kind of watching that. That will affect, obviously, gross patterns, and that supply can impact some of the brands. You saw that with Toyota last year quite a bit.

Thank you. The next question comes from Daniel Hagen with Morgan Stanley. Please go ahead.

Thanks. So can you speak a little bit more to the efficiencies you've seen so far with your cluster marketing initiative? You spoke to some learnings from branding in the U.K. business. What proof points can we look to in localizing inventory and reconditioning?

It's very early still, and we are still literally in the process of renaming the stores, which is kind of a first step in it. We've done one reconditioning pilot up in Boston that we're still assessing and evaluating, and so it's hard for us to quantify what the what it's done for us so far. We expect that what we'll be able to do is leverage our... We've brought a lot of our marketing and customer data management in-house concurrent with this change. And what we believe it will allow us to do is manage our customers on a more proactive basis across our store base. And that would be on a local basis, not... across the country or anything like that. We still believe our business is local. So that's where we expect to get leverage and be able to bring customers. We had shared some data earlier about loyalty of customers that buy a used car at a same-brand store versus an off-brand store. Those are things we're trying to leverage with this effort.

Got it. And then any shift to your capital allocation strategy with the current environment? Does the policy uncertainty complexities bring more private dealerships to the table for M&A? How have you seen that evolve, if at all?

I probably haven't seen the uncertainty drive the acquisition environment yet. I had some conversations with some folks yesterday that they feel like it hasn't changed yet. On capital allocation for us, we have deferred some capital projects that were discretionary. And when I say deferred, we've put them off like six months just to see if the environment is still uncertain or if those are ones that we could do. And so we have deferred some of those. We haven't canceled anything. We've reviewed some of our discretionary spending Um, and, and things that, uh, potentially, uh, we could rein in, we did. Um, and so we'll continue to do that. We do have a contingency plan, um, developed in writing that, uh, you know, should something dramatic happen. Um, uh, and we saw that with COVID, you know, something dramatic happened. What are the steps that we would take? And we do have a plan that outlines the steps that we would take, uh, from, you know, least severe to most severe. and the timeframe with which we would execute those. So we're trying to just be prepared, and as we mentioned in our comments, be nimble.

Thank you. The next question comes from John Murphy with Bank of America. Please go ahead.

Good morning, guys. Just wanted to ask first, Daryl, as you think about the increase of 8% in your techs year over year, Just curious how much capacity you think you have if we see a real slowdown at the front end on new and used sales and people hold onto their vehicles longer and we see an uptick in service opportunities. Is that something you think you can capture significantly and is there potentially room to ramp that tech and capacity count even more?

Short answer is yes, John. We feel like there is more capacity. We still have hundreds of of bays that we can grow into in addition to leveraging the bays that we have more efficiently. Even though we added 8% more techs year over year, we also improved our tech productivity year over year. And so we do feel that way. We're looking at some other things that try to drive more efficiency and productivity in our shops, and right now we're just studying those. And, you know, the thing we'll be done with our air conditioning project this year, and just to remind everybody, in a group one shop, the tech turnover is up to nine percentage points lower in a shop that has air conditioning than a shop that doesn't. And so in our minds, that's well worth the tradeoff on the capital spend to be able to have our technicians working in air conditioning and hopefully increasing our retention rate, lowering our turnover, which will effectively increase our capacity as well.

And then just maybe one quick follow-up. There's a lot of attention being paid to tariffs, but there's another significant policy around CARB and NHTSA and the EPA that is pushing EVs still. But that seems like we're going to get some relief on that real soon. I'm just curious, you know, the current state of EVs in the business, how negative the GPUs are and how much they're dragging down the total. And if we get relief on carb, you know, what that means for the business on an operating basis and maybe making acquisitions going forward in carb states.

John, I'll take the first part around the PRUs and inventory in the business. I would say our inventory for EV is really quite good at the moment. We're at I would say record low levels over the last two years, and some of that's what we did last quarter in terms of managing our EV inventory. I would say the drag in GPU that we had seen for EV has reduced over the last quarter. However, we're still seeing about a $1,000 differential between the GPU on a FEV versus an ICE vehicle. Regarding the second part of the question, I'll pass that over to Daryl.

