LITHIA MOTORS INC

Exhibit Index

The following exhibits are filed herewith. An asterisk (*) beside the exhibit number indicates the exhibits containing a management contract, compensatory plan or arrangement.

† Substantially similar agreements exist between Lithia Motors, Inc. and each of Michael Cavanaugh, Thomas Dobry, Dianna du Preez, Gary Glandon, George Hines, Cornelis Hogeveen, Christopher S. Holzshu, Edward Impert, Kevin Jarrard, Shawn Kukic, Charles Lietz, Katherine Macaddino, Kris Miller, Tina Miller, Thomas Naso, Bryan Osterhout, Ross Sherman, David Stork, and Boyd Westeren. The “Cash Change in Control Benefits” under the agreements with Michael Cavanaugh, Dianna du Preez, Cornelis Hogeveen, Edward Impert, Kevin Jarrard, Kris Miller, Ross Sherman, and Boyd Westeren provide for 12 months of base salary rather than 24 months.

†† Certain confidential and immaterial terms redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 25, 2026:

To the Stockholders and Board of Directors

Lithia Motors, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Lithia Motors, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and redeemable non-controlling interest, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the Company’s impairment tests over franchise value intangible assets

As disclosed in Note 1 and Note 6 to the consolidated financial statements, the Company had indefinite-lived franchise value intangible assets with a book value of $2,777.4 million as of December 31, 2025. The Company tested its franchise value intangible assets for impairment using a qualitative assessment performed at each individual legal entity level as of October 1, 2025. The Company determined that a $5.8 million impairment existed in 2025.

We identified the assessment of the Company’s qualitative impairment test over franchise value intangible assets for legal entities whose current operating results indicate a higher risk of potential impairment as a critical audit matter. The tests included the qualitative evaluation of factors such as future profitability and

comparable dealership divestitures for entities with recent losses, which required especially subjective auditor judgment.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s franchise value impairment assessment process, including controls related to the identification and development of relevant qualitative factors. We evaluated future profitability assumptions by comparing key financial metrics across entities with similar demographics, including historical legal entity level profitability, and evaluated differences for potential indicators of impairments. We evaluated the Company’s intent and ability to carry out a particular course of action by evaluating the Company’s history of carrying out its stated intentions. Additionally, we evaluated information about recent comparable dealership divestitures to identify potential indicators of impairment.

/s/KPMG LLP

We have served as the Company’s auditor since 1993.

Portland, Oregon

February 25, 2026

To the Stockholders and Board of Directors

Lithia Motors, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Lithia Motors, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and redeemable non-controlling interest, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 25, 2026 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired 17 stores during 2025, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, these acquired stores’ internal control over financial reporting which represented 2% of assets and 1% of revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2025. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of these 17 stores.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Portland, Oregon

February 25, 2026

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

We are the world’s largest global automotive retailer, operating a unique omnichannel ecosystem of comprehensive sales, financing, leasing, and aftersales. In 2025, we were ranked 124 on the Fortune 500. As of December 31, 2025, we operated 455 locations across the United States, the United Kingdom, and Canada representing 54 brands. We connect customers to their mobility needs through seamlessly integrated physical locations, e-commerce platforms, and tailored solutions including captive finance and fleet management. We focus on creating customer loyalty to maximize the potential of each store. This approach enables us to unlock sustained growth by delivering personalized experiences wherever, whenever, and however customers desire.

Basis of Presentation

The accompanying Consolidated Financial Statements reflect the results of operations, the financial position, and the cash flows for Lithia Motors, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Cash, Restricted Cash, and Cash Equivalents

Cash and cash equivalents are defined as cash on hand, cash in bank accounts without restrictions, and highly liquid investments with original maturities of three months or less. Restricted cash consisted of collections of principal, interest and fee payments on finance receivables that are restricted for repayment on borrowings on our securitization facilities before being unrestricted.

Accounts Receivable

Accounts receivable classifications include the following:

•Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received within five toten days of selling a vehicle.

•Trade receivables are comprised of amounts due from customers, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products.

•Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer.

•Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives, and warranty claims.

Receivables are recorded at invoice and do not bear interest until they are 60 days past due. The historical losses related to these balances are immaterial. The long-term portion of accounts receivable was included as a component of other non-current assets in the Consolidated Balance Sheets. See Note 2 – Accounts Receivable.

Finance Receivables

Finance receivables consist of auto loan and lease contracts originated through our Financing Operations, which are secured by the vehicles we sell. Finance receivables are presented net of an allowance for credit losses. The allowance for credit losses represents the net credit losses expected over the remaining contractual life of our finance receivables. See Note 5 – Finance Receivables for additional information on our significant accounting policies related to finance receivables and the allowance for credit losses.

Inventories

Inventories are valued at the lower of net realizable value or cost, using the specific identification method for new and used vehicles, and the lower of cost (first-in, first-out) or market method for parts. The cost of new and used vehicle inventories includes the cost of any equipment added, reconditioning, and transportation.

Manufacturers reimburse us for holdbacks, floor plan interest assistance, and advertising assistance, which are reflected as a reduction in the carrying value of each vehicle purchased. We recognize advertising assistance, floor plan interest assistance, holdbacks, cash incentives, and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold.

Parts purchase discounts that we receive from the manufacturer are reflected as a reduction in the carrying value of the parts purchased from the manufacturer and are recognized as a reduction to cost of goods sold as the related inventory is sold. See Note 3 – Inventories and Floor Plan Notes Payable.

Property and Equipment

Property and equipment are stated at cost and depreciated over their estimated useful lives on the straight-line basis. Leasehold improvements made at the inception of the lease or during the term of the lease are amortized on a straight-line basis over the shorter of the life of the improvement or the remaining term of the lease.

The range of estimated useful lives is as follows:

The cost for maintenance, repairs and minor renewals is expensed as incurred, while significant remodels and betterments are capitalized. In addition, interest on borrowings for major capital projects, significant remodels, and betterments is capitalized. Capitalized interest becomes a part of the cost of the depreciable asset and is depreciated according to the estimated useful lives as previously stated. For the years ended December 31, 2025, 2024, and 2023, we recorded capitalized interest of $8.5 million, $5.4 million and $2.6 million, respectively.

When an asset is retired, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to income from operations, as a component of SG&A.

Leased property meeting certain criteria are recorded as finance leases. We have finance leases for certain locations, expiring at various dates through August 31, 2037. Our finance lease right-of-use assets are included in property and equipment on our Consolidated Balance Sheets. Amortization of finance lease right-of-use assets is computed on a straight-line basis over the term of the lease, unless the lease transfers title or it contains a bargain purchase option, in which case, it is amortized over the asset’s useful life and is included in depreciation expense. Finance lease liabilities are recorded as the lesser of the estimated fair market value of the leased property or the net present value of the aggregated future minimum payments and are included in current maturities of long-term debt and long-term debt on our Consolidated Balance Sheets. Interest associated with these obligations is included in other interest expense in the Consolidated Statements of Operations. See Note 9 – Commitments and Contingencies.

Long-lived assets held and used by us are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider several factors when evaluating whether there are indications of potential impairment related to our long-lived assets, including store profitability, overall macroeconomic factors and the impact of our strategic management decisions. If recoverability testing is performed, we evaluate assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows associated with the asset, including its disposition. If such assets are considered to be impaired, the amount by which the carrying amount of the assets exceeds the fair value of the assets is recognized as a charge to income from operations. See Note 4 – Property and Equipment.

Goodwill

Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets, such as franchise rights, are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged.

Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount of the reporting unit more likely than not exceeds fair value. We have the option to qualitatively or quantitatively assess goodwill for impairment. We test our goodwill for impairment on October 1 of each year. In 2025, we evaluated our goodwill using a qualitative assessment process. If the qualitative factors determine that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, we would further evaluate for potential impairment. We have determined the appropriate unit of accounting for testing goodwill for impairment is at our reporting unit level: North America Vehicle Operations, U.K.

Vehicle Operations, and U.S. and Canada Financing Operations. See Note 6 – Goodwill and Franchise Value and Note 15 – Fair Value Measurements.

Franchise Value

We enter into agreements (franchise agreements) with our manufacturers. Franchise value represents a right received under franchise agreements with manufacturers and is identified on a legal entity basis.

We evaluated the useful lives of our franchise agreements based on the following factors:

•certain of our franchise agreements continue indefinitely by their terms;

•certain of our franchise agreements have limited terms, but are routinely renewed without substantial cost to us;

•other than franchise terminations related to the unprecedented reorganizations of Chrysler and GM, and allowed by bankruptcy law, we are not aware of manufacturers terminating franchise agreements against the wishes of the franchise owners in the ordinary course of business. A manufacturer may pressure a franchise owner to sell a franchise when the owner is in breach of the franchise agreement over an extended period of time;

•state dealership franchise laws typically limit the rights of the manufacturer to terminate or not renew a franchise;

•we are not aware of any legislation or other factors that would materially change the retail automotive franchise system; and

•as evidenced by our acquisition and disposition history, there is an active market for most automotive dealership franchises. We attribute value to the franchise agreements acquired with the dealerships we purchase based on the understanding and industry practice that the franchise agreements will be renewed indefinitely by the manufacturer.

Accordingly, we have determined that our franchise agreements will continue to contribute to our cash flows indefinitely and, therefore, have indefinite lives.

As an indefinite-lived intangible asset, franchise value is tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying value may exceed fair value. The impairment test for indefinite-lived intangible assets requires the comparison of estimated fair value to carrying value. An impairment charge is recorded to the extent the fair value is less than the carrying value. We have the option to qualitatively or quantitatively assess indefinite-lived intangible assets for impairment. We evaluated our indefinite-lived intangible assets using a qualitative assessment process. We have determined the appropriate unit of accounting for testing franchise value for impairment is each legal entity assigned franchise value.

We test our franchise value for impairment on October 1 of each year. In 2025, we evaluated our franchise value using a qualitative assessment process. If the qualitative factors discussed above determine that it is more likely than not that the fair value of the legal entity’s franchise value exceeds the carrying amount, the franchise value is not impaired and the second step is not necessary. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying value, then a quantitative valuation of our franchise value is performed and an impairment would be recorded. See Note 6 – Goodwill and Franchise Value and Note 15 – Fair Value Measurements.

Variable Interest Entities and Securitization Transactions

We maintain a revolving funding program composed of warehouse facilities that we use to fund finance receivables originated by our Financing Operations.

We use term securitizations to provide long-term funding for most of the finance receivables initially funded through the warehouse facilities. In these transactions, a pool of finance receivables is sold to a bankruptcy-remote, special purpose entity that, in turn, transfers the finance receivables to a special purpose securitization trust. The securitization trust issues asset-backed securities, secured or otherwise supported by the transferred finance receivables, and the proceeds from the sale of the asset-backed securities are used to finance the securitized finance receivables.

The securitization trusts established in connection with asset-backed securitization transactions are variable interest entities (VIE). We are required to evaluate term securitization trusts for consolidation. In our capacity as servicer, we have the power to direct the activities of the trusts that most significantly impact the economic performance of the

trusts. In addition, we have the obligation to absorb losses (subject to limitations) and the rights to receive any returns of the trusts, which could be significant. Accordingly, we are the primary beneficiary of the trusts and are required to consolidate them.

We recognize these term securitizations as secured borrowings, which result in recording the finance receivables and the related non-recourse notes payable on our Consolidated Balance Sheets.

These finance receivables can only be used as collateral to settle obligations of the related non-recourse funding vehicles. The non-recourse funding vehicles and investors have no recourse to our assets beyond the related finance receivables, the amounts on deposit in reserve accounts and the restricted cash from collections on finance receivables. We have not provided financial or other support to the non-recourse funding vehicles that was not previously contractually required, and there are no additional arrangements, guarantees, or other commitments that could require us to provide financial support to the non-recourse funding vehicles.

See Note 5 – Finance Receivables and Note 10 – Credit Facilities and Long-Term Debt for additional information on finance receivables and non-recourse notes payable.

Restricted Cash on Deposit in Reserve Accounts

The restricted cash on deposit in reserve accounts is for the benefit of holders of non-recourse notes payable, and these funds are not expected to be available to the company or its creditors. In the event that the cash generated by the related receivables in a given period was insufficient to pay the interest, principal, and other required payments, the balances on deposit in the reserve accounts would be used to pay those amounts. Restricted cash on deposit in reserve accounts is invested in both FDIC insured bank savings accounts as well as money market securities and is included in “Other non-current assets” on our Consolidated Balance Sheets. Restricted cash on deposit in reserve accounts totaled $49.5 million and $43.6 million at December 31, 2025 and 2024, respectively.

Advertising

We expense production and other costs of advertising as incurred as a component of SG&A expense. Additionally, manufacturer cooperative advertising credits for qualifying, specifically-identified advertising expenditures are recognized as a reduction of advertising expense. Advertising expense and manufacturer cooperative advertising credits were as follows:

Contract Origination Costs

Contract origination commissions paid to our team members directly related to the sale of our self-insured lifetime lube, oil, and filter service contracts and finance receivables originations are deferred and charged to expense in proportion to the associated revenue to be recognized.

Legal Costs

We are a party to numerous legal proceedings arising in the normal course of business. We accrue for certain legal costs, including attorney fees and potential settlement claims related to various legal proceedings that are estimable and probable. See Note 9 – Commitments and Contingencies.

Share-Based Compensation

Compensation costs associated with equity instruments exchanged for team member and director services are measured at the grant date, based on the fair value of the award. If there is a performance-based element to the award, the expense is recognized based on the estimated attainment level, estimated time to achieve the attainment level and/or the vesting period. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. The fair value of non-vested share-based awards is based on the closing price of our common stock on the date of grant. We account for forfeitures of share-based awards as they occur. See Note 14 – Share-Based Compensation Plans.

Income and Other Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.

When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, we adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties are recorded as income tax provision in the period incurred or accrued when related to an uncertain tax position. See Note 16 – Income Taxes.

We account for all taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction (i.e., sales, use, value-added) on a net (excluded from revenues) basis.

Concentration of Risk and Uncertainties

We purchase substantially all of our new vehicles and inventory from various manufacturers at the prevailing prices charged by auto manufacturers to all franchised dealers. Our overall sales could be impacted by the auto manufacturers’ inability or unwillingness to supply dealerships with an adequate supply of popular models.

We depend on our manufacturers to provide a supply of vehicles which supports expected sales levels. In the event that manufacturers are unable to supply the needed level of vehicles, our financial performance may be adversely impacted.

We depend on our manufacturers to deliver high-quality, defect-free vehicles. In the event that manufacturers experience future quality issues, our financial performance may be adversely impacted.

We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. Our sales volume could be materially adversely impacted by the manufacturers’ or distributors’ inability to supply the stores with an adequate supply of vehicles. We also receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are recorded as accounts receivable in our Consolidated Balance Sheets until payment is received. Our financial condition could be materially adversely impacted by the manufacturers’ or distributors’ inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables.

