AutoNation Inc.

This report does not constitute a rating action. Overview Key strengths Key risks Resilient business model with diverse revenue streams. Risk of disruption from online competitors, direct-to-consumer sales models, and transition to electric vehicles. Strong history of solid operational execution. Exposure to the cyclical new vehicle sales market. Consistent free operating cash flow (FOCF) generation. Balancing expansion opportunities and share buybacks with maintaining appropriate credit metrics. Despite this, we anticipate profits to shift toward used vehicles and maintenance activity within the parts and service (P&S) segment to increase as consumers keep their vehicles longer. The strength of the P&S business is expected to stabilize margins and sustain credit metrics within our rating triggers, albeit with reduced cushion. We continue to

...We continue to forecast AutoNation's new vehicle gross profit per unit (GPU) will moderate in 2025 and 2026, along with a drop in new vehicle volumes over the next 12 months, as tariff- induced price increases dampen demand. Despite this, we anticipate profits to shift toward used vehicles and maintenance activity within the parts and service (P&S) segment to increase as consumers keep their vehicles longer. The strength of the P&S business is expected to stabilize margins and sustain credit metrics within our rating triggers, albeit with reduced cushion. We continue to project that EBITDA margins will normalize but remain above pre-...

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