Financial Data and Key Metrics Changes - The company reported a 25% growth in adjusted EPS, reaching $5.01 for the quarter, an increase of nearly $1.25 from the previous year [4][15] - Total revenue for the quarter was $7 billion, reflecting a 7% increase year-over-year [12] - Adjusted net income increased by 18% to $191 million compared to $162 million a year ago [15] - Cash flow for the quarter was strong, with adjusted free cash flow being 1.7 times that of 2023 [10] Business Line Data and Key Metrics Changes - Same-store sales of new vehicles increased by 4.5%, with domestic segment growth leading at 11% [6] - Used vehicle gross profit increased by 3%, with unit sales up 4% overall [7][18] - Customer financial services gross profit reached a record high, increasing by 12% from a year ago [8][19] - Aftersales revenue increased by 6%, with gross profit up 7%, driven by customer pay [22] Market Data and Key Metrics Changes - Year-to-date light vehicle sales averaged 16.3 million units, with retail sales averaging around 13.6 million [5] - Industry inventory remains low at about 2.6 million units, down from the pre-pandemic norm of 4 million units [4] - The company reduced its BEV inventory by approximately 55% from year-end to around 1,550 units [7] Company Strategy and Development Direction - The company is focused on capital allocation, with over $1 billion deployed year-to-date for share repurchases and acquisitions [24] - The strategy includes maintaining higher inventory levels for used vehicles to support sales growth [41][45] - The company aims to improve franchise density and portfolio in existing markets through acquisitions [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall market conditions for new and used vehicles, noting reasonable holding patterns [4] - The company anticipates tougher comparisons in Q4 due to higher sales figures from the previous year [5] - Management expects improved dynamics in supply and demand for BEVs in Q4, potentially alleviating margin pressures [30] Other Important Information - The company has expanded its presence in key markets with acquisitions of multiple dealerships [11] - The finance portfolio has more than doubled since last year, now exceeding $2 billion, with improving credit performance metrics [20][21] Q&A Session Summary Question: Can you quantify the variable gross per unit changes from 2Q to 3Q? - Management noted that the decrease was primarily due to a significant increase in BEV mix and compression in domestic combustion sales, with expectations for improvement in Q4 [29][30] Question: Is there any reason the record level of finance and insurance per unit won't continue? - Management expressed confidence in the continued growth of finance and insurance contributions, driven by value-added products [32] Question: Any concerns regarding auto credit trends and consumer health? - Management reassured that the portfolio's performance is in line with expectations, with no acceleration in delinquencies or repossessions [38][39] Question: Update on used car business growth and profitability initiatives? - Management indicated that while growth is above industry levels, they are maintaining higher inventory levels to support sales, which may impact margins temporarily [41][45] Question: What is driving the gross margin expansion in service and parts? - Management attributed the expansion to increased volume and pricing, alongside effective technician hiring and training initiatives [49][50] Question: How is the company viewing competition in the used car market? - Management sees opportunities for consolidation in the fragmented used car market and is focused on maintaining strong sourcing strategies [66][68]