We enter into franchise agreements with the manufacturers. The franchise agreements generally limit the location of the dealership and provide the auto manufacturer approval rights over changes in dealership management and ownership. The auto manufacturers are also entitled to terminate the franchise agreement if the dealership is in material breach of the terms. Our ability to expand operations depends, in part, on obtaining consents of the manufacturers for the acquisition of additional dealerships. See also “Goodwill” and “Franchise Value” above.

We have a variety of syndicated credit facilities with several of the included financial institutions also providing vehicle financing for certain new vehicles, vehicles that are designated for use as service loaners and mortgage financing. These credit facilities are the primary source of floor plan financing for our new vehicle inventory and also provides used vehicle financing and a revolving line of credit. The terms of the facilities extends through various dates through February 23, 2029. At maturity, our financial condition could be materially adversely impacted if lenders are unable to provide credit that has typically been extended to us or with terms unacceptable to us. Our financial condition could be materially adversely impacted if these providers incur losses in the future or undergo funding limitations. See Note 10 – Credit Facilities and Long-Term Debt.

We anticipate continued organic growth and growth through acquisitions. This growth will require additional credit which may be unavailable or with terms unacceptable to us. If these events were to occur, we may not be able to borrow sufficient funds to facilitate our growth.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and related Notes to Consolidated Financial Statements. Changes in such estimates may affect amounts reported in future periods.

Estimates are used in the calculation of certain reserves maintained for charge-backs on estimated cancellations of service contracts; life, accident, and disability insurance policies; finance fees from customer financing contracts and uncollectible accounts receivable.

Estimates are also used in our allowance for credit losses, which represents the net credit losses expected over the remaining contractual life of our finance receivables. Because net loss performance can vary substantially over time, estimating net losses requires assumptions about matters that are uncertain. The allowance for credit losses is determined using a net loss timing curve, primarily based on the composition of the portfolio of managed finance receivables and historical gross loss and recovery trends. Determining the appropriateness of the allowance for credit losses requires management to exercise judgment about matters that are inherently uncertain, including the timing and distribution of net losses that could materially affect the allowance for credit losses and, therefore, net earnings.

We also use estimates in the calculation of various expenses, accruals and reserves, including anticipated losses related to workers’ compensation insurance; anticipated losses related to self-insurance components of our property and casualty and medical insurance; self-insured lifetime lube, oil, and filter service contracts; discretionary team member bonuses, the Transition Agreement with Sidney B. DeBoer, our Chairman of the Board; warranties provided on certain products and services; legal reserves and share-based compensation. We also make certain estimates regarding the assessment of the recoverability of long-lived assets, indefinite-lived intangible assets and deferred tax assets.

We offer a limited warranty on the sale of most retail used vehicles. This warranty is based on mileage and time. We also offer a mileage and time based warranty on parts used in our service repair work and on tire purchases. The cost that may be incurred for these warranties is estimated at the time the related revenue is recorded. A reserve for these warranty liabilities is estimated based on current sales levels, warranty experience rates and estimated costs per claim. The annual activity for reserve increases and claims is immaterial.

Fair Value of Assets Acquired and Liabilities Assumed

We estimate the fair value of the assets acquired and liabilities assumed in a business combination using various assumptions. The most significant assumptions used relate to determining the fair value of property and equipment and intangible franchise rights.

We estimate the fair value of property and equipment based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value.

We estimate the fair value of our franchise rights primarily using the Multi-Period Excess Earnings (MPEE) model. The forecasted cash flows used in the MPEE model contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, general operating expenses, and cost of capital. We use primarily internally-developed forecasts and business plans to estimate the future cash flows that each franchise will generate. We have determined that only certain cash flows of the store are directly attributable to the franchise rights. We estimate the appropriate interest rate to discount future cash flows to their present value equivalent taking into consideration factors such as a risk-free rate, a peer group average beta, an equity risk premium and a small stock risk premium. Additionally, we also may use a market approach to determine the fair value of our franchise rights. These market data points include our acquisition and divestiture experience and third-party broker estimates.

Revenue Recognition

The following describes our major product lines, which represent the disaggregation of our revenues to transactions that are similar in nature, amount, timing, uncertainties, and economic factors.

New Vehicle and Used Vehicle Sales

Revenue from the sale of a vehicle is recognized at a point in time, as all performance obligations are satisfied when a contract is signed by the customer, financing has been arranged or collectibility is probable, and the control of the vehicle is transferred to the customer. The transaction price for a vehicle sale is specified in the contract with the customer and includes all cash and non-cash consideration. In a vehicle sale, customers often trade in their current vehicle. The trade-in is measured at its stand-alone selling price in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration related to vehicle sales. All vehicle rebates are applied to the vehicle purchase price at the time of the sale and are therefore incorporated into the price of the contract at the time of the exchange. We do not allow the return of new or used vehicles, except where mandated by law.

Finance and Insurance Sales

Revenue from F&I sales is recognized, net of estimated charge-backs, at the time of the sale of the related vehicle. As a part of the vehicle sale, we seek to arrange financing for customers and sell a variety of add-ons, such as extended warranty service contracts. These products are inherently attached to the governing vehicle and performance of the obligation cannot be performed without the underlying sale of the vehicle. We act as an agent in the sale of these contracts as the pricing is set by the third-party provider, and our commission is preset.

Aftersales

Revenue from aftersales is recognized upon the transfer of control of the parts or service to the customer. We allow for customer returns on sales of our parts inventory up to 30 days after the sale. Most parts returns generally occur within one to two weeks from the time of sale and are not significant.

Deferred Revenue

We have contract liabilities related to various products and services sold to our customers. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer.

The amount of revenue recognized related to aftersales contract liabilities is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances associated with aftersales were $501.5 million and $452.2 million as of December 31, 2025, and December 31, 2024, respectively; and we recognized $102.7 million and $95.2 million of revenue in the years ended December 31, 2025, and December 31, 2024, respectively, related to our opening contract liability balances associated with aftersales.

The amount of revenue recognized related to operating lease vehicle contract liabilities is recognized evenly over the life of the related lease contracts. Our contract liability balances associated with operating lease vehicles were $136.4 million and $111.4 million as of December 31, 2025, and December 31, 2024, respectively; and we recognized $50.7 million and $48.4 million of revenue in the years ended December 31, 2025 and December 31, 2024, respectively, related to our opening contract liability balances associated with operating lease vehicles.

Our contract liability balances are included in accrued liabilities and deferred revenue.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. In connection with the preparation of these annual consolidated financial statements, we combined used wholesale revenue with used retail revenue and now present these revenues collectively as Used vehicle revenue. In addition, we combined fleet revenue with new retail revenue and now present these revenues collectively as New vehicle revenue.

These changes were made to better reflect how management evaluates our revenue performance and to improve comparability with industry practice. The reclassifications had no impact on total revenue, gross profit, operating income, net income, or cash flows for any period presented.

Correction of an Error

We identified an immaterial error related to interest and fee income recognition in our previously issued financial statements for the year ended December 31, 2024. In accordance with FASB ASC 250, Accounting Changes and Error Corrections, we corrected this error by retrospectively revising the affected prior period in these annual consolidated financial statements. The following tables summarize the impact of the correction on our Consolidated Balance Sheet and Consolidated Statement of Operations.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. We adopted this pronouncement and made the necessary updates to our disclosures for the year ending December 31, 2025, and, aside from these disclosure changes, the amendments did not have a material effect on our financial statements.

In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement expenses. The amendments in this update require public entities to disclose incremental information related to purchases of inventory, team member compensation, and depreciation, which will provide investors the ability to better understand entity expenses and make their own judgments about entity performance. The amendments in this update are effective for fiscal years beginning after December 15, 2026. We plan to adopt this pronouncement and make the necessary updates to our disclosures for the year ending December 31, 2027, and, aside from these disclosure changes, we do not expect the amendments to have a material effect on our financial statements.

