Asbury Automotive Group, Inc.

What they do

Asbury sells new and used vehicles, provides parts and service including collision repair, and arranges financing and vehicle protection products through its dealerships. The company operates in two reportable segments: Dealerships and Total Care Auto, Powered by Asbury (TCA), its F&I product provider that sells products through affiliated dealerships. As of June 30, 2026, it operated 202 new vehicle franchises representing 34 brands, 37 collision centers, and TCA within 14 states. Its new vehicle revenue brand mix for the six months ended June 30, 2026 was 41% imports, 33% luxury and 26% domestic.

Revenue drivers

• New vehicle sales — Second quarter 2026 new vehicle revenue was $2.3 billion, the largest single revenue line; brand mix is diversified across imports, luxury and domestic.
• Used vehicle retail — Second quarter 2026 used retail revenue was $1.1 billion with $66 million gross profit and gross profit per unit of $2,002, up 16% year over year.
• Parts and service — Second quarter 2026 parts and service revenue was $635 million with $374 million gross profit, a higher-margin business spanning repair, maintenance, collision and parts.
• Finance and insurance (F&I) — F&I, offered through TCA and third parties, generated PVR of $2,216 in second quarter 2026; TCA is a separate reportable segment.

Recent performance

Second quarter 2026 revenue was $4.4 billion with gross profit of $753 million and gross margin of 17.2%. Net income was $115 million ($6.25 per diluted share), down 25% from $153 million ($7.76 per diluted share) in second quarter 2025. Adjusted net income was $125 million ($6.82 per diluted share), down 15% from $146 million ($7.43 per diluted share). Same store revenue was $3.8 billion with gross profit of $643 million and operating margin of 5.2%. The company repurchased approximately 668,000 shares for $131 million in the quarter, and 70% of stores were converted to Tekion as of July 28, 2026.

Strategy

Asbury is executing an enterprise technology transformation, converting dealerships to the Tekion dealer management system, with about 70% completed as of July 28, 2026 and rollout scheduled for completion in fall 2026. The company pursues acquisitions and divestitures to adjust its brand and geographic mix, including the July 2025 Herb Chambers acquisition for approximately $1.76 billion and the December 2023 Koons acquisition for approximately $1.50 billion. It also divested franchises in 2025, recording an $80.2 million pre-tax gain. Capital allocation includes share repurchases, with $278 million repurchased year-to-date through June 30, 2026 and approximately $322 million remaining under authorization. Management describes its strategy as balanced automotive retailing and service with a guest-centric focus.

Risks

• Tariffs and trade policy — Changes or increases in tariffs or trade restrictions on vehicles and parts could raise Asbury's inventory acquisition and carrying costs and be passed on to consumers.
• Acquisition integration — Substantially all acquired businesses, such as Herb Chambers, are private companies, and Asbury may face difficulty integrating them or remediating insufficient control activities.
• Indebtedness and leverage — Asbury had a transaction adjusted net leverage ratio of 3.4x at June 30, 2026 and must comply with covenants in its financing and lease agreements.
• DMS conversion execution — The Tekion rollout requires substantial planning and resources and carries implementation expense, including $4 million after tax in second quarter 2026.

Outlook

Management said the Tekion implementation remains on schedule to be completed across operations in fall 2026 and believes it will deliver long-term value through a more personalized retail journey. The company reported being encouraged by operating improvements in converted stores and continues its balanced capital allocation approach, including share repurchases. Management also cited tariffs and general economic conditions as factors that could affect demand and costs.