It hasn't changed our view on acquisition strategy in the carb states or not. There's a place for BEVs. Customers continue to vote for them. They're still growing. The economics for the retailers are improving, so it's not something we're certainly afraid of. Hopefully, there will be more natural demand that's out there in the future that we'll see, and That's how we look at it.

Thank you. The next question comes from David Whiston from Morningstar. Please go ahead.

Hey, guys. Good morning. I guess on the UK first, can you talk a little bit about the over 450 people who were let go? What roles were they in?

David, it's Daniel. I would have said initially the cost reductions that we did were around central office functions. That's where we had, I guess, between doing the acquisitions and the original legacy Group 1 stores, where we had double functions. So, you know, two CFOs, two CEOs, two heads of marketing, et cetera. That was kind of the first phase, I would have said. Second phase was centralized facilities like accounting, where we centralized that all into one office or one function. Third phase was we went out to the stores and looked at some store reductions. But again, generally, duplicative roles. That was principally what we have undertaken so far.

Were there any major salesperson reductions? No.

We have technicians and salespeople. As a matter of fact, we're focused on adding technicians and salespeople in some of the EngCape retail stores. They were a little understaffed.

Okay.

It's a market growing in the UK now. I'm sorry, David. It's a market growing in the UK now. We don't want to pull back on the customer-facing positions at all.

Is that why your UK new vehicle inventory is down to 16 days? Or is there another supply chain reason?

It's Daniel here. Traditionally, March is the biggest selling month, March and September of the year in the UK. So effectively, that tends to be cyclical, and that's generally the case. Now, it's slightly lower than we would have expected, but our sales rate was pretty strong in March.

Thank you. The next question comes from Michael Ward with Citi. Please go ahead.

Thanks very much. Good morning, everyone. Good morning, Mike.

From a long-term basis, the UK penetration has gone from under 20% to now, I think, a third of the overall revenue. Can you continue to expand that? Do you see a day where maybe it gets to 50-50?

Mike, this is Daryl. Just so I can repeat the question so everybody can hear, your voice is a little muffled. Would our UK exposure ever get to 50-50 from a third, two-thirds today? You know, never say never, Mike. We don't have any plans to do that. We feel like, you know, certainly the UK market is more rolled up than the US market is, and at least for the foreseeable future, the acquisition opportunities we see are more U.S.-based than U.K.-based. It doesn't mean we won't do them in the U.K., but I don't expect they will be of the scale that you've seen over the last three or four years in the U.K.

Okay. And turning to the U.S., there was some weather impact early in the quarter. Were you able to make that up? Did it have an overall impact on your business? And it looks like parts and services was very strong relative to the market in the U.S. And I think that's despite one or two less business days.

Hi, Mike. It's Daniel here. I would have said that it did have some impact in February in the Northeast and Houston in particular, the stores were closed for a number of days in that period, which makes it pretty difficult to catch up that service work. Generally, when you look at our shops and look at the efficiency and the capacity in our shops that we have today, we're already fairly full, so it's hard to catch that business back.

Thank you. The next question comes from Brett Jordan with Jefferies. Please go ahead.

Hey, good morning, guys.

Hi, Brett.

Good morning, Brett. On the parts and service 30% growth and warranty, is that tied to a major program like the Tundra engine recall? Or I guess how long, you know, what drives that and how long can we expect that kind of a run rate?

Yeah, it was a lot of it was the Tundra number. I think Daniel might have the exact number on how much it was.

Brad, I don't have the number to hand, but Toyota and Honda with a lion's share of that increase. And, you know, Tundra is ongoing currently. So we don't see that dropping off significantly this quarter.