NOTE 2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

The long-term components of accounts receivable were included as a component of other non-current assets in the Consolidated Balance Sheets.

NOTE 3. INVENTORIES AND FLOOR PLAN NOTES PAYABLE

Inventories

The components of inventories consisted of the following:

The new vehicle inventory cost is generally reduced by manufacturer holdbacks and incentives, while the related floor plan notes payable are reflective of the gross cost of the vehicle.

See credit facilities discussion in Note 10 – Credit Facilities and Long-Term Debt for more information on our floor plan commitments.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Long-Lived Asset Impairment Charges

We determined no triggering events had occurred for the years ended December 31, 2025, 2024, and 2023.

NOTE 5. FINANCE RECEIVABLES

Our finance receivables are comprised of auto loan and lease receivables. Our auto loan receivables include amounts due from customers related to vehicle sales financed through U.S. and Canada Financing Operations, secured by the related vehicles. Lease receivables include amounts related to vehicles leased through Canadian Financing Operations, also secured by the related vehicles. These amounts are presented net of an allowance for credit losses.

Interest income on finance receivables is recognized based on the contractual terms of each loan and is accrued until repayment, reaching non-accrual status, charge-off, or repossession. Direct costs associated with finance receivable originations are capitalized and expensed as an offset to interest income when recognized on the finance receivables.

More than 99% of the portfolio is aged less than 60 days past due with less than 1% on non-accrual status. As of December 31, 2025, the allowance for credit losses related to finance receivables was $143.7 million and was included in finance receivables, net. In accordance with ASC Topic 326, the allowance for credit losses is estimated based on our historical write-off experience, current conditions and reasonable and supportable forecasts as well as the value of any underlying assets securing these receivables and is reviewed monthly. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance for credit losses upon the earlier of reaching 120 days past due status, the repossession of the vehicle, or the determination that the account is uncollectible.

Finance Receivables, net

Finance Receivables by FICO Score

(1)Includes legacy portfolio, loans that are originated with no FICO score available, and finance lease receivables.

Rollforward of Allowance for Credit Losses

Our allowance for credit losses represents the net credit losses expected over the remaining contractual life of our managed finance receivables. The allowance for credit losses related to finance receivables consisted of the following changes during the period:

See Note 1 – Summary of Significant Accounting Policies for additional information on the allowance for credit losses related to finance receivables.

Charge-off Activity by Year of Origination

NOTE 6. GOODWILL AND FRANCHISE VALUE

The following is a roll-forward of goodwill:

(1)Our purchase price allocations (PPA) for the 2023 acquisitions were finalized in 2024. As a result, we added $146.6 million of goodwill. Preliminary PPA for a portion of our 2024 acquisitions resulted in adding $20.4 million of goodwill.

(2)Our PPA for a portion of the 2023 acquisitions recognized in 2023 was adjusted and finalized in 2024 upon the completion of our fair value adjustments for assumed contract liabilities, acquired loan portfolio, and contingent consideration, adding $47.7 million of goodwill.

(3)Our PPA for the 2024 acquisitions were finalized in 2025. As a result, we added $348.2 million of goodwill. Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $34.9 million of goodwill. Our PPA for the remaining 2025 acquisitions is preliminary and goodwill is not yet allocated to our segments. These amounts are included as a component other non-current assets until we finalize our purchase accounting. See Note 17 – Acquisitions.

The following is a roll-forward of franchise value:

(1)Our PPA for the 2023 acquisitions were finalized in 2024. As a result, we added $172.5 million of franchise value.

(2)Our PPA for the 2024 acquisitions were finalized in 2025. As a result, we added $218.0 million of franchise value. Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $13.1 million of franchise value. Our PPA for the remaining 2025 acquisitions is preliminary and franchise value is not yet recorded. These amounts are included as a component of other non-current assets until we finalize our purchase accounting. See Note 17 – Acquisitions.

(3)In our annual impairment testing (See Note 1 – Summary of Significant Accounting Policies), we determined the franchise value of one underperforming store was not recoverable resulting in an impairment of franchise value of $5.8 million being recorded in the Consolidated Statements of Operations as Asset impairments. Balance as of December 31, 2025 is net of accumulated impairments of this amount only.

NOTE 7. INVESTMENTS

Marketable Securities

Our captive insurance subsidiary invests cash in excess of current needs in marketable securities. The marketable securities are recorded within other current assets in the Consolidated Balance Sheets and consist of debt securities accounted for as available-for-sale (AFS) and equity securities measured at fair value. Changes in the fair value of equity securities are recognized as a component of other income (expense), net in the Consolidated Statements of Operations and unrealized gains (losses) on AFS debt securities are recorded as a component of other comprehensive income (loss), net of tax until the security is sold. See Note 15 – Fair Value Measurements.

Our equity securities recorded within other current assets in the Consolidated Balance Sheets were $2.4 million as of December 31, 2025 and $2.2 million as of December 31, 2024. Net unrealized gains recognized during the twelve months ended December 31, 2025 and December 31, 2024 on equity securities held at the reporting date were $0.2 million and $0.3 million, respectively.

Marketable debt securities accounted for as AFS were as follows:

(1)Represents total unrealized gains for securities with net gains in accumulated other comprehensive income as of December 31, 2025.

(1)Represents total unrealized losses for securities with net losses in accumulated other comprehensive income as of December 31, 2024.

There were sales of $9.2 million of AFS securities during the twelve months ended December 31, 2025 andno sales in the twelve months ended December 31, 2024.

Equity Method Investments

In 2025, our common stock voting interests in Pinewood Technologies, PLC (PINE.L), a U.K.-based automotive dealership management system provider, increased from 25.50% to 31.95%. The investment is accounted for as an equity method investment, included as a component of “Other non-current assets” on the Consolidated Balance Sheets. The investment is measured at fair value based on quoted market prices, and all fair market value changes in the investment are recorded as unrealized gains or losses as a component of Other (expense) income, net in the Consolidated Statements of Operations. The fair value of our investment was $177.2 million and $100.0 million as of December 31, 2025 and December 31, 2024, respectively. See Note 15 – Fair Value Measurements.

Our investment in Wheels, Inc., an automotive fleet management provider, through LMMH consists of 26.5% of the common stock voting interests accounted for as an equity method investment. The investment is measured at cost plus or minus our share of equity method investee income or loss as a component of “Other non-current assets” in the Consolidated Balance Sheets. The book value of our investment was $222.0 million and $208.2 million as of December 31, 2025 and December 31, 2024, respectively.

We recorded unrealized losses on equity method investments of $15.1 million for the twelve months ended December 31, 2025. Comparatively, we recorded gains on equity method investments of $32.8 million in the same period of 2024 and losses of $1.7 million in the same period 2023.

NOTE 8. NET INVESTMENT IN OPERATING LEASES

Net investment in operating leases consists primarily of lease contracts for vehicles with individuals and business entities. Assets subject to operating leases are depreciated using the straight-line method over the term of the lease

to reduce the asset to its estimated residual value. Estimated residual values are based on assumptions for used vehicle prices at lease termination and the number of vehicles that are expected to be returned.

Net investment in operating leases was as follows:

(1)Vehicles, at cost and accumulated depreciation are recorded in “Other non-current assets” on the Consolidated Balance Sheets.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Leases

We lease certain dealerships, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. We have elected not to bifurcate lease and non-lease components related to leases of real property.

Most leases include one or more options to renew, with renewal terms that can extend the lease term fromone to 25 or more years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties.

The table below presents the lease-related liabilities and finance lease right-of-use assets recorded on the Consolidated Balance Sheets:

(1)Finance lease right-of-use assets included in property and equipment, net of accumulated depreciation.

