Lithia Motors revealed it had sold 271,596 new vehicles in 2022, beating the nation’s longtime frontrunner AutoNation by 40,000 units.
In Q4 alone, Lithia made 68,159 new vehicle sales, a 5.2% year-over-year increase. This performance allowed it to surpass its 2021 annual sales by 4.2%. AutoNation also experienced a successful holiday season, improving its quarterly new vehicle performance by 4.3%, but falling 8,085 units short of its competitor.
This is the first time since 1997 that AutoNation has failed to earn the No. 1 spot in U.S. vehicle sales. Although part of this change is attributable to its declining vehicle sales, which dropped 12% in 2022 to 229,971, an even more important factor is the dealer group’s slowing acquisitions efforts. The company, which was considered to be the nation’s largest retailer until last month, acquired 20 locations in 2021, but only four in 2022.
In comparison, Lithia Motors has continuously expanded its dealership network without falter since 2014, acquiring 32 locations in 2022 alone. With over 290 storefronts, it now claims to have surpassed AutoNation in size, making it the biggest dealer group in the U.S.
However, this growth does not come without cost. Speaking to analysts shortly after Lithia Motors published its Q4 report, CEO Bryannas DeBoer noted that the company had decided “to utilize the majority of [its] cash flows towards acquisitions rather than redistributing them primarily towards shareholders or paying down debt.” Although the brand’s newfound size and competitive edge are impressive, the long term sustainability of their growth is doubtful.
Predictions for the 2023 car market are intentionally ambiguous, as analysts remain unsure whether logistical improvements will normalize the market, or if a recession and looming affordability crisis will prevent an economic recovery. Whether Lithia Motors and AutoNation retain their positions into 2024 will depend on their ability to adapt to the changing business.
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