Okay. And I guess we look at parts and service going forward, and obviously the tariff changes daily. But as it stands today, what do you think the

price contribution to parts and service growth would be into the second half are you going to see mid single digits pick up just on price without any traffic as well or I guess how do you reconcile traffic versus ticket today well we were pleased this quarter with our traffic when you look at our increase it was one-third traffic count and two-thirds price which was up from from the past year and we're focused on traffic count you know there's There's been some pricing over the last couple of years, and we're trying not to take some anymore in the after-sales business. Now, you know, if tariffs hit parts, that could potentially obviously change that. But, you know, when you look at, I think, still the retention opportunities, they're still significant, which would be lead us to believe there's traffic count opportunity. One thing that could drive dollars up is the average mileage in early 2025 is up another 1,000 miles from last year, which as mileage increases, that increases usually the dollars per RO. So that could lead to higher dollars.

Thank you. The next question comes from Thomas Wendler with Stephenson Inc. Please go ahead.

Hey, good morning everyone. I just wanted to go back to the UK for a second here. March was registration month and the market was up, called 6%. But Mercedes, Audi, and BMW were all down for the quarter. Does this kind of indicate that the midlines are outperforming luxury and that the luxury buyer is pulling back a bit in the UK?

I think the Audi piece is more product cycle driven, to be honest with you. A lot of their new products come, they launched in Q1, like the new Q5, but we haven't been able to sell them until they get the pipeline full. We were pleased with our Mercedes business and pleased with our BMW business, honestly, in the UK and Q1. I can't say that I could make a general statement about midline buyers versus luxury buyers. Daniel, do you have anything to add to that? I have nothing to add at this moment.

All right. That was the only one for me. Thank you, guys.

Thank you.

Thanks.

Thank you. Reminder to all participants, to ask a question, you may press star, then one. The follow-up question is from Rajat Gupta with J.P. Morgan. Please go ahead.

Great. Thanks for squeezing me back in. The follow-up question rule was pretty strict. I had a question on the SG&A slide. I noticed that your same store head count reduction number is now 8% versus 2019. Last quarter, that number was 6%. I'm curious, has there been more change or turnover that's happened at the stores? Or is this pro forma for Inchcape? I know you're not taking out sales headcount at Inchcape, but maybe like other staffing. So I'm curious if you could just clarify that. That was the only question I had. Thanks.

Rajat, I think that we continue to increase headcount around technicians in particular. That 8% excludes technicians effectively. So that's SG&A within the stores. And we've really focused and concentrating on not adding additional cost whenever it's non-technician.

Rajat, I'll just add one thing. In the U.S., we added over 150 salespeople year over year, but our salesperson productivity with our volume increases was just dead flat year over year. So we're seeing capturing the scale on those additional heads increasing. as well, but there's not a concerted effort to change that.

Understood. Thanks for clarifying, and good luck.

Thank you. The next question comes from Ron Jesico with Guggenheim. Please go ahead.

Yeah, good morning, and thanks for taking my question. You mentioned you had some SG&A creep in the U.S. in the quarter. Maybe I missed this, but is there a way to quantify the impact of the higher spend in January and February and if that was normalized in March or if the process of getting that cost back in line kind of just started in March?

You know, I would have said some of it, Ron. SG&A as a percent of gross was – February, I would have said, was a little weaker. January and February was a little weaker in terms of SG&A leverage. And some of that was possibly around the lack of growth. And we talked earlier about the weather, et cetera, not that I ever really like to give weather as a reason for that. But equally so, we just saw some creep in variable expense, salespeople commission, manager commission, et cetera. And I think there just needs to be some realignment of that. And we realigned some of it in March and continuing in quarter M2.

Okay. And I know we're only kind of three weeks into the potential new world with tariff changes, but I did kind of have a question just on OEM plans from here. It seems like We will start getting some modest price increases starting in May, an emphasis on modest. But during your conversations with your OEM partners, what are they signaling to you kind of with respect to their strategy going forward around volume, price, and I think dealer support incentives are a pretty important topic here?

I think what we'll see is a moderation of incentives first. And then I think on pricing, formal pricing, not just transaction pricing, we'll see them be modest with their increases early. The thing that I'm, I guess, most interested in is parts to see how that is affected and where that's affected. And so that's what they've been signaling to us.

Okay, that's super helpful.

I appreciate you taking my questions. Thank you very much. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.