The components of lease costs, which were included in our Consolidated Statements of Operations, were as follows:

(1)Includes short-term and month-to-month lease costs, which are immaterial.

(2)Variable lease cost generally includes reimbursement for actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased real estate.

As of December 31, 2025, the maturities of our operating and finance lease liabilities were as follows:

Charge-Backs for Various Contracts

We have recorded a liability of $202.5 million as of December 31, 2025 for our estimated contractual obligations related to potential charge-backs for vehicle service contracts and other various insurance contracts that are terminated early by the customer. We estimate that the charge-backs will be paid out as follows:

Contract Liabilities

We retain the obligation for various contracts sold to our customers and assumed in acquisitions. These amounts are recorded as a contract liability. At the time of sale, we defer the full sale price and recognize the revenue based on the rate we expect future costs to be incurred. As of December 31, 2025, we had a contract liability balance of $638.0 million associated with these contracts and estimate the contract liability will be recognized as follows:

The contract liability balance is recorded as components of deferred revenue and accrued liabilities in our Consolidated Balance Sheets.

Self-insurance Programs

We self-insure a portion of our property and casualty insurance, vehicle open lot coverage, medical insurance, and workers’ compensation insurance. Third parties are engaged to assist in estimating the loss exposure related to the self-retained portion of the risk associated with these insurances. Additionally, we analyze our historical loss and claims experience to estimate the loss exposure associated with these programs. As of December 31, 2025 and 2024, we had liabilities associated with these programs of $113.0 million and $95.6 million, respectively, recorded as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets.

Litigation

We are party to numerous legal proceedings arising in the normal course of our business. Although we do not anticipate that the resolution of legal proceedings arising in the normal course of business will have a material adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with certainty.

NOTE 10. CREDIT FACILITIES AND LONG-TERM DEBT

Below is a summary of our outstanding balances on credit facilities and long-term debt:

Credit Facilities

US Bank Syndicated Credit Facility

On August 6, 2025 we amended our existing syndicated credit facility (USB credit facility), comprised of 20 financial institutions, including seven manufacturer-affiliated finance companies, maturing February 23, 2029. The amendment increased the total financing commitment and the amount to which the commitment could be further expanded.

This USB credit facility provides for a total financing commitment of $6.5 billion, which may be further expanded, subject to lender approval and the satisfaction of other conditions, up to a total of $7.0 billion. The allocation of the financing commitment is for up to $3.0 billion in new vehicle inventory floorplan financing, up to $900 million in used vehicle inventory floorplan financing, up to $100 million in service loaner vehicle floorplan financing, and up to $2.5 billion in revolving financing for general corporate purposes, including acquisitions and working capital. We have the option to reallocate the commitments under this USB credit facility, provided that the aggregate revolving loan commitment may not be more than 50% of the amount of the aggregate commitment, and the aggregate service loaner vehicle floorplan commitment may not be more than the 3% of the amount of the aggregate commitment. All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities.

Our obligations under our USB credit facility are secured by a substantial amount of our assets, including our inventory (including new and used vehicles, parts and accessories), equipment, accounts receivable (and other rights to payment), and our equity interests in certain of our subsidiaries.

The interest rate on the USB credit facility varies based on the type of debt, with the rate of one-day SOFR plus a credit spread adjustment of 0.10% plus a margin of 1.10% for new vehicle floor plan financing,1.40% for used vehicle floor plan financing,1.20% for service loaner floor plan financing, and a variable interest rate on the revolving financing ranging from 1.00% to 2.00% depending on our leverage ratio. The annual interest rates associated with our commitments are as follows:

Under the terms of our USB credit facility, we are subject to financial covenants and restrictive covenants that limit or restrict our incurring additional indebtedness, making investments, selling or acquiring assets and granting security interests in our assets.

Bank of Nova Scotia Syndicated Credit Facility

Our syndicated credit agreement with the Bank of Nova Scotia as agent (BNS credit facility) is comprised ofsix financing institutions, includingtwo manufacturer-affiliated finance companies.

The BNS credit facility provides for a total financing commitment of approximately $1.1 billion CAD, including a working capital revolving credit facility of up to $125 million CAD, a wholesale flooring facility for new vehicles up to $500 million CAD, used vehicle flooring facility of up to $75 million CAD, wholesale leasing facility of up to $400 million CAD, and daily rental vehicle facility up to $25 million CAD.

The interest rate on the BNS credit facility varies based on the type of debt, with the daily compound rate of the Canadian Overnight Repo Rate Average (CORRA) plus a credit spread adjustment of 0.30% plus a margin of 1.00% for the wholesale flooring facility,1.25% for the used vehicle flooring facility,1.20% for the daily rental facility,1.30% for the wholesale leasing facility, and a variable interest rate on the working capital revolving facility ranging from 1.25% to 2.25% depending on our leverage ratio. The annual interest rates associated with our commitments are as follows:

All BNS facilities other than the wholesale flooring facility, which is a demand facility, mature on March 18, 2027. Under the terms of our BNS credit facility, we are subject to compliance with various financial covenants.

Bank of America Revolving Credit Facility

On April 1, 2025, we amended our revolving credit facility agreement with Bank of America. The amendment increased the commitment to £150.0 million GBP. The maturity date is February 22, 2029 and the interest rate on the working capital line of credit is based on the Sterling Overnight Index Average (SONIA) plus 1.45%. The annual interest rate at December 31, 2025 was 5.18%.

JPM Warehouse facility

On December 9, 2025, we amended our securitization facility for our finance receivable portfolio (JPM warehouse facility) with JPMorgan Chase Bank, as administrative agent and account bank, providing initial commitments for borrowings of up to $1.0 billion and extending the maturity to December 9, 2027. The amendment adjusted the interest rate on the JPM warehouse facility varies based on the Daily Simple SOFR rate plus 0.85% to 1.80% and added Wells Fargo Bank as an additional lender.

Mizuho Warehouse facility

On August 1, 2025, we amended our securitization facility for our finance receivable portfolio (Mizuho warehouse facility), with Mizuho Bank Ltd., as administrative agent and account bank, providing initial commitments for

borrowings of up to $1 billion and extending the maturity to July 30, 2027. The amendment adjusted the interest rate on the Mizuho warehouse facility to the Daily Simple SOFR rate plus 0.85% to 0.95% and added Bank of America as an additional lender.

Floor Plan Notes Payable

We have floor plan agreements with manufacturer-affiliated finance companies and other lenders with direct manufacturer and vendor partnerships for certain new and used vehicles that have not been financed through our new vehicle credit facilities or third-party finance companies. The interest rates on these floor plan notes payable commitments vary by manufacturer and are variable rates ranging from 5.37% to 6.75% as of December 31, 2025. Borrowings from and repayments to manufacturer-affiliated finance companies are classified as operating activities in the Consolidated Statements of Cash Flows.

Floor Plan Notes Payable: Non-Trade

We have floor plan agreements with third-party finance companies for certain new and used vehicles that have not been financed through our new vehicle credit facilities or manufacturer finance companies. The interest rates on these floor plan notes payable non-trade commitments vary by lender and are variable rates ranging from 3.60% to 8.50% as of December 31, 2025. Borrowing from and repayments to third-party finance companies are classified as financing activities in the Consolidated Statements of Cash Flows.

See Note 3 – Inventories and Floor Plan Notes Payable for more information on our floor plan commitments outstanding as of December 31, 2025.

Non-Recourse Notes Payable

DFC finance receivables are temporarily funded through our warehouse facilities until they can be funded through non-recourse asset-backed term transactions. These non-recourse funding vehicles are structured to legally isolate the finance receivables, and we would not expect to be able to access the assets of our non-recourse funding vehicles, even in insolvency, receivership or conservatorship proceedings. Similarly, the investors in the non-recourse notes payable have no recourse to our assets beyond the related receivables, the amounts on deposit in reserve accounts and the restricted cash from collections on finance receivables. We do, however, continue to have the rights associated with the interest we retain in these non-recourse funding vehicles.

In 2025, we issued $1.7 billion in non-recourse notes payable related to quarterly asset-backed term funding transactions. Below is a summary of outstanding non-recourse notes payable issued:

Senior Notes

In 2025, we issued $600.0 million in Senior Notes on September 10, 2025. Below is a summary of outstanding senior notes issued:

Real Estate Mortgages, Finance Lease Obligations, and Other Debt

We have mortgages associated with our owned real estate. Interest rates related to this debt ranged from 3.0% to 7.6% at December 31, 2025. We have $1,039.5 million in mortgages outstanding as of December 31, 2025, which are payable in various installments through October 1, 2045. As of December 31, 2025, we had fixed interest rates on 59.4% of our outstanding mortgage debt.

We have $112.4 million of finance lease obligations with some of our leased real estate as of December 31, 2025. Interest rates related to this debt ranged from 2.5% to 8.5% at December 31, 2025. The leases have terms extending through August 2037.

Our other debt includes a variety of miscellaneous notes payable and bank overdrafts. The interest rates associated with our other debt ranged from 5.0% to 8.0% at December 31, 2025. This debt, which totaled $0.4 million at December 31, 2025, is due in various installments through April 1, 2027. Bank overdraft activity is included as a component of “Other financing activities” within the Consolidated Statements of Cash Flows.

Future Principal Payments

The schedule of future principal payments associated with real estate mortgages, finance lease liabilities, our senior notes, and other debt as of December 31, 2025 was as follows:

This table does not include future payments related to revolving lines of credit or non-recourse notes payable.

NOTE 11. RETIREMENT PLANS AND POSTRETIREMENT BENEFITS

Company-Sponsored Defined Contribution 401(k) Plan

We have a defined contribution 401(k) plan and trust covering substantially all full-time team members. Contributions of $46.8 million, $46.1 million, and $44.0 million were recognized for the years ended December 31, 2025, 2024, and 2023, respectively. Team members may contribute to the plan if they meet certain eligibility requirements.

Executive Management Non-Qualified Deferred Compensation and Supplemental Executive Retirement Plan

We offer a non-qualified deferred compensation and supplemental executive retirement plan (SERP) to provide certain team members the ability to accumulate assets for retirement on a tax deferred basis. We may, depending on position, also make discretionary contributions to the SERP. These discretionary contributions could vest immediately or over a period of up tofive years based on the team member’s age. Additionally, a participant may defer a portion of his or her compensation and receive the deferred amount upon certain events, including termination or retirement.

The following is a summary related to our SERP:

As of December 31, 2025 and 2024, the balance due to participants was $84.5 million and $77.7 million, respectively, and was included as a component of other long-term liabilities in the Consolidated Balance Sheets.

Company-Sponsored Defined Benefit Pension Plan

In January 2024, we acquired the Pendragon Group Pension Scheme, a company-sponsored defined benefit pension of U.K.-based Pendragon PLC, applicable to a portion of the salaried present and past team members. This plan is in addition to the Jardine Motors Group UK Pension Scheme acquired in 2023. Both pension plans are closed to future accrual.

The following table shows the changes in the benefit obligation, plan assets, and funded status for the pension benefit plans:

The benefit obligation for our pension benefit is the projected benefit obligation based upon credited service as of the measurement date.

The December 31, 2025 pension funded status declined primarily due to increased benefit payments and fewer employer contributions.

Net Periodic (Benefit) Cost

Interest cost represents the increase in the projected benefit obligation, which is a discounted amount, due to the passage of time. The expected return on plan assets reflects the computed amount of current-year earnings from the investment of plan assets using an estimated long-term rate of return.

The components of net periodic pension (benefits) cost are included inother income (expense) in the Consolidated Statements of Operations.

Actuarial Assumptions

The weighted-average assumptions used to determine the benefit obligation and net periodic pension cost of our pension plan were as follows:

The discount rates used in the determination of pension benefit obligation and pension expense we determined based on a review of long-term high-grade bonds of appropriate duration.

The expected return on plan assets assumption is based upon an analysis of historical long-term returns for various investment categories, as measured by appropriate indices and forward looking expectations of returns. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return. The expected rate of return on assets has been set in line with the Trustee’s target return.

Plan Assets

There have been no changes in the methodologies used since the assumption of our pension plans. Factors used in determining the fair value of our plan assets are summarized into three broad categories:

•Level 1 - the unadjusted quoted price in an active market for identical assets or liabilities which the entity can access at the measurement date;

•Level 2 - inputs other than quoted prices included within Level 1 which are observable (i.e. developed using market data) for the asset or liability; and

•Level 3 - inputs which are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The following tables set forth by level, within the fair value hierarchy, the investments at fair value for our company-sponsored defined benefit pension plans:

The Company maintains formal investment policy guidelines for our company-sponsored pension plans. These guidelines are established by the plans’ Trustees, who are responsible for oversight of the investment program, periodic review of investment performance, and compliance with the stated policies and objectives.

The Trustees have appointed external investment managers (Fiduciary Managers) with discretionary authority to manage plan assets and to provide investment advisory services. Asset allocations within and among investment categories are determined from time-to-time by the Fiduciary Managers in accordance with the investment strategy established by the Trustees. The strategy is designed to maximize the probability of meeting the plans’ long-term funding and benefit payment obligations, while maintaining risk within parameters approved by the Trustees.

The Trustees periodically review the investment policy guidelines and target asset allocations and make adjustments as appropriate in response to changes in market conditions, funded status, and liquidity requirements.

The primary investment objectives of the pension plans are:

•to generate returns to meet benefit obligations as they become due;

•to maintain appropriate liquidity to fund benefit payments and plan expenses;

•to manage the risk of asset values diverging from the measurement of plan liabilities, both over the long term and shorter-term periods; and

•to seek to minimize the long-term cost of the plans by achieving appropriate risk-adjusted returns.

To achieve these objectives, the plans’ investment strategy utilizes a diversified portfolio of assets, which may include:

•liability-matching assets, consisting primarily of high-quality corporate bonds and other low-risk fixed income instruments intended to broadly align with changes in the value of plan liabilities;

•secure income assets;

•return-seeking assets, including equities, listed real assets, diversifying strategies, hedge funds, private markets, alternative credit and downside protection strategies;

•a buy-in insurance contract; and

•cash and other money market instruments.

The plans may hold cash and money market instruments from time to time to meet near-term liquidity needs or for risk management purposes.

The long-term target asset allocations established by the Fiduciary Managers are presented below:

In 2025, the Company secured the liabilities of the Jardine Motor Group UK Pension Scheme through the purchase of a buy-in insurance contract. Under the arrangement, the insurer is obligated to make payments to the Scheme that match specified benefit obligations covered by the contract. The Scheme retains certain residual uninsured assets, which are intended to meet any remaining benefit payments or associated obligations. These assets are held in cash in the Trustee bank account or in liquid cash and money market instruments.

We anticipate making pension plan cash contributions of $8.2 million in 2026.

Estimated future benefit payments are as follows for the years indicated:

NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS

We account for derivative financial instruments by recording the fair value as either an asset or liability in our Consolidated Balance Sheets and recognize the resulting gains or losses as adjustments to accumulated other comprehensive income (loss). We do not hold or issue derivative financial instruments for trading or speculative purposes.

We have entered into four offsetting derivative arrangements that do not qualify for hedge accounting. These are related to a securitization facility, effective October 2, 2020 and June 15, 2021. We purchased and sold offsetting interest rate caps, all of which are 5-years long with notional amounts totaling $298 million. As of December 31, 2025, the balance in allfour agreements were offsetting amounts of $0.7 million and were located in other current assets and accrued liabilities, respectively.

See Note 15 – Fair Value Measurements for information on the fair value of the derivative contracts.

NOTE 13. EQUITY

Common Stock

The shares of common stock are not convertible into any other series or class of our securities. Holders of common stock are entitled toone vote for each share held of record.

Repurchases of Common Stock

Repurchases of our common stock occurred under repurchase authorizations granted by our Board and related to shares withheld as part of the vesting of RSUs.

Share repurchases under our authorization were as follows:

As of December 31, 2025, we had $621.6 million available for repurchases pursuant to our share repurchase authorization.

In addition, during 2025, we repurchased 36,822 shares at an average price of $356.74 per share, for a total of $13.1 million, related to tax withholdings associated with the vesting of RSUs. The repurchase of shares related to tax withholdings associated with share-based awards does not reduce the number of shares available for repurchase as approved by our Board.

The following is a summary of our repurchases:

1. Price excludes excise taxes imposed under the Inflation Reduction Act of $9.1 million for the twelve months ended December 31, 2025.

Dividends

We declared and paid dividends on our common stock as follows:

NOTE 14. SHARE-BASED COMPENSATION PLANS

Employee Stock Purchase Plan

The 2009 Employee Stock Purchase Plan (ESPP) allows for the issuance of 3.0 million shares of our common stock. The ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by the Compensation Committee of the Board. As of December 31, 2025,817,691 shares were available for purchase pursuant to the ESPP.

Eligible team members are entitled to allocate up to 10% of their base pay for the purchase of stock, up to $25,000 of fair market value of our common stock annually. The purchase price is equal to 85% of the fair market value at the end of the purchase period. Compensation expense related to our ESPP is calculated based on the 15% discount from the per share market price on the date of grant.

For the year ended December 31, 2025,103,075 shares were purchased pursuant to the ESPP at a weighted average price per share of $270.18, with weighted average per share discount from market value of $47.69.

Following is information regarding our ESPP:

Stock Incentive Plan

During 2025, we registered an additional 1.16 million shares to our 2013 Stock Incentive Plan, as amended, (Stock Plan) now allowing for the grant of a total of 4.96 million shares in the form of stock appreciation rights, qualified stock options, non-qualified stock options, RSAs, and RSUs to our officers, key team members, directors, and consultants. The Stock Plan is administered by the Compensation Committee of the Board and permits accelerated vesting of outstanding awards upon the occurrence of certain changes in control. As of December 31, 2025,1,530,834 shares of common stock were available for future grants. As of December 31, 2025, there wereno stock appreciation rights, qualified stock options, non-qualified stock options or restricted share awards outstanding.

Restricted Stock Unit Awards

RSU grants vest over a period of time up tofour years from the date of grant. RSU activity was as follows:

We granted 30,355 time-vesting RSUs to members of our Board and team members in 2025. Each grant entitles the holder to receive shares of our common stock upon vesting. A portion of the RSUs vest over three years for team members and vest quarterly for our Board, over their service period.

We granted 207,159 performance and time-vesting RSUs to our team members in 2025. These shares will be earned either overone orthree-year performance periods based on attaining various target levels of operational performance, as well as market-based returns. These RSUs will vest inthree years or over four years from the grant date.

Time-vesting RSUs and performance and time-vesting RSUs that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, we estimated the fair value of the total shareholder return (TSR) component of the performance and time-vesting RSUs using a Monte Carlo simulation model. The performance and time-vesting RSUs granted during the years presented are contingent on the achievement of our financial performance metrics, our comparative market-based returns, or the achievement of financial and non-financial operating goals.

The assumptions for the valuation of time-vesting RSUs and performance and time-vesting RSUs granted are summarized as follows:

Certain information regarding RSU grant vesting was as follows:

Share-Based Compensation Expense

Share-based compensation is recognized as a component of SG&A in our Consolidated Statements of Operations. SG&A expense related to all share-based compensation is as follows:

As of December 31, 2025, unrecognized share-based compensation related to outstanding, but unvested RSUs was $39.6 million , which will be recognized over the remaining weighted average vesting period of 2.1 years.

NOTE 15. FAIR VALUE MEASUREMENTS

Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:

•Level 1 - quoted prices in active markets for identical securities;

•Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and

•Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.

We determined the carrying value of cash, restricted cash, cash equivalents, accounts receivable, trade payables, accrued liabilities, finance receivables, and short-term borrowings approximate their fair values because of the nature of their terms and current market rates of these instruments. We believe the carrying value of our variable rate debt approximates fair value.

We have money market securities, which include restricted cash from collections on finance receivables, recorded as a component of “Cash, restricted cash, and cash equivalents” in our Consolidated Balance Sheets, as well as

restricted cash on deposit in reserve accounts, recorded as a component of “Other non-current assets” in our Consolidated Balance Sheets. These money market securities consist of highly liquid investments with original maturities of three months or less and are classified as Level 1.

We have investments consisting of equity securities, available for sale debt securities, and equity method investment with a fair value election. We calculated the estimated fair value of the equity securities, equity method investment with a fair value election, and U.S. Treasury debt securities using quoted market prices (Level 1). The fair value of corporate and municipal debt securities are measured using observable Level 2 market expectations at each measurement date. See Note 7 – Investments.

We have fixed rate debt primarily consisting of amounts outstanding under our senior notes, non-recourse notes payable, and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1). The fair value of non-recourse notes payable are measured using observable Level 2 market expectations at each measurement date. The calculated estimated fair values of the fixed rate real estate mortgages and finance lease liabilities use a discounted cash flow methodology with estimated current interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and summed to compute the fair value of the debt.

We have derivative instruments consisting of an offsetting set of interest rate caps. The fair value of derivative assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is recorded as other current assets, current liabilities and other long-term liabilities in the Consolidated Balance Sheets. See Note 12 – Derivative Financial Instruments for more details regarding our derivative contracts.

Nonfinancial assets such as goodwill, franchise value, or other long-lived assets are measured and recorded at fair value during a business combination or when there is an indicator of impairment. We evaluate our goodwill and franchise value using a qualitative assessment process. If the qualitative factors determine that it is more likely than not that the carrying value exceeds the fair value, we would further evaluate for potential impairment using a quantitative assessment. The quantitative assessment estimates fair values using unobservable (Level 3) inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, and cost of capital, for which we utilize certain market participant-based assumptions we believe to be reasonable. We estimate the value of other long-lived assets that are recorded at fair value on a non-recurring basis on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions, and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. Real estate appraisers’ and brokers’ valuations are typically developed using one or more valuation techniques including market, income and replacement cost approaches. Because these valuations contain unobservable inputs, we classified the measurement of fair value of long-lived assets as Level 3.

There were no changes to our valuation techniques during the year ended December 31, 2025.

Below are our assets and liabilities that are measured at fair value on a recurring basis:

(1)Excluding unamortized debt issuance cost

Impairment charges related to franchise value of $5.8 million were recorded in the twelve months ended December 31, 2025. No impairment charges were recorded in 2024 or 2023.

NOTE 16. INCOME TAXES

Income Before Income Taxes

Income from continuing operations before income tax expense:

Income Tax Provision

The income tax provision was as follows:

At December 31, 2025, we had income taxes receivable of $23.5 million included as a component of Other current assets in our Consolidated Balance Sheets. At December 31, 2024, we had income taxes receivable of $10.4 million included as a component of other current assets in our Consolidated Balance Sheet.

The reconciliation between amounts computed using the federal income tax rate of 21% and our income tax provision is shown in the following tabulation:

The foreign tax effects include operations in Canada and the United Kingdom. For 2023, 2024, and 2025, state and local income taxes in California, New Jersey, and Oregon comprise the majority of the Domestic U.S. state and local taxes, net of federal income tax benefit category.

Deferred Taxes

Individually significant components of the deferred tax assets and (liabilities) are presented below:

As of December 31, 2025, we had net operating loss (NOL) carryforwards and capital loss carryforwards totaling approximately $65.2 million. Of these carryforwards, approximately $43.3 million will expire, if not utilized, in various years through 2045. The remaining carryforwards have no expiration.

We consider whether our deferred tax assets are more likely than not to be realized. This evaluation considers all sources of future taxable income, including prior carryback capacity, the expected reversal of temporary differences, projected operating income, and available tax-planning strategies. If conditions change and recovery becomes more likely than not, we reverse the valuation allowance, with the impact recognized in the income statement.

As of December 31, 2025, we had a $59.2 million valuation allowance on deferred tax assets associated primarily with state net operating loss carryforwards and foreign capital loss carryforwards.

We have asserted that the earnings of our Canadian subsidiaries will be indefinitely reinvested to ensure there is sufficient working capital to expand our operations in Canada. The amount of unremitted earnings and the related deferred tax liability are not material. We do not intend to indefinitely reinvest the earnings of our U.K. subsidiaries, however, no deferred tax liability has been recorded for foreign withholding taxes due to a 0% treaty rate on dividends.

Income Taxes Paid

Tax payments, net of refunds, was as follows:

Unrecognized Tax Benefits

The following is a reconciliation of our unrecognized tax benefits for December 31, 2025, 2024, and 2023:

Open tax years at December 31, 2025 included the following:

NOTE 17. ACQUISITIONS

In 2025, we completed the following acquisitions:

•In January 2025, Stohlman Subaru in Virginia.

•In March 2025, Elk Grove Subaru in California.

•In June 2025, Collierville Mercedes-Benz in Tennessee.

•In June 2025, Jackson Mercedes-Benz in Mississippi.

•In August 2025, Manchester Renault and Dacia in the United Kingdom.

•In September 2025, Acura of Palm Beach and West Palm Beach Hyundai and Genesis in Florida.

•In October 2025, Stivers Decatur Subaru in Georgia.

•In October 2025, Anaheim Hyundai, Garden Grove Hyundai and Huntington Beach Hyundai in California.

•In October 2025, Hatfields Jaguar & Land Rover Motor Group in the United Kingdom.

•In November 2025, Santa Monica Audi and Beverly Hills Porsche in California.

•In December 2025, Fines Ford Lincoln in Canada.

Revenue and operating income contributed by the 2025 acquisitions subsequent to the date of acquisition were as follows:

In 2024, we completed the following acquisitions:

•In January 2024, Pendragon PLC’s Fleet Management and Motor Divisions in the United Kingdom.

•In February 2024, Carousel Motor Group in Minnesota and Wisconsin.

•In May 2024, Pine View Hyundai Store in Ontario, Canada.

•In June 2024, Sunrise Chevrolet Buick GMC at Collierville and Sunrise Buick GMC at Wolfchase in Tennessee.

•In September 2024, Duval Honda, Duval Acura, and Gainesville Subaru in Florida.

•In December 2024, Hyundai of Leicester in the United Kingdom.

All acquisitions were accounted for as business combinations under the acquisition method of accounting. The results of operations of the acquired stores are included in our Consolidated Financial Statements from the date of acquisition.

The following tables summarize the consideration paid for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date:

The PPA for the 2025 acquisitions is preliminary as we have not obtained all of the detailed information to finalize the opening balance sheet related to real estate purchased, leases and contract liabilities assumed, deferred taxes, and the allocation of franchise value and goodwill to each reporting unit. Management has recorded the purchase price allocations based on the information that is currently available.

We expect all of the goodwill related to U.S. acquisitions completed in 2025 to be deductible for U.S. federal income tax purposes. Due to local country laws, we do not expect goodwill related to U.K. acquisitions completed in 2025 to be deductible for U.K. income tax purposes.

The PPA for the 2024 acquisitions was finalized in 2025, including amounts posted to real estate, franchise value, and goodwill, reducing the amounts posted to “Other assets” shown in the table above. We account for franchise value as an indefinite-lived intangible asset.

We recognized $17.0 million and $10.0 million, respectively, in acquisition related expenses as a component of SG&A in the Consolidated Statements of Operations in 2025 and 2024, respectively.

The following unaudited pro forma summary presents consolidated information as if the acquisitions had occurred on January 1 of the year:

These amounts have been calculated by applying our accounting policies and estimates. The results of the acquired stores have been adjusted to reflect the following: depreciation on a straight-line basis over the expected lives for property, plant, and equipment; accounting for inventory on a specific identification method; and recognition of interest expense for real estate financing related to stores where we purchased the facility. No non-recurring pro forma adjustments directly attributable to the acquisitions are included in the reported pro forma revenues and earnings.

NOTE 18. EARNINGS PER SHARE

We calculate basic EPS by dividing net income attributable to Lithia Motors, Inc. by the weighted average number of common shares outstanding for the period, including vested RSU awards. Diluted EPS is calculated by dividing net income attributable to Lithia Motors, Inc. by the weighted average number of shares outstanding, adjusted for the dilutive effect of unvested RSU awards and employee stock purchases.

The following is a reconciliation of net income attributable to Lithia Motors, Inc. and weighted average shares used for our basic EPS and diluted EPS:

The effects of antidilutive securities on common stock was evaluated for the years ended 2025, 2024, and 2023 and determined to be immaterial.

NOTE 19. SEGMENTS

As of December 31, 2025, we hadtwo reportable segments: Vehicle Operations and Financing Operations. Our Vehicle Operations consists of all aspects of our auto merchandising and service operations, including our retail automotive, recreational vehicles, and motorcycle franchises that sell new vehicles, used vehicles, parts, repair and maintenance services, and vehicle F&I products. Vehicle Operations excludes financing provided by our Financing Operations. Our Financing Operations segment provides financing to customers buying and leasing retail vehicles from our Vehicle Operations.

All other remaining activity is reported under “Corporate and Other,” including corporate personnel costs, certain unallocated reserves, internal charges, and other unallocated corporate overhead expenses. Internal charges consist of corporate expense allocations which increase segment income for “Corporate and Other” while decreasing segment income for the other operating segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset team members within our corporate headquarters that perform certain dealership functions.

The reportable segments identified above represent our business activities for which discrete financial information is available and for which operating results are regularly provided and reviewed by our CODM to allocate resources and assess performance. Our CODM is our Chief Executive Officer. The CODM assesses segment performance using segment income, which is measured as net segment profit before taxes on a U.S. GAAP basis.

Total asset information by segment is not regularly provided to our CODM or utilized for purposes of assessing performance or allocating resources and, as a result, such information has not been presented below. Certain financing operations asset information including total managed receivables are used by the financing operations segment manager to manage operations and are included in various reports regularly provided to our CODM. See Note 5 – Finance Receivables.

Certain financial information including significant expense detail on a segment basis is as follows:

(1)Other vehicle operations expenses includes management fees, data processing fees, outside services fees, insurance expense, office and other supplies expense, banking expense, and certain overhead expenses.

(2)Other financing operations expenses includes personnel expense, data processing fees, outside services fees, expenses attributable to underwriting, funding, and loan servicing, and certain overhead expenses.

(3)Corporate and other includes management fee income.

The following table presents revenue and assets by geographic area: