10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-14733

Lithia Motors, Inc.

(Exact name of registrant as specified in its charter)

Oregon			93-0572810
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
150 N. Bartlett Street	Medford,	Oregon	97501
(Address of principal executive offices)			(Zip Code)

(541) 776-6401

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock without par value	LAD	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Non-accelerated filer	Accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 27, 2022, there were 27,338,411 shares of the registrant’s common stock outstanding.

LITHIA MOTORS, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

 

Item Number	Item	Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets (Unaudited) - September 30, 2022, and December 31, 2021	1
	Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended September 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income (Unaudited) – Three and Nine Months Ended September 30, 2022 and 2021	3
	Consolidated Statements of Equity and Redeemable Non-controlling Interest (Unaudited) - Three and Nine Months Ended September 30, 2022 and 2021	4
	Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2022 and 2021	5
	Condensed Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	48
SIGNATURE		49

CONSOLIDATED BALANCE SHEETS
(In millions; Unaudited)	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash, restricted cash, and cash equivalents	$	233.0	$	174.8
Accounts receivable, net of allowance for doubtful accounts of $37.0 and $17.3	1,004.6		910.0
Inventories, net	3,309.3		2,385.5
Other current assets	135.4		63.0
Total current assets	4,682.3		3,533.3
Property and equipment, net of accumulated depreciation of $490.5 and $422.6	3,473.0		3,052.6
Operating lease right-of-use assets	373.2		395.9
Goodwill	1,463.1		977.3
Franchise value	1,866.8		799.1
Other non-current assets	2,216.1		2,388.7
Total assets	$	14,074.5	$	11,146.9
Liabilities and equity
Current liabilities:
Floor plan notes payable	$	454.8	$	354.2
Floor plan notes payable: non-trade	1,208.1		835.9
Current maturities of long-term debt	113.4		223.7
Trade payables	241.3		235.4
Accrued liabilities	809.0		753.6
Total current liabilities	2,826.6		2,402.8
Long-term debt, less current maturities	5,222.3		3,185.7
Deferred revenue	219.9		191.2
Deferred income taxes	254.5		191.0
Non-current operating lease liabilities	337.7		361.7
Other long-term liabilities	185.3		151.3
Total liabilities	9,046.3		6,483.7
Redeemable non-controlling interest	40.5		34.0
Equity:
Preferred stock - no par value; authorized 15.0 shares; none outstanding	—		—
Common stock - no par value; authorized 125.0 shares; issued and outstanding 27.5 and 29.5	1,107.1		1,711.6
Additional paid-in capital	69.0		58.3
Accumulated other comprehensive loss	(21.5)		(3.0)
Retained earnings	3,829.1		2,859.5
Total stockholders’ equity - Lithia Motors, Inc.	4,983.7		4,626.4
Non-controlling interest	4.0		2.8
Total equity	4,987.7		4,629.2
Total liabilities, redeemable non-controlling interest and equity	$	14,074.5	$	11,146.9

 See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 1

CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share amounts; Unaudited)	2022		2021		2022		2021
Revenues:
New vehicle retail	$	3,306.9	$	2,898.2	$	9,619.4	$	8,237.7
Used vehicle retail	2,465.8		2,079.5		7,197.0		5,236.6
Used vehicle wholesale	363.2		260.9		1,131.5		613.5
Finance and insurance	333.3		297.0		977.0		765.0
Service, body and parts	712.2		578.3		2,022.6		1,503.4
Fleet and other	114.3		55.9		293.8		166.0
Total revenues	7,295.7		6,169.8		21,241.3		16,522.2
Cost of sales:
New vehicle retail	2,903.2		2,548.9		8,403.9		7,418.0
Used vehicle retail	2,264.5		1,846.9		6,533.6		4,635.2
Used vehicle wholesale	374.8		255.2		1,131.5		586.8
Service, body and parts	328.0		275.8		945.9		704.3
Fleet and other	111.0		53.9		283.1		162.7
Total cost of sales	5,981.5		4,980.7		17,298.0		13,507.0
Gross profit	1,314.2		1,189.1		3,943.3		3,015.2
Asset impairments	—		1.9		—		1.9
Selling, general and administrative	749.2		673.3		2,256.8		1,757.6
Depreciation and amortization	41.9		34.4		122.1		91.5
Operating income	523.1		479.5		1,564.4		1,164.2
Floor plan interest expense	(10.7)		(3.6)		(19.4)		(17.0)
Other interest expense, net	(49.6)		(28.0)		(114.1)		(79.6)
Other expense, net	(7.1)		(25.7)		(37.0)		(14.6)
Income before income taxes	455.7		422.2		1,393.9		1,053.0
Income tax provision	(125.4)		(113.2)		(382.1)		(282.9)
Net income	330.3		309.0		1,011.8		770.1
(Net income) loss attributable to non-controlling interest	0.5		(0.8)		(3.9)		(0.8)
Net income attributable to redeemable non-controlling interest	(1.2)		(0.3)		(4.5)		(0.3)
Net income attributable to Lithia Motors, Inc.	$	329.6	$	307.9	$	1,003.4	$	769.0
Basic earnings per share attributable to Lithia Motors, Inc.	$	11.97	$	10.18	$	35.23	$	27.12
Shares used in basic per share calculations	27.5		30.3		28.5		28.4
Diluted earnings per share attributable to Lithia Motors, Inc.	$	11.92	$	10.11	$	35.10	$	26.91
Shares used in diluted per share calculations	27.6		30.5		28.6		28.6
Cash dividends paid per share	$	0.42	$	0.35	$	1.19	$	1.01

    

See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions; Unaudited)	2022		2021		2022		2021
Net income	$	330.3	$	309.0	$	1,011.8	$	770.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(16.4)		0.2		(20.3)		0.2
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9) respectively	—		0.5		1.8		2.5
Total other comprehensive income (loss), net of tax	(16.4)		0.7		(18.5)		2.7
Comprehensive income	313.9		309.7		993.3		772.8
Comprehensive (income) loss attributable to non-controlling interest	0.5		(0.8)		(3.9)		(0.8)
Comprehensive income attributable to redeemable non-controlling interest	(1.2)		(0.3)		(4.5)		(0.3)
Comprehensive income attributable to Lithia Motors, Inc.	$	313.2	$	308.6	$	984.9	$	771.7

See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 3

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions; Unaudited)	2022		2021		2022		2021
Total equity, beginning balances	$	4,698.0	$	4,228.4	$	4,629.2	$	2,661.5
Common stock1, beginning balances	1,123.9		1,906.9		1,711.6		788.2
Compensation for stock and stock option issuances and excess tax benefits from option exercises	1.9		1.6		21.0		16.2
Issuance of stock in connection with employee stock plans	9.4		8.0		28.1		17.6
Class B common stock converted to class A common stock1	—		—		—		—
Repurchase of common stock	(28.1)		—		(653.6)		(15.9)
Equity issuances, net of issuance costs	—		(0.1)		—		1,110.3
Common stock1, ending balances	1,107.1		1,916.4		1,107.1		1,916.4
Class B common stock1, beginning balances	—		—		—		—
Class B common stock converted to class A common stock1	—		—		—		—
Class B common stock1, ending balances	—		—		—		—
Additional paid-in capital, beginning balances	62.2		44.0		58.3		41.4
Compensation for stock and stock option issuances and excess tax benefits from option exercises	6.8		6.8		10.7		9.4
Additional paid-in capital, ending balances	69.0		50.8		69.0		50.8
Accumulated other comprehensive loss, beginning balances	(5.1)		(4.3)		(3.0)		(6.3)
Foreign currency translation adjustment	(16.4)		0.2		(20.3)		0.2
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9), respectively	—		0.5		1.8		2.5
Accumulated other comprehensive loss, ending balances	(21.5)		(3.6)		(21.5)		(3.6)
Retained earnings, beginning balances	3,510.8		2,281.8		2,859.5		1,838.2
Net income attributable to Lithia Motors, Inc.	329.6		307.9		1,003.4		769.0
Dividends paid	(11.3)		(10.6)		(33.8)		(28.2)
Retained earnings, ending balances	3,829.1		2,579.1		3,829.1		2,579.1
Non-controlling interest, beginning balances	6.1		—		2.8		—
Contribution (distribution) of non-controlling interest	(1.6)		1.1		(2.7)		1.1
Net income (loss) attributable to non-controlling interest	(0.5)		0.8		3.9		0.8
Non-controlling interest, ending balances	4.0		1.9		4.0		1.9
Total equity, ending balances	$	4,987.7	$	4,544.6	$	4,987.7	$	4,544.6
Redeemable non-controlling interest, beginning balances	$	39.8	$	—	$	34.0	$	—
Contribution (distribution) of redeemable non-controlling interest	(0.5)		33.0		2.0		33.0
Net income attributable to redeemable non-controlling interest	1.2		0.3		4.5		0.3
Redeemable non-controlling interest, ending balances	$	40.5	$	33.3	$	40.5	$	33.3

1 Prior to June 7, 2021, common stock was classified as Class A common stock. The Class A common stock reclassification as common stock occurred in connection with the elimination of our classified common stock structure following the conversion of all Class B common stock to Class A common stock.

See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 4

CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended September 30,
(In millions; Unaudited)	2022		2021
Cash flows from operating activities:
Net income	$	1,011.8	$	770.1
Adjustments to reconcile net income to net cash used for operating activities:
Asset impairments	—		1.9
Depreciation and amortization	122.1		91.5
Stock-based compensation	31.7		25.6
Loss on redemption of senior notes	—		10.3
Gain on disposal of other assets	(0.4)		(2.5)
(Gain) loss on disposal of franchise	(49.6)		5.2
Unrealized investment loss	32.6		22.3
Deferred income taxes	63.5		25.6
Amortization of operating lease right-of-use assets	37.6		27.0
(Increase) decrease (net of acquisitions and dispositions):
Accounts receivable, net	(54.0)		(85.0)
Inventories	(852.4)		1,003.2
Other assets	(1,032.5)		(338.4)
Increase (net of acquisitions and dispositions):
Floor plan notes payable	101.1		91.3
Trade payables	9.3		97.2
Accrued liabilities	19.1		236.9
Other long-term liabilities and deferred revenue	42.6		19.7
Net cash provided by (used in) operating activities	(517.5)		2,001.9
Cash flows from investing activities:
Capital expenditures	(209.8)		(194.1)
Proceeds from sales of assets	16.4		4.6
Cash paid for other investments	(9.3)		(9.8)
Cash paid for acquisitions, net of cash acquired	(962.6)		(2,409.5)
Proceeds from sales of stores	148.0		45.7
Net cash used in investing activities	(1,017.3)		(2,563.1)
Cash flows from financing activities:
Borrowings (repayments) on floor plan notes payable, net: non-trade	429.6		(840.9)
Borrowings on lines of credit	9,178.4		1,642.5
Repayments on lines of credit	(7,430.0)		(1,631.6)
Principal payments on long-term debt and finance lease liabilities, scheduled	(181.1)		(24.7)
Principal payments on long-term debt and finance lease liabilities, other	(70.0)		(483.6)
Proceeds from issuance of long-term debt	337.8		817.5
Payment of debt issuance costs	(4.7)		(10.9)
Proceeds from issuance of common stock	28.1		1,127.9
Repurchase of common stock	(644.4)		(15.9)
Dividends paid	(33.8)		(28.2)
Payment of contingent consideration related to acquisitions	(7.2)		(1.4)
Other financing activity	(2.7)		—
Net cash provided by financing activities	1,600.0		550.7
Effect of exchange rate changes on cash and cash equivalents	(3.3)		0.9
Increase (decrease) in cash, restricted cash, and cash equivalents	61.9		(9.6)
Cash, restricted cash, and cash equivalents at beginning of year	178.4		162.4
Cash, restricted cash, and cash equivalents at end of period	$	240.3	$	152.8

See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 5

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Nine Months Ended September 30,
(In millions)	2022		2021
Reconciliation of cash, restricted cash, and cash equivalents to the consolidated balance sheets
Cash and cash equivalents	$	172.7	$	137.8
Restricted cash from collections on auto loans receivable and customer deposits	60.3		15.0
Cash, restricted cash, and cash equivalents	233.0		152.8
Restricted cash on deposit in reserve accounts, included in other non-current assets	7.3		—
Total cash, restricted cash, and cash equivalents reported in the Consolidated Statements of Cash Flows	$	240.3	$	152.8
Supplemental cash flow information:
Cash paid during the period for interest	$	122.2	$	89.5
Cash paid during the period for income taxes, net	380.0		237.3
Debt paid in connection with store disposals	23.6		8.7
Non-cash activities:
Debt issued in connection with acquisitions	$	—	$	355.4
Contingent consideration in connection with acquisitions	21.7		0.9
Debt assumed in connection with acquisitions	0.7		4.0
Acquisition of finance leases in connection with acquisitions	78.2		—
Right-of-use assets obtained in exchange for lease liabilities	22.3		131.2
Unsettled repurchases of common stock	9.2		—

See accompanying condensed notes to consolidated financial statements.

FINANCIAL STATEMENTS 6

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. INTERIM FINANCIAL STATEMENTS

Basis of Presentation

These condensed Consolidated Financial Statements contain unaudited information as of September 30, 2022, and for the three and nine months ended September 30, 2022 and 2021. The unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America for annual financial statements are not included herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2021 audited Consolidated Financial Statements and the related notes thereto. The financial information as of December 31, 2021, is derived from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain immaterial reclassifications of amounts previously reported have been made to the accompanying condensed Consolidated Financial Statements to maintain consistency and comparability between periods presented.

NOTE 2. CONTRACT LIABILITIES AND ASSETS

Contract Liabilities

We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $274.0 million and $239.0 million as of September 30, 2022, and December 31, 2021, respectively; and we recognized $10.4 million and $32.5 million of revenue in the three and nine months ended September 30, 2022 related to our contract liability balance at December 31, 2021. Our contract liability balance is included in accrued liabilities and deferred revenue.

Contract Assets

Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related 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. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract. Our contract asset balances associated with future estimated variable consideration were $12.7 million and $9.6 million as of September 30, 2022 and December 31, 2021, respectively; and are included in trade receivables and other non-current assets.

NOTES TO FINANCIAL STATEMENTS 7

NOTE 3. ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS

Accounts receivable consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
Contracts in transit	$	356.9	$	304.9
Trade receivables	115.2		125.5
Vehicle receivables	114.0		106.6
Manufacturer receivables	145.8		120.5
Auto loan and lease receivables	1,821.5		829.2
Other receivables	17.2		43.2
	2,570.6		1,529.9
Less: Allowance for doubtful accounts	(37.0)		(17.3)
Less: Long-term portion of accounts receivable, net1	(1,529.0)		(602.6)
Total accounts receivable, net	$	1,004.6	$	910.0

1The long-term portions of accounts receivable and allowance for doubtful accounts were included as a component of other non-current assets in the Consolidated Balance Sheets.

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 approximately ten days after selling a vehicle.

•Trade receivables are comprised of amounts due from customers for open charge accounts, 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.

•Auto loan receivables include amounts due from customers related to vehicle sales financed through Driveway Finance Corporation.

•Lease receivables include amounts related to vehicles leased to customers through Pfaff Leasing.

Interest income on auto loan 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 loan originations are capitalized and expensed as an offset to interest income when recognized on the loans. All other receivables are recorded at invoice and do not bear interest until they are 60 days past due.

The balances of auto loan and lease receivables are made up of loans secured by the related vehicles. More than 98% of the portfolio is aged less than 60 days past due with less than 2% on non-accrual status.

(Dollars in millions)	September 30, 2022		December 31, 2021
Total Auto loan and lease receivables	$	1,821.5	$	829.2
Less: Allowance for loan and lease losses	(52.4)		(25.0)
Auto loan and lease receivables, net	$	1,769.1	$	804.2

NOTES TO FINANCIAL STATEMENTS 8

Below is a breakdown of the current and long term portions of our auto loan and lease receivables:

(Dollars in millions)	September 30, 2022		December 31, 2021
Current portion of auto loan and lease receivables, net of allowance of $33.8 and $13.6	$	267.7	$	224.5
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,501.4		579.7
Auto loan and lease receivables, net	$	1,769.1	$	804.2

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

	Nine Months Ended September 30,
(Dollars in millions)	2022		2021
Allowance for loan losses at beginning of period	$	22.5	$	12.9
Charge-offs	(36.3)		(9.7)
Recoveries	12.2		6.1
Provision expense	49.7		6.0
Allowance for loan losses at end of period	48.1		15.3
Allowance for lease losses	4.3		1.9
Total allowance for loan and lease losses balance at end of period	$	52.4	$	17.2

Ending auto loan receivables (principal balances) by FICO score:

(Dollars in millions)	September 30, 2022		December 31, 2021
<5991	$	97.9	$	83.2
600-699	811.7		437.6
700-774	526.4		166.8
775+	250.5		37.4
Total auto loan receivables	1,686.5		725.0
Lease portfolio and accrued interest	135.0		104.2
Total auto loan and lease receivables	$	1,821.5	$	829.2

1Includes loans that are originated with no FICO score available.

In accordance with Topic 326, the allowance for loan and lease losses is estimated based on our historical write-off experience, current conditions and forecasts, as well as the value of any underlying assets securing these loans. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance upon reaching 120 days past due status. The remainder of our receivables are due primarily from manufacturer partners and various third-party lenders. The historical losses related to these balances are immaterial.

The long-term portion of auto loan and lease receivables was included as a component of other non-current assets in the Consolidated Balance Sheets as follows:

(Dollars in millions)	September 30, 2022		December 31, 2021
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	$	1,501.4	$	579.7
Unallocated acquisition purchase price	456.6		1,554.6
Other	258.1		254.4
Other non-current assets	$	2,216.1	$	2,388.7

NOTES TO FINANCIAL STATEMENTS 9

NOTE 4. INVENTORIES

The components of inventories, net, consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
New vehicles	$	1,292.8	$	812.9
Used vehicles	1,826.5		1,418.3
Parts and accessories	190.0		154.3
Total inventories	$	3,309.3	$	2,385.5

NOTE 5. GOODWILL AND FRANCHISE VALUE

The changes in the carrying amounts of goodwill are as follows:

(in millions)	Domestic		Import		Luxury		Corporate and Other		Consolidated
Balance as of December 31, 2020 ¹	$	204.5	$	287.9	$	100.6	$	—	$	593.0
Additions through acquisitions 2	101.0		188.7		105.8		—		395.5
Reductions through divestitures	(1.5)		(8.4)		(1.3)		—		(11.2)
Balance as of December 31, 2021 ¹	304.0		468.2		205.1		—		977.3
Additions through acquisitions 3	121.0		219.1		137.3		23.0		500.4
Reductions through divestitures	(5.8)		(8.8)		—		—		(14.6)
Balance as of September 30, 2022 ¹	$	419.2	$	678.5	$	342.4	$	23.0	$	1,463.1

1 Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008.

2 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $395.5 million of goodwill.

3 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $500.4 million of goodwill. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and goodwill is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

The changes in the carrying amounts of franchise value are as follows:

(in millions)	Franchise Value
Balance as of December 31, 2020	$	350.2
Additions through acquisitions 1	459.7
Reductions through divestitures	(8.9)
Reductions from impairments	(1.9)
Balance as of December 31, 2021	799.1
Additions through acquisitions 2	1,088.3
Reductions through divestitures	(20.6)
Balance as of September 30, 2022	$	1,866.8

1 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $459.7 million of franchise value.

2 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $1,088.3 million of franchise value. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and franchise value is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

NOTE 6. CREDIT FACILITIES AND LONG-TERM DEBT

US Bank Credit Facility

On June 2, 2022, we entered into a Second Amendment to our Fourth Amended and Restated Loan Agreement with U.S. Bank National Association as agent for the lenders, and each of the lenders party to the loan agreement, as lenders. The credit facility continues to provide for a total financing commitment of $3.75 billion, which may be further expanded under the Second Amendment, subject to lender approval and the satisfaction of other conditions, up to a total of $4.5 billion. Among other changes, the Second Amendment:

NOTES TO FINANCIAL STATEMENTS 10

•Incorporates the adoption of the Secured Overnight Financing Rate (SOFR) as a replacement of the London Interbank Offered Rate (LIBOR).

•Modifies the initial allocation of the financing commitment to up to $1.0 billion in used vehicle inventory floorplan financing, up to $1.5 billion in revolving financing for general corporate purposes, including acquisitions and working capital, up to $1.2 billion in new vehicle inventory floorplan financing, and up to $50 million in service loaner vehicle floorplan financing.

•Modifies our option to reallocate the commitments under the credit facility, such that the new and used vehicle floor plan commitments may have unlimited allocation and the aggregate revolving loan commitment may not be more than the 40% 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.

•Modifies the conditions for including real property in the Revolving Loan Borrowing Base to better facilitate borrowing against real estate and modifies the overall cap to $1.0 billion.

All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities.

The interest rate on the credit facility varies based on the type of debt, with the rate One-month Term SOFR plus 1.20% for new vehicle floor plan financing, Daily Simple SOFR plus 1.50% for used vehicle floor plan financing, 1.30% for service loaner floor plan financing and 1.10% for our working capital revolver. The annual interest rates associated with our floor plan commitments are as follows:

Commitment	Annual Interest Rate at September 30, 2022
New vehicle floor plan	4.30%
Used vehicle floor plan	4.48%
Service loaner floor plan	4.28%
Revolving line of credit	4.08%

Other Credit Facilities and Lines of Credit

On June 3, 2022, we entered into a credit agreement with The Bank of Nova Scotia (BNS), Royal Bank of Canada, Bank of Montreal, The Toronto-Dominion Bank, VW Credit Canada, Inc. and BMW Group Financial Services, as lenders, and BNS, as administrative agent for the lenders. Pursuant to the credit agreement, the lenders assumed all of the indebtedness under our original commitment letter, dated August 30, 2021, between us and BNS, including the letters of credit issued thereunder, and agreed to certain new and amended terms. Among other things, the credit agreement establishes a total financing commitment of approximately $1.125 billion CAD, including (i) up to $100.0 million CAD to finance our working capital and for general corporate purposes; (ii) up to $500.0 million CAD to finance the purchase of new motor vehicles (Wholesale Flooring Facility); (iii) up to $100.0 million CAD to finance the purchase of used motor vehicles for sale in Canada and for export to the United States; (iv) up to $400.0 million CAD for the wholesale lease financing of leased units and finance contracts, and (v) up to $25.0 million CAD to finance certain motor vehicle leases. The credit agreement also establishes sublimits for swingline commitments and/or letter of credit commitments under certain of the Canadian facilities and incorporates an accordion feature to increase maximum potential borrowings under the Wholesale Flooring Facility by up to $200.0 million CAD and under the other Canadian facilities by up to $200.0 million CAD in aggregate. Borrowings under the credit agreement accrue interest at rates equal to the greater of BNS’ prime lending rate or the Canadian Dollar Offered Rate plus, in each case, a spread, with the spreads ranging from 0.25% per annum to 1.30% per annum. All Canadian Facilities other than the Wholesale Flooring Facility, which is a demand facility, mature on June 3, 2025.

Other Credit Facilities and Lines of Credit

In 2022, we amended our securitization facility agreement, increasing our commitment for borrowings of up to $1.0 billion and extending the maturity date to July 2024. As of September 30, 2022, we had $350.0 million drawn on the securitization facility.

NOTES TO FINANCIAL STATEMENTS 11

Non-Recourse Notes Payable

Driveway Finance Corporation auto loans receivable are primarily funded through our warehouse facilities and asset-backed term funding transactions. These non-recourse funding vehicles are structured to legally isolate the auto loans receivable, 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 auto loans receivable. We do, however, continue to have the rights associated with the interest we retain in these non-recourse funding vehicles.

In August 2022, we issued $298.1 million in non-recourse notes payable related to the asset-backed term funding transaction.

NOTE 7. EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS

Repurchases of Common Stock

Repurchases of our common stock occurred under a repurchase authorization granted by our Board of Directors and related to shares withheld as part of the vesting of restricted stock units (RSUs). On November 30, 2021, our Board of Directors approved an additional $750 million repurchase authorization of our common stock, increasing our total repurchase authorization to $1.25 billion when combined with the amount previously authorized by the Board for repurchase. Share repurchases under this authorization were as follows:

	Repurchases Occurring in 2022			Cumulative Repurchases as of September 30, 2022
	Shares	Average Price		Shares	Average Price
Share Repurchase Authorization	2,254,193	$	282.46	6,730,124	$	172.95

As of September 30, 2022, we had $86.0 million available for repurchases pursuant to our share repurchase authorization.

In addition, during 2022, we repurchased 56,867 shares at an average price of $296.94 per share, for a total of $16.9 million, related to tax withholding associated with the vesting of RSUs. The repurchase of shares related to tax withholding associated with stock awards does not reduce the number of shares available for repurchase as approved by our Board of Directors.

ATM Equity Offering

In 2020, we entered into an ATM Equity Offering Sales Agreement, which allows us to offer and sell, from time to time, shares of our common stock, no par value, having an aggregate gross sales price of up to $400 million. The shares will be issued pursuant to a registration statement on Form S-3 (File No. 333-239969), which became effective upon its filing on July 21, 2020. Under this agreement, we may enter into forward share purchase transactions. As of September 30, 2022, no amounts have been issued in relation to the ATM Equity Offering Sales Agreement.

Redeemable Non-Controlling Interest

In 2021, we expanded into Canada through a partnership with Toronto-based Pfaff Automotive Partners. As part of the acquisition, we were granted the right to purchase (Call Option), and granted Pfaff Automotive a right to sell (Put Option), the remaining interest after a three-year period, with a purchase price based on Pfaff’s pro rata share of assets at the date of exercise of the Call or Put Option, as applicable. As a result of this redemption feature, we recorded redeemable non-controlling interest that is classified as mezzanine equity in the accompanying Consolidated Balance Sheets. The non-controlling interest is adjusted each reporting period for income (loss) attributable to the non-controlling interest.

NOTES TO FINANCIAL STATEMENTS 12

NOTE 8. 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 that the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities 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 investments primarily consisting of our investment in Shift Technologies, Inc. (Shift), a San Francisco-based digital retail company. Shift has a readily determinable fair value following Shift going public in a reverse-merger deal with Insurance Acquisition, a special purpose acquisition company, in the fourth quarter of 2020. We calculated the fair value of this investment using quoted prices for the identical security (Level 1) and recorded the fair value as part of other non-current assets. An additional component of our investment in Shift consists of shares in escrow subject to release upon certain market conditions being met. The fair value of this component of our investment in Shift is measured using observable Level 2 market expectations at each measurement date and is recorded as part of other non-current assets. For the three and nine months ended September 30, 2022, we recognized a $0.3 million and $32.6 million unrealized investment gain and loss related to Shift, respectively. For the three and nine months ended September 30, 2021, we recognized a $23.2 million and $22.3 million unrealized investment loss related to Shift, respectively. These amounts were recorded as a component of Other expense, net.

We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using 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. As of September 30, 2022, our real estate mortgages and other debt, which includes capital leases, had maturity dates between October 1, 2022, and July 1, 2038.

We have derivative instruments consisting of interest rate caps and have had an interest rate collar in prior periods. The fair value of derivative assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is recorded as 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.

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 nine-month period ended September 30, 2022.

NOTES TO FINANCIAL STATEMENTS 13

Below are our investments that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	8.3	$	—	$	—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	40.4	$	0.5	$	—

Below are our derivative assets and liabilities that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	23.8	$	—
Derivative liability	—		23.8		—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	6.4	$	—
Derivative liability	—		8.9		—

A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows:

(in millions)	September 30, 2022		December 31, 2021
Carrying value
4.625% Senior notes due 2027	$	400.0	$	400.0
4.375% Senior notes due 2031	550.0		550.0
3.875% Senior notes due 2029	800.0		800.0
Non-recourse notes payable	494.1		317.6
Real estate mortgages and other debt	477.5		477.6
	$	2,721.6	$	2,545.2
Fair value
4.625% Senior notes due 2027	$	360.0	$	420.0
4.375% Senior notes due 2031	442.8		583.0
3.875% Senior notes due 2029	642.0		815.0
Non-recourse notes payable	482.0		316.8
Real estate mortgages and other debt	421.5		488.7
	$	2,348.3	$	2,623.5

NOTE 9. NET INCOME PER SHARE

We compute net income per share using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding common shares underlying equity awards that are unvested or subject to forfeiture. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the common shares issuable upon the net exercise of stock options and unvested RSUs and is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumed the conversion of Class B common stock, while the diluted net income per share of Class B common stock did not assume the conversion of those shares.

Prior to June 7, 2021, our common stock was classified as Class A common stock. The Class A common stock reclassification as common stock occurred pursuant to an amendment and restatement of our Articles of Incorporation in connection with the elimination of our classified common stock structure following the conversion of all Class B common stock to Class A common stock. Prior to the reclassification, except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock were identical. Under our Articles

NOTES TO FINANCIAL STATEMENTS 14

of Incorporation, the Class A and Class B common stock shared equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation that would adversely alter the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year were allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights were identical, the undistributed earnings were allocated on a proportionate basis.

The following is a reconciliation of net income and weighted average shares used for our basic earnings per share (EPS) and diluted EPS:

Three Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Common Stock
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	329.6	$	307.9
Weighted average common shares outstanding – basic	27.5		30.3
Effect of dilutive stock options on weighted average common shares	0.1		0.2
Weighted average common shares outstanding – diluted	27.6		30.5
Basic earnings per share attributable to Lithia Motors, Inc.	$	11.97	$	10.18
Diluted earnings per share attributable to Lithia Motors, Inc.	$	11.92	$	10.11

The effect of antidilutive securities on Class A and Class B common stock was evaluated for the three-month periods ended September 30, 2022, and 2021 and was determined to be immaterial.

Nine Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Class A		Class B
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic	$	1,003.4	$	768.4	$	0.6
Conversion of class B common shares into class A common shares	—		0.6		—
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	1,003.4	$	769.0	$	0.6
Weighted average common shares outstanding – basic	28.5		28.4		—
Conversion of class B common shares into class A common shares	—		—		—
Effect of employee stock purchases and restricted stock units on weighted average common shares	0.1		0.2		—
Weighted average common shares outstanding – diluted	28.6		28.6		—
Basic earnings per share attributable to Lithia Motors, Inc.	$	35.23	$	27.12	$	27.12
Diluted earnings per share attributable to Lithia Motors, Inc.	$	35.10	$	26.91	$	26.91

The effect of antidilutive securities on Class A and Class B common stock was evaluated for the nine-month periods ended September 30, 2022, and 2021 and was determined to be immaterial.

NOTE 10. SEGMENTS

While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury.

Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Stellantis, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, as well as automotive finance and insurance products.

NOTES TO FINANCIAL STATEMENTS 15

Corporate and other revenue and income includes the results of operations of our stand-alone body shops offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase income for Corporate and other while decreasing segment income for the reportable 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 employees within our corporate headquarters who perform certain dealership functions.

We define our chief operating decision maker (CODM) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM does not regularly review capital expenditures on a reporting unit level. Performance measurement of each reportable segment by the CODM are based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of and to allocate resources, mainly associated with expected inventory and working capital requirements, to each of the reportable segments.

NOTES TO FINANCIAL STATEMENTS 16

Certain financial information on a segment basis is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Revenues:
Domestic
New vehicle retail	$	1,078.3	$	766.1	$	3,083.1	$	2,305.3
Used vehicle retail	832.9		699.7		2,418.7		1,803.7
Used vehicle wholesale	115.4		74.5		376.3		174.4
Finance and insurance	98.9		80.5		284.6		217.7
Service, body and parts	206.7		170.2		597.5		450.0
Fleet and other	69.7		28.2		182.0		67.4
	2,401.9		1,819.2		6,942.2		5,018.5
Import
New vehicle retail	1,389.0		1,376.9		4,022.9		3,730.7
Used vehicle retail	1,015.5		847.9		2,920.9		2,127.8
Used vehicle wholesale	112.7		99.5		361.2		247.8
Finance and insurance	178.9		162.9		532.3		408.9
Service, body and parts	292.1		235.3		802.5		596.9
Fleet and other	12.7		4.9		27.6		37.5
	3,000.9		2,727.4		8,667.4		7,149.6
Luxury
New vehicle retail	840.3		750.9		2,513.2		2,204.1
Used vehicle retail	618.2		530.3		1,861.9		1,309.9
Used vehicle wholesale	92.1		72.8		300.5		171.9
Finance and insurance	61.2		56.1		187.2		145.7
Service, body and parts	200.3		162.8		580.3		434.7
Fleet and other	30.9		22.2		81.4		59.5
	1,843.0		1,595.1		5,524.5		4,325.8
	7,245.8		6,141.7		21,134.1		16,493.9
Corporate and other	49.9		28.1		107.2		28.3
	$	7,295.7	$	6,169.8	$	21,241.3	$	16,522.2
Segment income1:
Domestic	$	127.9	$	123.6	$	400.1	$	335.6
Import	261.5		255.4		782.8		573.2
Luxury	109.5		108.5		366.6		249.8
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6

1Segment income for each of the segments is a Non-GAAP measure defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net.

NOTES TO FINANCIAL STATEMENTS 17

Reconciliation of total segment income for reportable segments to our consolidated income before income taxes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6
Corporate and other	55.4		22.8		117.6		80.1
Depreciation and amortization	(41.9)		(34.4)		(122.1)		(91.5)
Other interest expense	(49.6)		(28.0)		(114.1)		(79.6)
Other income (expense), net	(7.1)		(25.7)		(37.0)		(14.6)
Income before income taxes	$	455.7	$	422.2	$	1,393.9	$	1,053.0

Total assets by reportable segments is as follows:

(in millions)	September 30, 2022		December 31, 2021
Total assets:
Domestic	$	2,504.1	$	1,574.7
Import	2,855.4		1,858.1
Luxury	2,007.3		1,407.1
Corporate and other	6,707.7		6,307.0
	$	14,074.5	$	11,146.9

NOTE 11. 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 balance sheet; 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 from one to 25 years or more. 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.

Our finance lease liabilities are included in long-term debt, with the current portion included in current maturities of long-term debt. The related assets are included in property, plant and equipment, net of accumulated amortization. These amounts are included in other non-current assets until we finalize our purchase accounting.

We rent or sublease certain real estate to third parties.

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. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (AOCI) in equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.

In 2019, to hedge the business exposure to rising interest rates on a portion of our variable rate debt, we entered into a five-year, zero-cost interest rate collar, with an aggregate notional amount of $300 million, effective June 1, 2019. This instrument hedged interest rate risk related to a portion of our $1.2 billion of non-trade floor plan notes payable.

NOTES TO FINANCIAL STATEMENTS 18

The table below presents the liabilities related to the zero-cost interest rate collar:

(Dollars in millions)	Accrued Liabilities		Other Long-Term Liabilities		Other Non-Current Assets		Total
Balance as of December 31, 2020	$	(2.6)	$	(6.0)	$	—	$	(8.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.6)		2.4		—		1.8
Balance as of March 31, 2021	(2.5)		(3.6)		—		(6.1)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.2		—		(0.5)
Balance as of June 30, 2021	(2.5)		(3.4)		—		(5.9)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.7		—		—
Balance as of September 30, 2021	(2.5)		(2.7)		—		(5.2)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.1)		2.0		—		1.9
Balance as of December 31, 2021	(1.9)		(0.7)		—		(2.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	1.2		0.7		2.7		4.6
Balance as of March 31, 2022	—		—		2.7		2.7
Amounts reclassified from AOCI to floorplan interest expense	—		—		(2.7)		(2.7)
(Loss) gain recorded from interest rate collar	—		—		—		—
Balance as of June 30, 2022	$	—	$	—	$	—	$	—

During the three months ended June 30, 2022, we terminated our zero-cost interest rate collar, resulting in a $2.7 million reclassification from AOCI to floorplan interest expense.

In 2020, we entered into two offsetting derivative arrangements that do not qualify for hedge accounting. These are both related to a securitization facility, effective October 2, 2020. We purchased and sold offsetting interest rate caps, both of which have a five-year term with notional amounts of $100 million.

In 2021, we entered into two additional offsetting derivative arrangements that do not qualify for hedge accounting. These are both related to a securitization facility, effective June 15, 2021. We purchased and sold offsetting interest rate caps, both of which have a five-year term with notional amounts of $100 million.

As of September 30, 2022, the balance on all four agreements was an offsetting $23.8 million and was recorded in other current assets and accrued liabilities, respectively.

See Note 8 – Fair Value Measurements for information on the fair value of the derivative contracts.

NOTE 13. ACQUISITIONS

In the first nine months of 2022, we completed the following acquisitions:

•In January 2022, John L. Sullivan Chevrolet, John L. Sullivan Chrysler Dodge Jeep Ram, and Roseville Toyota in California.

•In March 2022, Sahara Chrysler Dodge Jeep Ram, Desert 215 Superstore, and Jeep Only in Nevada.

•In May 2022, Sisley Honda in Canada.

•In June 2022, Esserman International Volkswagen & Acura in Florida.

•In June 2022, Henderson Hyundai Superstore in Nevada.

•In June 2022, Lehman Auto Group in Florida.

•In July 2022, Elk Grove Ford in California.

•In September 2022, Wilde Honda, Wilde Subaru, Wilde Chrysler Dodge Jeep Ram, Wilde Toyota, and Wilde East Towne Honda in Wisconsin.

Revenue and operating income contributed by the 2022 acquisitions subsequent to the date of acquisition were as follows (in millions):

NOTES TO FINANCIAL STATEMENTS 19

Nine Months Ended September 30,	2022
Revenue	$	812.6
Operating income	43.2

In the first nine months of 2021, we completed the following acquisitions:

•In February 2021, Fields Chrysler Jeep Dodge Ram and Land Rover Orlando in Florida.

•In March 2021, Fink Auto Group in Florida.

•In March 2021, Avondale Nissan in Arizona.

•In April 2021, Suburban Collection Auto Group in Michigan.

•In April 2021, Planet Honda in New Jersey.

•In May 2021, Las Vegas Hyundai Superstore Auto Group in Nevada.

•In May 2021, BMW of Sherman Oaks and Acura of Sherman Oaks in California.

•In June 2021, Southwest Kia Group in Arizona.

•In June 2021, Herrin-Gear Toyota in Mississippi.

•In June 2021, Michael’s Subaru and Michael’s Toyota in Washington.

•In July 2021, Subaru of Mobile in Alabama.

•In August 2021, Rock Honda in California.

•In September 2021, Curry Honda in GA.

•In September 2021, Orange Coast Chrysler, Dodge, Jeep, Ram and Ford.

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 2022 acquisitions and the preliminary purchase price allocations for identified assets acquired and liabilities assumed as of the acquisition date:

(in millions)	Consideration
Cash paid, net of cash acquired	$	958.5

(in millions)	Assets Acquired and Liabilities Assumed
Accounts receivable	$	0.1
Inventories	$	166.1
Franchise value	63.7
Property and equipment	325.2
Other non-current assets	459.5
Floor plan notes payable	(0.7)
Debt and finance lease obligations	(78.2)
Other long-term liabilities	(7.3)
	928.4
Goodwill	30.1
	$	958.5

The purchase price allocations for the acquisitions from the first quarter of 2022 through the third quarter of 2022 are preliminary, and we have not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects. We recorded the purchase price allocations based upon information that is currently available and recorded unallocated items as a component of other non-current assets in the Consolidated Balance Sheets.

We expect substantially all of the goodwill related to acquisitions completed in 2022 to be deductible for federal income tax purposes.

In the three and nine-month periods ended September 30, 2022, we recorded $2.0 million and $10.1 million, respectively, in acquisition-related expenses as a component of selling, general and administrative expense.

NOTES TO FINANCIAL STATEMENTS 20

Comparatively, we recorded $6.3 million and $17.9 million, respectively, of acquisition-related expenses in the same periods of 2021.

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three and nine-month periods ended September 30, 2022 and 2021 had occurred on January 1, 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2022		2021		2022		2021
Revenue	$	7,411.1	$	6,791.7	$	22,300.4	$	18,194.2
Net income attributable to Lithia Motors, Inc.	337.3		343.9		1,065.0		857.3
Basic earnings attributable to Lithia Motors, Inc. per share	12.25		11.37		37.39		30.23
Diluted earnings attributable to Lithia Motors, Inc. per share	12.20		11.29		37.26		30.00

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 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 nonrecurring proforma adjustments directly attributable to the acquisitions are included in the reported proforma revenues and earnings.

NOTE 14. NET INVESTMENT IN OPERATING LEASES

In 2021, we purchased a leasing entity and the sales-type financing and operating leases it manages.

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:

(in millions)	September 30, 2022		December 31, 2021
Vehicles, at cost1	$	86.8	$	66.0
Accumulated depreciation1	(6.4)		(0.9)
Net investment in operating leases	$	80.4	$	65.1

1Vehicles, at cost and accumulated depreciation are recorded in other current assets, on the Consolidated Balance Sheets.

NOTES TO FINANCIAL STATEMENTS 21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Risk Factors

Certain statements under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” and elsewhere in this Form 10-Q constitute forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as “project,” “outlook,” “target,” “may,” “will,” “would,” “should,” “seek,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “likely,” “goal,” “strategy,” “future,” “maintain,” and “continue” or the negative of these terms or other comparable terms. Examples of forward-looking statements in this Form 10-Q include, among others, statements we make regarding:

•Future market conditions, including anticipated car and other sales levels and the supply of inventory

•Our business strategy and plans, including our achieving our 2025 Plan (or “50/50” Plan)

•The growth, expansion and success of our network, including our finding accretive acquisitions and acquiring additional stores

•Annualized revenues from acquired stores

•The growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation, their synergies and other impacts on our business and our ability to meet Driveway-related targets

•Our capital allocations and uses and levels of capital expenditures in the future

•Expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and any projections

•Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facility, unfinanced real estate and other financing sources

•Our continuing to purchase shares under our share repurchase program

•Impacts from the continued COVID-19 pandemic on the national and local economies in which we operate, our business operations and consumer demand

•Our compliance with financial and restrictive covenants in our credit facility and other debt agreements

•Our programs and initiatives for employee recruitment, training, and retention

•Our strategies for customer retention, growth, market position, financial results and risk management

The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties and situations that may cause our actual results to materially differ from the results expressed or implied by these statements. Certain important factors that could cause actual results to differ from our expectations are discussed in the Risk Factors section of our 2021 Annual Report on Form 10-K, as supplemented and amended from time to time in Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission (SEC).

By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. You should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We assume no obligation to update or revise any forward-looking statement.

Overview

Lithia & Driveway (LAD) is a growth company focused on profitably consolidating the largest retail sector in North America. We are among the fastest growing companies in the Fortune 500 (#2 on 10-year EPS Growth, #3 on 10-Year TSR and #12 on 10-year Revenue growth in 2021). As of September 30, 2022, we operated 291 locations representing 40 brands in 26 states and 3 Canadian provinces.

We offer a wide array of products and services fulfilling the entire vehicle ownership lifecycle including new and used vehicles, financing, and insurance products and automotive repair and maintenance. We strive for diversification in our products, services, brands and geographic locations to reduce dependence on any one manufacturer, reduce susceptibility to changing consumer preferences, manage market risk and maintain profitability. Our diversification, along with our operating structure, provides a resilient and nimble business model.

MANAGEMENT’S DISCUSSION AND ANALYSIS 22

Our omni-channel strategy is designed to pragmatically disrupt the industry by leveraging our experienced teams, vast owned inventories, technology, and physical network. We continue to lead the industry’s consolidation and, combined with Driveway’s e-commerce in-home experiences and Driveway Finance Corporation’s growing auto loan portfolio, further accelerate our massive profit and capital engine. Together, these endeavors create a unique and compelling high-growth strategy that provides transportation solutions wherever, whenever and however consumers desire. Our long-term strategy to create value for our customers, employees and shareholders includes the following elements:

Driving operational excellence, innovation and diversification

LAD builds magnetic brand loyalty in our 291 locations within our Lithia channel and with Driveway, our e-commerce home delivery experience, and GreenCars, our electric vehicle learning resource and marketplace. Operational excellence is achieved by focusing the business on convenient and transparent consumer experiences supported by proprietary data science to improve market share, consumer loyalty, and profitability. By promoting an entrepreneurial model with our in-store experiences, we build strong businesses responsive to each of our local markets. Utilizing performance-based action plans, we develop high-performing teams and foster manufacturer relationships.

In response to evolving consumer preferences, we invest in modernization that supports and expands our core business. These digital strategies combine our experienced, knowledgeable workforce with our owned inventory and physical network of stores, enabling us to be agile and adapt to consumer preferences and market specific conditions. Additionally, we systematically explore transformative adjacencies, which are identified to be synergistic and complementary to our existing business such as Driveway Finance Corporation, which holds our captive auto loan portfolio.

Our investments in modernization are well under way and are taking hold with our teams as they provide digital shopping experiences including finance, contactless test drives and home delivery or curbside pickup for vehicle purchases. Our people and these solutions power our national brands, overlaying our physical footprint in a way that we believe attracts a larger population of digital consumers seeking transparent, empowered, flexible and simple buying and servicing experiences.

Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our personnel. We develop pay plans that are measured based upon various factors such as customer satisfaction, profitability and individual performance metrics. These plans serve to reward team members for creating customer loyalty, achieving store potential, developing high-performing talent, meeting and exceeding manufacturer requirements and living our core values.

We have centralized many administrative functions to drive efficiencies and streamline store-level operations. The reduction of administrative functions at our stores allows our local managers to focus on customer-facing opportunities to increase revenues and gross profit. Our operations are supported by regional and corporate management, as well as dedicated training and personnel development programs which allow us to share best practices across our network and develop management talent.

Growth through network development

The foundation of our omni-channel plan is the growth and expansion of our physical network to provide consumers convenient access to all of our business lines in-store or through Driveway. Acquiring new vehicle franchises, which operate in markets ranging from mid-sized regional markets to metropolitan markets, provides us a cash generating and profitable model to expand our network of locations. In addition to being financially accretive, these businesses improve our ability to serve customers through wider selection, greater density and convenient access to vehicle repair services, our highest margin offerings. Our physical footprint currently reaches 95% of American consumers within an average radius of 250 miles.

While we target an annual after tax return of more than 15% for our acquisitions, we have averaged over a 25% return by the third year of ownership due to a disciplined approach focusing on accretive, cash flow positive targets at reasonable valuations. Culturally, we have a greater than 95% acquisition employee retention rate, demonstrating the valuable career opportunities we provide to our employees. We regularly optimize and balance our network through strategic divestitures to ensure continued high performance. We believe our disciplined approach provides us with attractive acquisition opportunities and expanded coast-to-coast coverage.

MANAGEMENT’S DISCUSSION AND ANALYSIS 23

Thoughtful capital allocation

Our capital deployment strategy targets deployment of 65% of free cash flows generated toward acquisitions, 25% toward capital expenditures, innovation and diversification and 10% in shareholder return in the form of dividends and share repurchases. As we identify acquisition opportunities that further enhance our business, we may consider other potential sources of capital, including financing of real estate and proceeds from debt or equity offerings. This disciplined approach, combined with our ability to successfully integrate newly-acquired locations, drives growth and profitability.

Key Revenue and Gross Profit Metrics

Key performance metrics for revenue and gross profit were as follows:

	Three Months Ended September 30,								Nine Months Ended September 30,
($ in millions, except per unit values)	2022			2021			Change		2022			2021			Change
Revenues
New vehicle retail	$	3,306.9		$	2,898.2		14.1	%	$	9,619.4		$	8,237.7		16.8	%
Used vehicle retail	2,465.8			2,079.5			18.6		7,197.0			5,236.6			37.4
Finance and insurance	333.3			297.0			12.2		977.0			765.0			27.7
Service, body and parts	712.2			578.3			23.2		2,022.6			1,503.4			34.5
Total Revenues	7,295.7			6,169.8			18.2		21,241.3			16,522.2			28.6
Gross profit
New vehicle retail	$	403.7		$	349.2		15.6	%	$	1,215.5		$	819.7		48.3	%
Used vehicle retail	201.3			232.6			(13.5)		663.4			601.3			10.3
Finance and insurance	333.3			297.0			12.2		977.0			765.0			27.7
Service, body and parts	384.2			302.6			27.0		1,076.7			799.0			34.8
Total Gross Profit	1,314.2			1,189.1			10.5		3,943.3			3,015.2			30.8
Gross profit margins
New vehicle retail	12.2		%	12.1		%	10	bps	12.6		%	10.0		%	260	bps
Used vehicle retail	8.2			11.2			(300)		9.2			11.5			(230)
Finance and insurance	100.0			100.0			—		100.0			100.0			—
Service, body and parts	54.0			52.3			170		53.2			53.2			—
Total Gross Profit Margin	18.0			19.3			(130)		18.6			18.2			40
Retail units sold
New vehicles	69,743			66,894			4.3	%	203,437			195,934			3.8	%
Used vehicles	81,215			76,362			6.4		235,930			205,643			14.7
Average selling price per retail unit
New vehicles	$	47,416		$	43,325		9.4	%	$	47,284		$	42,043		12.5	%
Used vehicles	30,361			27,233			11.5		30,505			25,464			19.8
Average gross profit per retail unit
New vehicles	$	5,789		$	5,221		10.9	%	$	5,975		$	4,184		42.8	%
Used vehicles	2,478			3,046			(18.6)		2,812			2,924			(3.8)
Finance and insurance	2,208			2,073			6.5		2,224			1,905			16.7
Total vehicle1	6,139			6,175			(0.6)		6,500			5,510			18.0

1 Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail.

Same Store Operating Data

We believe that same store comparisons are an important indicator of our financial performance. Same store measures demonstrate our ability to grow revenues in our existing locations. As a result, same store measures have been integrated into the discussion below.

MANAGEMENT’S DISCUSSION AND ANALYSIS 24

Same store measures reflect results for stores that were operating in each comparison period and only include the months when operations occurred in both periods. For example, a store acquired in August 2021 would be included in same store operating data beginning in September 2022, after its first full complete comparable month of operation. The third quarter operating results for the same store comparisons would include results for that store in only the month of September for both comparable periods.

	Three Months Ended September 30,								Nine Months Ended September 30,
($ in millions, except per unit values)	2022			2021			Change		2022			2021			Change
Revenues
New vehicle retail	$	2,770.4		$	2,824.5		(1.9)	%	$	7,316.1		$	7,896.8		(7.4)	%
Used vehicle retail	2,180.2			2,033.7			7.2		5,908.5			5,058.5			16.8
Finance and insurance	285.7			289.0			(1.1)		762.4			736.9			3.5
Service, body and parts	615.2			564.6			9.0		1,599.7			1,450.0			10.3
Total Revenues	6,245.9			6,021.1			3.7		16,585.1			15,891.5			4.4
Gross profit
New vehicle retail	$	334.6		$	342.2		(2.2)	%	$	922.3		$	791.5		16.5	%
Used vehicle retail	174.9			228.6			(23.5)		534.1			582.3			(8.3)
Finance and insurance	285.7			289.0			(1.1)		762.4			736.9			3.5
Service, body and parts	331.9			294.5			12.7		864.5			771.6			12.0
Total Gross Profit	1,117.2			1,161.8			(3.8)		3,081.3			2,912.3			5.8
Gross profit margins
New vehicle retail	12.1		%	12.1		%	—	bps	12.6		%	10.0		%	260	bps
Used vehicle retail	8.0			11.2			(320)		9.0			11.5			(250)
Finance and insurance	100.0			100.0			—		100.0			100.0			—
Service, body and parts	53.9			52.2			170		54.0			53.2			80
Total Gross Profit Margin	17.9			19.3			(140)		18.6			18.3			30
Retail units sold
New vehicles	58,086			64,873			(10.5)	%	152,689			187,024			(18.4)	%
Used vehicles	72,292			74,363			(2.8)		194,946			197,621			(1.4)
Average selling price per retail unit
New vehicles	$	47,695		$	43,540		9.5	%	$	47,915		$	42,224		13.5	%
Used vehicles	30,158			27,348			10.3		30,308			25,597			18.4
Average gross profit per retail unit
New vehicles	$	5,761		$	5,275		9.2	%	$	6,040		$	4,232		42.7	%
Used vehicles	2,419			3,074			(21.3)		2,740			2,947			(7.0)
Finance and insurance	2,191			2,075			5.6		2,193			1,916			14.5
Total vehicle1	6,007			6,215			(3.3)		6,356			5,557			14.4

1 Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail.

During the three months ended September 30, 2022, we had net income attributable to Lithia Motors, Inc. of $329.6 million, or $11.92 per share on a diluted basis, compared to $307.9 million, or $10.11 per share on a diluted basis, during the same period of 2021. During the nine months ended September 30, 2022, we had net income attributable to Lithia Motors, Inc. of $1,003.4 million, or $35.10 per share on a diluted basis, compared to $769.0 million, or $26.91 per share on a diluted basis, during the same period of 2021.

MANAGEMENT’S DISCUSSION AND ANALYSIS 25

New Vehicles

We believe that our new vehicle sales create incremental profit opportunities through certain manufacturer incentive programs, arranging of third-party financing, vehicle service and insurance contracts, future resale of used vehicles acquired through trade-in, and parts and service work. Same store new vehicle revenue decreased 1.9% and 7.4%, respectively, for the three and nine-month periods ended September 30, 2022 compared to the same periods in 2021. This was due to a decrease in unit volume of 10.5%, offset by an increase in average selling prices of 9.5% for the three months ended September 30, 2022, compared to the same period of 2021; and a decrease in unit volume of 18.4%, offset by an increase in average selling prices of 13.5% in the nine months ended September 30, 2022, compared to the same period of 2021. Our leaders in each market continue to adapt to changing conditions, respond to customer needs and manage inventory availability and selection.

Consumer demand continued to outpace supply in the third quarter of 2022 and as each manufacturer navigates component shortages and recovery of inventory production varies. This imbalance has resulted in higher than normal average selling prices and gross profits per unit. While there has been improvements in certain brands, we continue to expect reduced levels of new vehicle availability throughout the remainder of 2022.

Same store new vehicle gross profit per unit increased 9.2% and 42.7%, respectively, increasing new vehicle gross profit margins zero bps and 260 bps, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021.

Total same store new vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of new vehicles, increased $670 to $8,080 and increased $2,116 to $8,343 for the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021, respectively.

Used Vehicles

Used vehicle retail sales are a strategic focus for organic growth. We offer three categories of used vehicles: manufacturer certified pre-owned (CPO) vehicles; core vehicles, or late-model vehicles with lower mileage; and value autos, or vehicles with over 80,000 miles. We have established a company-wide target of achieving a per store average of 100 used retail units per month. Strategies to achieve this target include reducing wholesale sales and selling the full spectrum of used units, from late model CPO models to vehicles up to twenty years old. During the three months ended September 30, 2022, our stores sold an average of 90 used vehicles per store per month, compared to 92 used vehicles per store per month for the same period ended September 30, 2021. This slight decrease is due to performance at recently acquired locations.

Used vehicle revenue for the three and nine-month periods ended September 30, 2022 increased 18.6% and 37.4%, respectively, compared to the same periods of 2021 due to higher average selling prices, driven by the shortage of new vehicles, and acquisition activity. On a same store basis, used vehicle sales for the three and nine-month periods ended September 30, 2022 increased 7.2% and 16.8%, respectively, as compared to the same periods of 2021. The changes were mainly due to increases of 10.3% and 18.4%, respectively, in average selling prices, offset by decreases of 2.8% and 1.4%, respectively, in volumes for the three and nine-month periods ended September 30, 2022. Volume decreases were driven by declining volumes associated with certified vehicles offset by positive growth in value autos. We continue to focus on procuring vehicles across the full spectrum of the addressable used vehicle market to provide customers with a wide selection meeting all levels of affordability, driving increased used vehicle unit volumes.

Our used vehicle operations provide an opportunity to generate sales to customers unable or unwilling to purchase a new vehicle, sell brands other than the store’s new vehicle franchise(s) and increase sales from finance and insurance and parts and service.

Total same store used vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of retail used vehicles, decreased $601 to $4,496 and increased $56 to $4,843 for the three and nine-month periods ended September 30, 2022, as compared to the same periods of 2021, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS 26

Finance and Insurance

We believe that arranging vehicle financing is an important part of our ability to sell vehicles, and we attempt to arrange financing for every vehicle we sell. We also offer related products such as extended warranties, insurance contracts and vehicle and theft protection which drive continued engagement with the consumer throughout the ownership lifecycle.

Total finance and insurance income increased 12.2% and 27.7%, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021. Same store finance and insurance revenues decreased 1.1% and increased 3.5%, respectively, for the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021. Revenue increases associated with service contracts were offset by a decline in finance reserve revenues as we increase our penetration rates associated with Driveway Finance Corporation and the growth of our captive auto loan portfolio business. On a same store basis, our finance and insurance revenue per retail unit increased $116 to $2,191 and $277 to $2,193, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021.

Service, body and parts

We provide automotive repair and maintenance services for customers for the new vehicle brands sold by our stores, as well as service and repairs for most other makes and models. These after sales services are an integral part of our customer retention and the largest contributor to our overall profitability. Earnings from after sales continue to prove to be more resilient during economic downturns, when owners tend to repair their existing vehicles rather than buy new vehicles.

Our service, body, and parts revenue increased 23.2% and 34.5%, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021, driven by acquisitions, as well as increases in customer pay revenues. We believe the increased number of units in operation will continue to benefit our service, body and parts revenue in the coming years as more late-model vehicles age, necessitating repairs and maintenance.

We focus on retaining customers by offering competitively-priced routine maintenance and through our marketing efforts. In the three and nine-month periods ended September 30, 2022, the largest contribution to our service, body and parts revenue was same store customer pay revenue of $350.5 million and $918.7 million, respectively.

Same store service, body and parts gross profit increased 12.7% and 12.0%, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021. These increases were primarily due to increased volumes of customer pay transactions. Overall same store service, body, and parts gross margins increased 170 and 80 bps, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021, primarily as a result of our mix continuing to shift towards customer pay, which has higher margins than other service work. Same store customer pay gross margin increased 210 and 170 bps, respectively, in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021.

Segments

Certain financial information by segment is as follows:

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Revenues:
Domestic	$	2,401.9	$	1,819.2	$	582.7	32.0	%
Import	3,000.9		2,727.4		273.5		10.0
Luxury	1,843.0		1,595.1		247.9		15.5
	7,245.8		6,141.7		1,104.1		18.0
Corporate and other	49.9		28.1		21.8		NM
	$	7,295.7	$	6,169.8	$	1,125.9	18.2	%

NM - not meaningful

MANAGEMENT’S DISCUSSION AND ANALYSIS 27

	Nine Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Revenues:
Domestic	$	6,942.2	$	5,018.5	$	1,923.7	38.3	%
Import	8,667.4		7,149.6		1,517.8		21.2
Luxury	5,524.5		4,325.8		1,198.7		27.7
	21,134.1		16,493.9		4,640.2		28.1
Corporate and other	107.2		28.3		78.9		NM
	$	21,241.3	$	16,522.2	$	4,719.1	28.6	%

NM - not meaningful

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Segment income1:
Domestic	$	127.9	$	123.6	$	4.3	3.5	%
Import	261.5		255.4		6.1		2.4
Luxury	109.5		108.5		1.0		0.9
	498.9		487.5		11.4		2.3
Corporate and other	55.4		22.8		32.6		NM
	$	554.3	$	510.3	$	44.0	8.6

 

	Nine Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Segment income1:
Domestic	$	400.1	$	335.6	$	64.5	19.2	%
Import	782.8		573.2		209.6		36.6
Luxury	366.6		249.8		116.8		46.8
	1,549.5		1,158.6		390.9		33.7
Corporate and other	117.6		80.1		37.5		NM
	$	1,667.1	$	1,238.7	$	428.4	34.6

1Segment income for each of the segments is a Non-GAAP measure defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net. See Note 10 – Segments of the Condensed Notes to the Consolidated Financial Statements for additional information.

	Three Months Ended September 30,		Increase (Decrease)	% Increase (Decrease)
	2022	2021
Retail new vehicle unit sales:
Domestic	20,243	15,163	5,080	33.5	%
Import	37,235	39,645	(2,410)	(6.1)
Luxury	12,282	12,096	186	1.5
	69,760	66,904	2,856	4.3
Allocated to management	(17)	(18)	(1)	NM
	69,743	66,894	2,849	4.3	%

NM – Not meaningful

MANAGEMENT’S DISCUSSION AND ANALYSIS 28

	Nine Months Ended September 30,		Increase (Decrease)	% Increase (Decrease)
	2022	2021
Retail new vehicle unit sales:
Domestic	58,463	47,219	11,244	23.8	%
Import	108,329	112,303	(3,974)	(3.5)
Luxury	37,032	36,718	314	0.9
	203,824	196,240	7,584	3.9
Allocated to management	(387)	(314)	73	NM
	203,437	195,934	7,503	3.8	%

NM – Not meaningful

Domestic

A summary of financial information for our Domestic segment follows:

	Three Months Ended September 30,				Increase		% Increase
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	1,078.3	$	766.1	$	312.2	40.8	%
Used vehicle retail	832.9		699.7		133.2		19.0
Used vehicle wholesale	115.4		74.5		40.9		54.9
Finance and insurance	98.9		80.5		18.4		22.9
Service, body and parts	206.7		170.2		36.5		21.4
Fleet and other	69.7		28.2		41.5		147.2
	$	2,401.9	$	1,819.2	$	582.7	32.0
Segment income	$	127.9	$	123.6	$	4.3	3.5
Retail new vehicle unit sales	20,243		15,163		5,080		33.5	%

NM - not meaningful

Our Domestic segment revenue increased 32.0% in the three-month period ended September 30, 2022 compared to the same period of 2021, driven by increases in all major business lines. The acquisition of nine stores in 2022 and the acquisition and integration of 18 stores from 2021 were the primary contributors to these increases.

Our Domestic segment income increased 3.5% in the three-month period ended September 30, 2022 compared to the same period of 2021, primarily due to gross profit growth of 18.0%. Total Domestic SG&A as a percentage of gross profit increased from 59.4% to 61.2% for the three-month period ended September 30, 2022, compared to the same period of 2021. The increase for the three-month period ended September 30, 2022 was primarily driven by increases in all SG&A categories without proportional increases in gross profit. Floor plan interest expense for Domestic stores increased 198.2% for the three-month period ended September 30, 2022 compared to the same period of 2021.

	Nine Months Ended September 30,				Increase		% Increase
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	3,083.1	$	2,305.3	$	777.8	33.7	%
Used vehicle retail	2,418.7		1,803.7		615.0		34.1
Used vehicle wholesale	376.3		174.4		201.9		115.8
Finance and insurance	284.6		217.7		66.9		30.7
Service, body and parts	597.5		450.0		147.5		32.8
Fleet and other	182.0		67.4		114.6		170.0
	$	6,942.2	$	5,018.5	$	1,923.7	38.3
Segment income	$	400.1	$	335.6	$	64.5	19.2
Retail new vehicle unit sales	58,463		47,219		11,244		23.8	%

NM - not meaningful

MANAGEMENT’S DISCUSSION AND ANALYSIS 29

Our Domestic segment revenue increased 38.3% in the nine-month period ended September 30, 2022 compared to the same period of 2021, driven by increases across all business lines, primarily related to acquisition activity.

Our Domestic segment income increased 19.2% in the nine-month period ended September 30, 2022 compared to the same period of 2021, primarily due to gross profit growth of 27.4%. Total Domestic SG&A as a percentage of gross profit increased from 59.7% to 60.8% for the nine-month period ended September 30, 2022, compared to the same period of 2021. The increase for the nine-month period ended September 30, 2022 was primarily driven by increases in all SG&A categories without proportional increases in gross profit. Floor plan interest expense for Domestic stores increased 105.6% for the nine-month period ended September 30, 2022 compared to the same period of 2021.

Import

A summary of financial information for our Import segment follows:

	Three Months Ended September 30,				Increase (Decrease)		% Increase (Decrease)
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	1,389.0	$	1,376.9	$	12.1	0.9	%
Used vehicle retail	1,015.5		847.9		167.6		19.8
Used vehicle wholesale	112.7		99.5		13.2		13.3
Finance and insurance	178.9		162.9		16.0		9.8
Service, body and parts	292.1		235.3		56.8		24.1
Fleet and other	12.7		4.9		7.8		159.2
	$	3,000.9	$	2,727.4	$	273.5	10.0
Segment income	$	261.5	$	255.4	$	6.1	2.4
Retail new vehicle unit sales	37,235		39,645		(2,410)		(6.1)	%

NM - not meaningful

Our Import segment revenue increased 10.0% in the three-month period ended September 30, 2022 compared to the same period of 2021, driven by increases in all major business lines. The acquisition of 13 stores in 2022 and the acquisition and integration of 34 stores from 2021 were the primary contributors to these increases.

Our Import segment income increased 2.4% in the three-month period ended September 30, 2022 compared to the same period of 2021, due to gross profit growth of 9.0%. Total Import SG&A as a percentage of gross profit increased from 55.6% to 57.3% for the three-month period ended September 30, 2022 compared to the same period of 2021. The increase for the three-month period ended September 30, 2022 was primarily driven by increases in all SG&A categories without proportional increases in gross profit. Floor plan interest expense for Import stores increased 82.7% in the three-month period ended September 30, 2022 compared to the same period of 2021.

	Nine Months Ended September 30,				Increase (Decrease)		% Increase (Decrease)
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	4,022.9	$	3,730.7	$	292.2	7.8	%
Used vehicle retail	2,920.9		2,127.8		793.1		37.3
Used vehicle wholesale	361.2		247.8		113.4		45.8
Finance and insurance	532.3		408.9		123.4		30.2
Service, body and parts	802.5		596.9		205.6		34.4
Fleet and other	27.6		37.5		(9.9)		(26.4)
	$	8,667.4	$	7,149.6	$	1,517.8	21.2
Segment income	$	782.8	$	573.2	$	209.6	36.6
Retail new vehicle unit sales	108,329		112,303		(3,974)		(3.5)	%

 NM - not meaningful

Our Import segment revenue increased 21.2% in the nine-month period ended September 30, 2022 compared to the same period of 2021, driven by increases across all major business lines, primarily due to acquisition activity.

MANAGEMENT’S DISCUSSION AND ANALYSIS 30

Our Import segment income increased 36.6% in the nine-month period ended September 30, 2022 compared to the same period of 2021, due to gross profit growth of 32.2%. Total Import SG&A as a percentage of gross profit decreased from 58.3% to 57.0% for the nine-month period ended September 30, 2022 compared to the same period of 2021. The decrease for the nine-month periods ended September 30, 2022 was primarily driven by increased gross profit without proportional increases in all SG&A costs. Floor plan interest expense for Import stores increased 26.3% in the nine-month period ended September 30, 2022 compared to the same period of 2021, respectively.

Luxury

A summary of financial information for our Luxury segment follows:

	Three Months Ended September 30,				Increase		% Increase
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	840.3	$	750.9	$	89.4	11.9	%
Used vehicle retail	618.2		530.3		87.9		16.6
Used vehicle wholesale	92.1		72.8		19.3		26.5
Finance and insurance	61.2		56.1		5.1		9.1
Service, body and parts	200.3		162.8		37.5		23.0
Fleet and other	30.9		22.2		8.7		39.2
	$	1,843.0	$	1,595.1	$	247.9	15.5
Segment income	$	109.5	$	108.5	$	1.0	0.9
Retail new vehicle unit sales	12,282		12,096		186		1.5	%

NM - not meaningful

Our Luxury segment revenue increased 15.5% in the three-month period ended September 30, 2022 compared to the same period of 2021, driven by increases in all business lines. The acquisition of three stores in 2022 and acquisition and integration of 26 stores from 2021 were the primary contributors to these increases.

Our Luxury segment income increased 0.9% for the three-month period ended September 30, 2022 compared to the same period of 2021, due to gross profit growth of 12.8%. Total Luxury SG&A as a percentage of gross profit increased from 59.6% to 61.9% for the three-month period ended September 30, 2022 compared to the same period of 2021. The increase for the three-month period ended September 30, 2022 was primarily driven by increases in all SG&A categories without proportional increases in gross profit. Floor plan interest expense for Luxury stores increased 124.4% for the three-month period ended September 30, 2022 compared to the same period of 2021.

	Nine Months Ended September 30,				Increase		% Increase
($ in millions)	2022		2021
Revenue:
New vehicle retail	$	2,513.2	$	2,204.1	$	309.1	14.0	%
Used vehicle retail	1,861.9		1,309.9		552.0		42.1
Used vehicle wholesale	300.5		171.9		128.6		74.8
Finance and insurance	187.2		145.7		41.5		28.5
Service, body and parts	580.3		434.7		145.6		33.5
Fleet and other	81.4		59.5		21.9		36.8
	$	5,524.5	$	4,325.8	$	1,198.7	27.7
Segment income	$	366.6	$	249.8	$	116.8	46.8
Retail new vehicle unit sales	37,032		36,718		314		0.9	%

NM - not meaningful

Our Luxury segment revenue increased 27.7% in the nine-month period ended September 30, 2022 compared to the same period of 2021, driven by increases in all business lines, primarily due to acquisition activity.

MANAGEMENT’S DISCUSSION AND ANALYSIS 31

Our Luxury segment income increased 46.8% for the nine-month period ended September 30, 2022 compared to the same period of 2021, due to gross profit growth of 37.7%. Total Luxury SG&A as a percentage of gross profit decreased from 62.6% to 60.0% for the nine-month period ended September 30, 2022 compared to the same period of 2021. The decrease for the nine-month period ended September 30, 2022 was primarily driven by increased gross profit without proportional increases in all SG&A costs. Floor plan interest expense for Luxury stores increased 52.3% for the nine-month period ended September 30, 2022 compared to the same period of 2021.

Corporate and Other

Revenues attributable to Corporate and other include the results of operations of our stand-alone body shops and centralized used vehicle team, offset by certain unallocated reserves and elimination adjustments related to vehicle sales.

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Revenue, net	$	49.9	$	28.1	$	21.8	77.6	%
Segment income	$	55.4	$	22.8	$	32.6	143.0	%

NM - not meaningful

	Nine Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Revenue, net	$	107.2	$	28.3	$	78.9	278.8	%
Segment income	$	117.6	$	80.1	$	37.5	46.8	%

NM - not meaningful

The changes in Corporate and other revenue in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021 were primarily related to increased used vehicle wholesales associated with our centralized used vehicle team and changes to certain reserves that were not specifically identified with our Domestic, Import or Luxury segment revenue, such as our reserve for revenue reversals associated with unwound vehicle sales.

Income attributable to Corporate and other includes amounts associated with the operating income from our stand-alone body shops, centralized used vehicle team and certain internal corporate expense allocations that reduce reportable segment income but increase Corporate and other income. 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 employees within our corporate headquarters who perform certain dealership functions. Income attributable to Corporate and other also includes gains on the divestiture of stores.

Corporate and other income increased $32.6 million and $37.5 million for the three and nine-month periods ended September 30, 2022, compared to the same periods of 2021, primarily due to increases in internal corporate expense allocations with dealerships, offset by increases in SG&A.

Selling, General and Administrative Expense (SG&A)

SG&A includes salaries and related personnel expenses, advertising (net of manufacturer cooperative advertising credits), rent, facility costs, and other general corporate expenses.

MANAGEMENT’S DISCUSSION AND ANALYSIS 32

	Three Months Ended September 30,				Increase (Decrease)		% Increase
(in millions)	2022		2021
Personnel	$	536.4	$	475.4	$	61.0	12.8	%
Advertising	64.7		46.4		18.3		39.4
Rent	18.3		14.3		4.0		28.0
Facility costs1	39.5		31.2		8.3		26.6
Gain on sale of assets	(36.3)		(2.6)		(33.7)		NM
Other	126.6		108.6		18.0		16.6
Total SG&A	$	749.2	$	673.3	$	75.9	11.3	%

1 Includes variable lease costs related to the reimbursement of actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased property.

NM - not meaningful

	Three Months Ended September 30,				Increase (Decrease)
As a % of gross profit	2022		2021
Personnel	40.8	%	40.0	%	80	bps
Advertising	4.9		3.9		100
Rent	1.4		1.2		20
Facility costs	3.0		2.6		40
Gain on sale of assets	(2.8)		(0.2)		(260)
Other	9.7		9.1		60
Total SG&A	57.0	%	56.6	%	40	bps

	Nine Months Ended September 30,				Increase (Decrease)		% Increase
(in millions)	2022		2021
Personnel	$	1,606.8	$	1,242.0	$	364.8	29.4	%
Advertising	190.1		114.3		75.8		66.3
Rent	54.0		37.9		16.1		42.5
Facility costs1	111.2		82.9		28.3		34.1
(Gain) loss on sale of assets	(49.9)		2.8		(52.7)		NM
Other	344.6		277.7		66.9		24.1
Total SG&A	$	2,256.8	$	1,757.6	$	499.2	28.4	%

1 Includes variable lease costs related to the reimbursement of actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased property.

NM - not meaningful

	Nine Months Ended September 30,				Increase (Decrease)
As a % of gross profit	2022		2021
Personnel	40.7	%	41.2	%	(50)	bps
Advertising	4.8		3.8		100
Rent	1.4		1.3		10
Facility costs	2.8		2.7		10
(Gain) loss on sale of assets	(1.3)		0.1		(140)
Other	8.8		9.2		(40)
Total SG&A	57.2	%	58.3	%	(110)	bps

 

SG&A as a percentage of gross profit was 57.0% and 57.2% for the three and nine-month periods ended September 30, 2022 compared to 56.6% and 58.3% for the same periods of 2021, respectively. SG&A expense increased 11.3% and 28.4% in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021, respectively. Overall, SG&A expense increased in all areas, primarily as a result of our network expansion in 2021 and 2022.

On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 61.2% and 60.0% for the three and nine-month periods ended September 30, 2022 compared to 55.7% and 57.2% for the

MANAGEMENT’S DISCUSSION AND ANALYSIS 33

same periods of 2021, respectively. The increases for the three and nine-month periods ended September 30, 2022 were primarily related to increased SG&A costs without proportionate increases in gross profit.

SG&A expense adjusted for non-core charges was as follows:

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Personnel	$	536.4	$	475.4	$	61.0	12.8	%
Advertising	64.7		46.4		18.3		39.4
Rent	18.3		14.3		4.0		28.0
Facility costs1	39.5		31.2		8.3		26.6
Adjusted (gain) loss on sale of assets	0.2		(2.6)		2.8		NM
Adjusted other	124.6		98.9		25.7		26.0
Adjusted total SG&A	$	783.7	$	663.6	$	120.1	18.1	%

1 Includes variable lease costs related to the reimbursement of actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased property.

NM - not meaningful

	Three Months Ended September 30,				Increase
As a % of gross profit	2022		2021
Personnel	40.8	%	40.0	%	80	bps
Advertising	4.9		3.9		100
Rent	1.4		1.2		20
Facility costs	3.0		2.6		40
Adjusted (gain) loss on sale of assets	—		(0.2)		20
Adjusted other	9.5		8.3		120
Adjusted total SG&A	59.6	%	55.8	%	380	bps

	Nine Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Personnel	$	1,606.8	$	1,242.0	$	364.8	29.4	%
Advertising	190.1		114.3		75.8		66.3	%
Rent	54.0		37.9		16.1		42.5	%
Facility costs1	111.2		82.9		28.3		34.1	%
Adjusted gain on sale of assets	(0.3)		(2.4)		2.1		NM
Adjusted other	334.5		254.8		79.7		31.3	%
Adjusted total SG&A	$	2,296.3	$	1,729.5	$	566.8	32.8	%

1 Includes variable lease costs related to the reimbursement of actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased property.

NM - not meaningful

	Nine Months Ended September 30,				Increase (Decrease)
As a % of gross profit	2022		2021
Personnel	40.7	%	41.2	%	(50)	bps
Advertising	4.8		3.8		100
Rent	1.4		1.3		10
Facility costs	2.8		2.7		10
Adjusted gain on sale of assets	—		(0.1)		10
Adjusted other	8.5		8.5		—
Adjusted total SG&A	58.2	%	57.4	%	80	bps

MANAGEMENT’S DISCUSSION AND ANALYSIS 34

Adjusted SG&A for three-months ended September 30, 2022 excludes $2.0 million in acquisition-related expenses and a $36.5 million net gain on store disposals. For the nine-months ended September 30, 2022, adjusted SG&A excludes $10.1 million in acquisition-related expenses and a $49.6 million net gain on store disposals.

Adjusted SG&A for the three-months ended September 30, 2021 excludes $3.4 million in storm insurance reserve charges and $6.3 million in acquisition-related expenses. For the nine-months ended September 30, 2021, adjusted SG&A excludes $5.0 million in storm insurance reserve charges, $17.9 million in acquisition-related expenses, and a $5.2 million net loss on store disposals.

See “Non-GAAP Reconciliations” for more details.

Depreciation and Amortization

Depreciation and amortization is comprised of depreciation expense related to buildings, significant remodels or improvements, furniture, tools, equipment, signage, and amortization of certain intangible assets, including customer lists.

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Depreciation and amortization	$	41.9	$	34.4	$	7.5	21.8	%

	Nine Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Depreciation and amortization	$	122.1	$	91.5	$	30.6	33.4	%

Acquisition activity contributed to the increases in depreciation and amortization in 2022 compared to 2021. We acquired approximately $268 million of depreciable property as part of our acquisition activity over the last twelve months ended September 30, 2022. For the nine-months ended September 30, 2022, we invested $209.8 million in capital expenditures. These investments increased the amount of depreciation expense in the three and nine-month periods ended September 30, 2022. See the discussion under “Liquidity and Capital Resources” for additional information.

Operating Margin

Operating income as a percentage of revenue, or operating margin, was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating margin	7.2	%	7.8	%	7.4	%	7.0	%
Operating margin adjusted for non-core charges 1	6.7	%	8.0	%	7.2	%	7.2	%

1 See “Non-GAAP Reconciliations” for more details.

Operating margins decreased 60 bps and increased 40 bps in the three and nine-month periods ended September 30, 2022 compared to the same period in 2021, respectively. The changes in operating margins for the three and nine-month periods ended September 30, 2022 were primarily due to increased gross profit of 10.5% and 30.8% with offsetting increases to SG&A of 11.3% and 28.4%, respectively, compared to the same periods in 2021.

Floor Plan Interest Expense and Floor Plan Assistance

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2022		2021		% Change		2022		2021		% Change
Floor plan interest expense (new vehicles)	$	10.7	$	3.6	197.2	%	$	19.4	$	17.0	14.1	%

Floor plan interest expense increased $7.1 million and $2.4 million in the three and nine-month periods ended September 30, 2022 compared to the same periods of 2021, respectively. These increases were primarily due to increases in inventory levels and rising interest rates.

MANAGEMENT’S DISCUSSION AND ANALYSIS 35

Floor plan assistance is provided by manufacturers to support store financing of new vehicle inventory and is recorded as a component of new vehicle gross profit when the specific vehicle is sold. However, because manufacturers provide this assistance to offset inventory carrying costs, we believe a comparison of floor plan interest expense to floor plan assistance is a useful measure of the efficiency of our new vehicle sales relative to stocking levels.

The following table details the carrying costs for new vehicles and includes new vehicle floor plan interest net of floor plan assistance earned.

	Three Months Ended September 30,						%
(in millions)	2022		2021		Change		Change
Floor plan interest expense (new vehicles)	$	10.7	$	3.6	$	7.1	197.2	%
Floor plan assistance (included as an offset to cost of sales)	(33.3)		(30.4)		(2.9)		9.5
Net new vehicle carrying costs	$	(22.6)	$	(26.8)	$	4.2	(15.7)

NM - not meaningful

	Nine Months Ended September 30,						%
(in millions)	2022		2021		Change		Change
Floor plan interest expense (new vehicles)	$	19.4	$	17.0	$	2.4	14.1	%
Floor plan assistance (included as an offset to cost of sales)	(96.6)		(90.0)		(6.6)		7.3
Net new vehicle carrying costs	$	(77.2)	$	(73.0)	$	(4.2)	5.8

NM - Not meaningful

Other Interest Expense

Other interest expense includes interest on senior notes, debt incurred related to acquisitions, real estate mortgages, used and service loaner vehicle inventory financing commitments, non-recourse notes payable and revolving lines of credit.

	Three Months Ended September 30,				Increase		% Increase
(in millions)	2022		2021
Mortgage interest	$	6.7	$	6.1	$	0.6	9.8
Other interest	43.6		22.5		21.1		93.8
Capitalized interest	(0.7)		(0.6)		0.1		NM
Total other interest expense	$	49.6	$	28.0	$	21.6	77.1	%

NM - not meaningful

	Nine Months Ended September 30,				Increase (Decrease)		% Increase (Decrease)
(in millions)	2022		2021
Mortgage interest	$	18.1	$	19.4	$	(1.3)	(6.7)	%
Other interest	97.9		61.7		36.2		58.7
Capitalized interest	(1.9)		(1.5)		0.4		NM
Total other interest expense	$	114.1	$	79.6	$	34.5	43.3	%

NM - not meaningful

Other interest expense for the three and nine-month periods ended September 30, 2022 increased $21.6 million and $34.5 million related to increased borrowings and interest rates compared to the same periods of 2021.

Other Expense, net

	Three Months Ended September 30,				Decrease		% Decrease
(Dollars in millions)	2022		2021
Other Expense, net	$	(7.1)	$	(25.7)	$	18.6	(72.4)	%

MANAGEMENT’S DISCUSSION AND ANALYSIS 36

	Nine Months Ended September 30,				Increase		% Decrease
(Dollars in millions)	2022		2021
Other Expense, net	$	(37.0)	$	(14.6)	$	(22.4)	153.4	%

Other expense, net in the nine-month period ended September 30, 2022, was primarily related to a $32.6 million unrealized investment loss associated with the change in fair value of our investment in Shift Technologies, Inc. We also experienced a $15.0 million and $18.6 million loss, respectively, due to foreign currency exchange in the three and nine-month periods ended September 30, 2022. We experienced a $1.6 million loss due to foreign currency exchange in the three and nine-month periods ended September 30, 2021.

Income Tax Provision

Our effective income tax rate was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Effective income tax rate	27.5	%	26.8	%	27.4	%	26.9	%
Effective income tax rate excluding other non-core items	27.0	%	26.7	%	26.6	%	26.8	%

Our effective income tax rate for the nine-month period ended September 30, 2022 compared to last year was negatively affected by a valuation allowance established for certain deferred tax assets not expected to be realized. Excluding the valuation allowance and other non-core charges, we estimate our annual effective income tax rate to be 27.0%.

Non-GAAP Reconciliations

Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We believe each of the non-GAAP financial measures below improves the transparency of our disclosures, provides a meaningful presentation of our results from the core business operations because they exclude items not related to our ongoing core business operations and other non-cash items, and improves the period-to-period comparability of our results from the core business operations. We use these measures in conjunction with GAAP financial measures to assess our business, including our compliance with covenants in our credit facility and in communications with our Board of Directors concerning financial performance. These measures should not be considered an alternative to GAAP measures.

The following tables reconcile certain reported non-GAAP measures, which we refer to as “adjusted,” to the most comparable GAAP measure from our Consolidated Statements of Operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS 37

	Three Months Ended September 30, 2022
(in millions, except per share amounts)	As reported		Net disposal gain on sale of stores		Investment gain		Acquisition expenses		Adjusted
Selling, general and administrative	$	749.2	$	36.5	$	—	$	(2.0)	$	783.7
Operating income (loss)	523.1		(36.5)		—		2.0		488.6
Other expense, net	(7.1)		—		(0.3)		—		(7.4)
Income before income taxes	$	455.7	$	(36.5)	$	(0.3)	$	2.0	$	420.9
Income tax (provision) benefit	(125.4)		9.8		—		1.9		(113.7)
Net income (loss)	330.3		(26.7)		(0.3)		3.9		307.2
Net income attributable to non-controlling interest	0.5		—		—		—		0.5
Net income attributable to redeemable non-controlling interest	(1.2)		—		—		—		(1.2)
Net income (loss) attributable to Lithia Motors, Inc.	$	329.6	$	(26.7)	$	(0.3)	$	3.9	$	306.5
Diluted earnings (loss) per share attributable to Lithia Motors, Inc.	$	11.92	$	(0.97)	$	(0.01)	$	0.14	$	11.08
Diluted share count	27.6

	Three Months Ended September 30, 2021
(in millions, except per share amounts)	As reported		Asset impairment		Investment loss		Insurance reserves		Acquisition expenses		Loss on redemption of senior notes		Adjusted
Asset impairment	$	1.9	$	(1.9)	$	—	$	—	$	—	$	—	$	—
Selling, general and administrative	673.3		—		—		(3.4)		(6.3)		—		663.6
Operating income	479.5		1.9		—		3.4		6.3		—		491.1
Other income (expense), net	(25.7)		—		23.2		—		—		10.3		7.8
Income before income taxes	$	422.2	$	1.9	$	23.2	$	3.4	$	6.3	$	10.3	$	467.3
Income tax provision	(113.2)		(0.5)		(6.2)		(0.9)		(1.4)		(2.7)		(124.9)
Net income	$	309.0	$	1.4	$	17.0	$	2.5	$	4.9	$	7.6	$	342.3
Net income attributable to non-controlling interest	(0.8)		—		—		—		—		—		(0.8)
Net income attributable to redeemable non-controlling interest	(0.3)		—		—		—		—		—		(0.3)
Net income attributable to Lithia Motors, Inc.	$	307.9	$	1.4	$	17.0	$	2.5	$	4.9	$	7.6	$	341.3
Diluted earnings per share attributable to Lithia Motors, Inc.	$	10.11	$	0.05	$	0.56	$	0.08	$	0.16	0.25		$	11.21
Diluted share count	30.5

MANAGEMENT’S DISCUSSION AND ANALYSIS 38

	Nine Months Ended September 30, 2022
(in millions, except per share amounts)	As reported		Net disposal gain on sale of stores		Investment loss		Acquisition expenses		Adjusted
Selling, general and administrative	$	2,256.8	$	49.6	$	—	$	(10.1)	$	2,296.3
Operating income (loss)	1,564.4		(49.6)		—		10.1		1,524.9
Other (expense) income, net	(37.0)		—		32.6		—		(4.4)
Income (loss) before income taxes	$	1,393.9	$	(49.6)	$	32.6	$	10.1	$	1,387.0
Income tax (provision) benefit	(382.1)		13.2		—		(0.5)		(369.4)
Net income (loss)	1,011.8		(36.4)		32.6		9.6		1,017.6
Net income attributable to non-controlling interest	(3.9)		—		—		—		(3.9)
Net income attributable to redeemable non-controlling interest	(4.5)		—		—		—		(4.5)
Net income (loss) attributable to Lithia Motors, Inc.	$	1,003.4	$	(36.4)	$	32.6	$	9.6	$	1,009.2
Diluted earnings (loss) per share attributable to Lithia Motors, Inc.	$	35.10	$	(1.27)	$	1.14	$	0.33	$	35.30
Diluted share count	28.6

	Nine Months Ended September 30, 2021
(in millions, except per share amounts)	As reported		Net disposal loss on sale of stores		Asset impairment		Investment loss		Insurance reserves		Acquisition expenses		Loss on redemption of senior notes		Adjusted
Asset impairment	$	1.9	$	—	$	(1.9)	$	—	$	—	$	—	$	—	$	—
Selling, general and administrative	1,757.6		(5.2)		—		—		(5.0)		(17.9)		—		1,729.5
Operating income	1,164.2		5.2		1.9		—		5.0		17.9		—		1,194.2
Other (expense) income, net	(14.6)		—		—		22.3		—		—		10.3		18.0
Income before income taxes	$	1,053.0	$	5.2	$	1.9	22.3		$	5.0	$	17.9	$	10.3	$	1,115.6
Income tax provision	(282.9)		(1.4)		(0.5)		(6.0)		(1.4)		(4.5)		(2.7)		(299.4)
Net income	$	770.1	$	3.8	$	1.4	$	16.3	$	3.6	$	13.4	$	7.6	$	816.2
Net income attributable to non-controlling interest	(0.8)		—		—		—		—		—		—		(0.8)
Net income attributable to redeemable non-controlling interest	(0.3)		—		—		—		—		—		—		(0.3)
Net income (loss) attributable to Lithia Motors, Inc.	$	769.0	$	3.8	$	1.4	$	16.3	$	3.6	$	13.4	$	7.6	$	815.1
Diluted earnings (loss) per share attributable to Lithia Motors, Inc.	$	26.91	$	0.13	$	0.05	$	0.57	$	0.13	$	0.47	$	0.26	$	28.52
Diluted share count	28.6

MANAGEMENT’S DISCUSSION AND ANALYSIS 39

Liquidity and Capital Resources

We manage our liquidity and capital resources in the context of our overall business strategy, continually forecasting and managing our cash, working capital balances and capital structure in a way that we believe will meet the short-term and long-term obligations of our business while maintaining liquidity and financial flexibility. Our capital deployment strategy for our free cash flows targets an allocation of 65% investment in acquisitions, 25% internal investments including capital expenditures, Driveway and Driveway Finance Corporation and 10% in shareholder return in the form of dividends and share repurchases.

Cash flows from operations and borrowings under our credit facilities are our main sources for liquidity. In addition to the above sources of liquidity, potential sources to fund our business strategy include issuing equity through our $400 million ATM Equity Offering Agreement, financing of real estate and proceeds from debt or equity offerings. We evaluate all of these options and may select one or more of them depending on overall capital needs and the availability and cost of capital, although no assurances can be provided that these capital sources will be available in sufficient amounts or with terms acceptable to us.

Available Sources

Below is a summary of our immediately available funds:

(in millions)	September 30, 2022		December 31, 2021		Change		% Change
Cash and cash equivalents	$	172.7	$	153.1	$	19.6	12.8	%
Available credit on credit facilities	1,400.2		1,344.8		55.4		4.1
Total current available funds	$	1,572.9	$	1,497.9	$	75.0	5.0	%

Information about our cash flows, by category, is presented in our Consolidated Statements of Cash Flows. The following table summarizes our cash flows:

	Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		in Cash Flow
Net cash provided by (used in) operating activities	$	(517.5)	$	2,001.9	$	(2,519.4)
Net cash used in investing activities	(1,017.3)		(2,563.1)		1,545.8
Net cash provided by financing activities	1,600.0		550.7		1,049.3

Operating Activities

Cash provided by operating activities for the nine-month period ended September 30, 2022 decreased $2.5 billion compared to the same period of 2021, primarily related to an increase in inventories and other assets as we build our portfolio of auto loans associated with Driveway Finance Corporation, partially offset by increased net income compared to the same period of 2021.

Borrowings from and repayments to our syndicated credit facility related to our new vehicle inventory floor plan financing and our non-recourse notes payable related to our portfolio of auto loans are presented as financing activities. To better understand the impact of changes in inventory, other assets, and the associated financing, we also consider our adjusted net cash provided by operating activities to include borrowings or repayments associated with our new vehicle floor plan commitment and non-recourse notes payable.

Adjusted net cash provided by operating activities is presented below:

	Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		in Cash Flow
Net cash provided by (used in) operating activities – as reported	$	(517.5)	$	2,001.9	$	(2,519.4)
Adjust: Net borrowings (repayments) on floor plan notes payable, non-trade	429.6		(840.9)		1,270.5
Adjust: Net borrowings (repayments) on non-recourse notes payable	419.4		236.0		183.4
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory	(72.4)		(271.5)		199.1
Net cash provided by (used in) operating activities – adjusted	$	259.1	$	1,125.5	$	(866.4)

MANAGEMENT’S DISCUSSION AND ANALYSIS 40

Investing Activities

Net cash used in investing activities totaled $1.0 billion and $2.6 billion, respectively, for the nine-month periods ended September 30, 2022 and 2021.

Below are highlights of significant activity related to our cash flows from investing activities:

	Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		in Cash Flow
Capital expenditures	$	(209.8)	$	(194.1)	$	(15.7)
Cash paid for acquisitions, net of cash acquired	(962.6)		(2,409.5)		1,446.9
Cash paid for other investments	(9.3)		(9.8)		0.5
Proceeds from sales of stores	148.0		45.7		102.3

Capital Expenditures

Below is a summary of our capital expenditure activities:

	Nine Months Ended September 30,
(in millions)	2022		2021
Post-acquisition capital improvements	$	37.3	$	14.7
Facilities for open points	(2.5)		14.1
Purchase of facilities for existing operations	8.3		23.6
Existing facility improvements	58.4		79.1
Maintenance	108.3		62.6
Total capital expenditures	$	209.8	$	194.1

Many manufacturers provide assistance in the form of additional incentives or assistance if facilities meet specified standards and requirements. We expect that certain facility upgrades and remodels will generate additional manufacturer incentive payments. Also, tax laws allowing accelerated deductions for capital expenditures reduce the overall investment needed and encourage accelerated project timeliness.

We expect to use a portion of our future capital expenditures to upgrade facilities that we recently acquired. This additional capital investment is contemplated in our initial evaluation of the investment return metrics applied to each acquisition and is usually associated with manufacturer standards and requirements.

The increase in capital expenditures for the nine-month period ended September 30, 2022, compared to the same period of 2021 related primarily to higher maintenance and post-acquisition capital improvements.

If we undertake a significant capital commitment in the future, we expect to pay for the commitment out of existing cash balances, construction financing and borrowings on our credit facility. Upon completion of the projects, we believe we would have the ability to secure long-term financing and general borrowings from third party lenders for 70% to 90% of the amounts expended, although no assurances can be provided that these financings will be available to us in sufficient amounts or on terms acceptable to us.

Acquisitions

We focus on acquiring stores at attractive purchase prices that meet our return thresholds and strategic objectives. We look for acquisitions that diversify our brand and geographic mix as we continue to evaluate our portfolio to minimize exposure to any one manufacturer and achieve financial returns.

We are able to subsequently floor new vehicle inventory acquired as part of an acquisition; however, the cash generated by this transaction is recorded as borrowings on floor plan notes payable, non-trade.

MANAGEMENT’S DISCUSSION AND ANALYSIS 41

Adjusted net cash paid for acquisitions, as well as certain other acquisition-related information is presented below:

	Nine Months Ended September 30,
	2022		2021
Number of locations acquired	34		73
(in millions)
Cash paid for acquisitions, net of cash acquired	$	(962.6)	$	(2,409.5)
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory	72.4		271.5
Cash paid for acquisitions, net of cash acquired – adjusted	$	(890.2)	$	(2,138.0)

We evaluate potential capital investments primarily based on targeted rates of return on assets and return on our net equity investment.

Financing Activities

Net cash provided by financing activities, adjusted for borrowing on floor plan facilities: non-trade and non-recourse notes payable was as follows:

	Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		in Cash Flow
Cash provided by financing activities, as reported	$	1,600.0	$	550.7	$	1,049.3
Adjust: Net (borrowings) repayments on floor plan notes payable: non-trade	(429.6)		840.9		(1,270.5)
Adjust: Net (borrowings) repayments on non-recourse notes payable	$	(419.4)	$	(236.0)	(183.4)
Cash provided by financing activities – adjusted	$	751.0	$	1,155.6	$	(404.6)

Below are highlights of significant activity related to our cash flows from financing activities, excluding net borrowings (repayments) on floor plan notes payable: non-trade, which are discussed above:

	Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		in Cash Flow
Net borrowings on lines of credit	$	1,748.4	$	10.9	$	1,737.5
Principal payments on long-term debt and finance lease liabilities, other	(70.0)		(483.6)		413.6
Proceeds from issuance of long-term debt	337.8		817.5		(479.7)
Repurchase of common stock	(644.4)		(15.9)		(628.5)
Dividends paid	(33.8)		(28.2)		(5.6)
Proceeds from issuance of common stock	28.1		1,127.9		(1,099.8)

Equity Transactions

In November 2021, our Board of Directors authorized the repurchase of up to $750 million of our Common Stock, increasing our total repurchase authorization to $1.25 billion combined with the amount previously authorized by the Board for repurchase. We repurchased a total of 2,311,060 shares of our Common Stock at an average price of $282.81 in the first nine months of 2022. This included 2,254,193 shares as part of our repurchase authorization at an average price per share of $282.46 and 56,867 shares related to tax withholding on vesting RSUs at an average price of $296.94 per share. As of September 30, 2022, we had $86.0 million remaining available for repurchases and the authorization does not have an expiration date.

In the first nine months of 2022, we declared and paid dividends on our Common Stock as follows:

Dividend paid:	Dividend amount per share		Total amount of dividend (in millions)
March 2022	$	0.35	$	10.3
May 2022	$	0.42	$	11.9
August 2022	$	0.42	$	11.6

We evaluate performance and make a recommendation to the Board of Directors on dividend payments on a quarterly basis.

MANAGEMENT’S DISCUSSION AND ANALYSIS 42

Summary of Outstanding Balances on Credit Facilities and Long-Term Debt

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

	As of September 30, 2022
(in millions)	Outstanding		Remaining Available
Floor plan note payable: non-trade	$	1,208.1	$	—	1
Floor plan notes payable	454.8		—
Used and service loaner vehicle inventory financing commitments	1,061.8		3.5		2
Revolving lines of credit	1,396.0		1,365.9		2, 3
Real estate mortgages	545.3		—
Finance lease obligations	113.8		—
Non-recourse notes payable	494.1		—
4.625% Senior notes due 2027	400.0		—
4.375% Senior notes due 2031	550.0		—
3.875% Senior notes due 2029	800.0		—
Other debt	1.5		—
Unamortized debt issuance costs	(26.8)		—		4
Total debt	$	6,998.6	$	1,369.4

1 As of September 30, 2022, we had a $1.2 billion new vehicle floor plan commitment as part of our credit facility.

2 The amount available on the credit facility is limited based on a borrowing base calculation and fluctuates monthly.

3 Available credit is based on the borrowing base amount effective as of August 31, 2022. This amount is reduced by $51.7 million for outstanding letters of credit.

4 Debt issuance costs are presented on the balance sheet as a reduction from the carrying amount of the related debt liability.

US Bank Credit Facility

On June 2, 2022, we entered into a Second Amendment to our Fourth Amended and Restated Loan Agreement with U.S. Bank National Association as agent for the lenders, and each of the lenders party to the loan agreement, as lenders. The credit facility continues to provide for a total financing commitment of $3.75 billion, which may be further expanded under the Second Amendment, subject to lender approval and the satisfaction of other conditions, up to a total of $4.5 billion. Among other changes, the Second Amendment:

•Incorporates the adoption of the Secured Overnight Financing Rate (SOFR) as a replacement of the London Interbank Offered Rate (LIBOR).

•Modifies the initial allocation of the financing commitment to up to $1.0 billion in used vehicle inventory floorplan financing, up to $1.5 billion in revolving financing for general corporate purposes, including acquisitions and working capital, up to $1.2 billion in new vehicle inventory floorplan financing, and up to $50 million in service loaner vehicle floorplan financing.

•Modifies our option to reallocate the commitments under the credit facility, such that the new and used vehicle floor plan commitments may have unlimited allocation and the aggregate revolving loan commitment may not be more than the 40% 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.

•Modifies the conditions for including real property in the Revolving Loan Borrowing Base to better facilitate borrowing against real estate and modifies the overall cap to $1.0 billion.

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 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. Under our credit facility, our obligations relating to new vehicle floor plan loans are secured only by collateral owned by borrowers of new vehicle floor plan loans under the credit facility.

The interest rate on the credit facility varies based on the type of debt, with the rate One-month Term SOFR plus 1.20% for new vehicle floor plan financing, Daily Simple SOFR plus 1.50% for used vehicle floor plan financing,

MANAGEMENT’S DISCUSSION AND ANALYSIS 43

1.30% for service loaner floor plan financing and 1.10% for our working capital revolver. The annual interest rates associated with our floor plan commitments are as follows:

Commitment	Annual Interest Rate at September 30, 2022
New vehicle floor plan	4.30%
Used vehicle floor plan	4.48%
Service loaner floor plan	4.28%
Revolving line of credit	4.08%

Under the terms of our 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.

Under our credit facility, we are required to maintain the ratios detailed in the following table:

Debt Covenant Ratio	Requirement	As of September 30, 2022
Fixed charge coverage ratio	Not less than 1.20 to 1	2.24 to 1
Leverage ratio	Not more than 5.75 to 1	1.50 to 1

As of September 30, 2022, we were in compliance with all covenants. We expect to remain in compliance with the financial and restrictive covenants in our credit facility and other debt agreements. However, no assurances can be provided that we will continue to remain in compliance with the financial and restrictive covenants.

If we do not meet the financial and restrictive covenants and are unable to remediate or cure the condition or obtain a waiver from our lenders, a breach would give rise to remedies under the agreement, the most severe of which are the termination of the agreement, acceleration of the amounts owed and the seizure and sale of our assets comprising the collateral for the loans. A breach would also trigger cross-defaults under other debt agreements.

Although we refer to the lenders’ obligations to make loans as “commitments,” each lender’s obligations to make any loan or other credit accommodations under the credit facility is subject to the satisfaction of the conditions precedent specified in the credit agreement including, for example, that our representations and warranties in the agreement are true and correct in all material respects as of the date of each credit extension. If we are unable to satisfy the applicable conditions precedent, we may not be able to request new loans or other credit accommodations under our credit facility.

Floor Plan Notes Payable

We have floor plan agreements with manufacturer-affiliated finance companies for certain new vehicles and vehicles that are designated for use as service loaners. The interest rates on these floor plan notes payable commitments vary by manufacturer and are variable rates. As of September 30, 2022, $454.8 million was outstanding on these agreements. Borrowings from, and repayments to, manufacturer-affiliated finance companies are classified as operating activities in the Consolidated Statements of Cash Flows.

Other Credit Facilities and Lines of Credit

In 2020, we entered into a real-estate backed facility with eight financial institutions, including two manufacturer affiliated finance companies, maturing in July 2025. The real-estate backed credit facility provides a total financing commitment of up to $219.0 million in working capital financing for general corporate purposes, including acquisitions and working capital, collateralized by real estate and certain other assets owned by us. The interest rate on this credit facility uses one-month LIBOR plus a margin ranging from 2.00% to 2.50% based on our leverage ratio, or a base rate of 0.75% plus a margin. As of September 30, 2022, nothing was outstanding on the real-estate backed facility.

In 2022, we amended our securitization facility agreement, increasing our commitment for borrowings of up to $1.0 billion and extending the maturity date to July 2024. As of September 30, 2022, we had $350.0 million drawn on the securitization facility.

In 2021, we entered into a credit agreement with Ally Bank (Ally Capital in Hawaii, Mississippi, Montana and New Jersey), as lender. The credit agreement matures in April 2023 and provides for a revolving line of credit facility of up to $300.0 million and is secured by real estate owned by us. The credit facility bears interest at a rate per annum

MANAGEMENT’S DISCUSSION AND ANALYSIS 44

equal to the greater of 3.00% or the prime rate designated by Ally Bank, minus 25 basis points. As of September 30, 2022, nothing was outstanding on the Ally credit facility.

On June 3, 2022, we entered into a credit agreement with The Bank of Nova Scotia (BNS), Royal Bank of Canada, Bank of Montreal, The Toronto-Dominion Bank, VW Credit Canada, Inc. and BMW Group Financial Services, as lenders, and BNS, as administrative agent for the lenders. Pursuant to the credit agreement, the lenders assumed all of the indebtedness under our original commitment letter, dated August 30, 2021, between us and BNS, including the letters of credit issued thereunder, and agreed to certain new and amended terms. Among other things, the credit agreement establishes a total financing commitment of approximately $1.125 billion CAD, including (i) up to $100.0 million CAD to finance the our working capital and for general corporate purposes; (ii) up to $500.0 million CAD to finance the purchase of new motor vehicles (Wholesale Flooring Facility); (iii) up to $100.0 million CAD to finance the purchase of used motor vehicles for sale in Canada and for export to the United States; (iv) up to $400.0 million CAD for the wholesale lease financing of leased units and finance contracts, and (v) up to $25.0 million CAD to finance certain motor vehicle leases. The credit agreement also establishes sublimits for swingline commitments and/or letter of credit commitments under certain of the Canadian facilities and incorporates an accordion feature to increase maximum potential borrowings under the Wholesale Flooring Facility by up to $200.0 million CAD and under the other Canadian facilities by up to $200.0 million CAD in aggregate. Borrowings under the credit agreement accrue interest at rates equal to the greater of BNS’ prime lending rate or the Canadian Dollar Offered Rate plus, in each case, a spread, with the spreads ranging from 0.25% per annum to 1.30% per annum. All Canadian Facilities other than the Wholesale Flooring Facility, which is a demand facility, mature on June 3, 2025.

These other credit facilities and lines of credit above include financial and restrictive covenants typical of such agreements, lending conditions, and representations and warranties by us. As of September 30, 2022, we were in compliance with all covenants. We expect to remain in compliance with the financial and restrictive covenants in our other credit facilities and lines of credit. However, no assurances can be provided that we will continue to remain in compliance with the financial and restrictive covenants.

Non-Recourse Notes Payable

Driveway Finance Corporation auto loans receivable are primarily funded through our warehouse facilities and asset-backed term funding transactions. These non-recourse funding vehicles are structured to legally isolate the auto loans receivable, 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 auto loans receivable. We do, however, continue to have the rights associated with the interest we retain in these non-recourse funding vehicles.

In August 2022, we issued $298.1 million in non-recourse notes payable related to the asset-backed term funding transaction.

Senior Notes

We have issued senior notes to eligible purchasers in a private placement under Rule 144A and Regulation S of the Securities Act of 1933. Interest accrues on the notes and is payable semiannually. We may redeem the notes in whole or in part, on or after the redemption dates, at the redemption prices set forth in the Indentures. Prior to the redemption dates set forth in the Indentures, we may redeem the notes, in whole or in part, at a price equal to 100% of the principal amount thereof plus make-whole premiums set forth in the Indentures. Upon certain change of control events (as set forth in the Indentures), the holders of the notes may require us to repurchase all or a portion of the notes at a purchase price of 101% of their principal amount plus accrued and unpaid interest, if any, to the date of purchase.

Below is a summary of outstanding senior notes issued:

Description	Maturity Date	Interest Payment Dates	Principal Amount
4.625% Senior notes due 2027	December 15, 2027	June 15, December 15	$400 million
4.375% Senior notes due 2031	January 15, 2031	January 15, July 15	$550 million
3.875% Senior notes due 2029	June 1, 2029	June 1, December 1	$800 million

MANAGEMENT’S DISCUSSION AND ANALYSIS 45

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 5.5% at September 30, 2022. The mortgages are payable in various installments through July 1, 2038. As of September 30, 2022, we had fixed interest rates on 66.4% of our outstanding mortgage debt.

We have finance lease obligations with some of our leased real estate. Interest rates related to this debt ranged from 2.0% to 8.5% at September 30, 2022. The leases have terms extending through August 2037.

Our other debt includes sellers’ notes. The interest rates associated with our other debt ranged from 5.0% to 10.0% at September 30, 2022. This debt is due in various installments through April 2027.

LIBOR Transition

We have worked with our lending partners to update remaining LIBOR-based agreements and substantially all agreements have been updated. We do not anticipate this transition to have any material impact on our results of operations or financial position.

Recent Accounting Pronouncements

None.

Critical Accounting Policies and Use of Estimates

There have been no material changes in the critical accounting policies and use of estimates described in our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2022.

Seasonality and Quarterly Fluctuations

Historically, our sales have been lower in the first quarter of each year due to consumer purchasing patterns and inclement weather in certain of our markets. As a result, financial performance is expected to be lower during the first quarter than during the second, third and fourth quarters of each fiscal year. We believe that interest rates, levels of consumer debt, consumer confidence and manufacturer sales incentives, as well as general economic conditions, also contribute to fluctuations in sales and operating results.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our reported market risks or risk management policies since the filing of our 2021 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 18, 2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We evaluated, with the participation and under the supervision of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

MANAGEMENT’S DISCUSSION AND ANALYSIS 46

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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.

Item 1A. Risk Factors

The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our 2021 Annual Report on Form 10-K, which was filed with the SEC on February 18, 2022. We have described in our 2021 Annual Report on Form 10-K, under “Risk Factors” in Item 1A, the primary risks related to our business and securities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We repurchased the following shares of our common stock during the third quarter of 2022:

For the full calendar month of	Total number of shares purchased2	Average price paid per share		Total number of shares purchased as part of publicly announced plans1	Maximum dollar value of shares that may yet be purchased under publicly announced plan (in thousands)1
July	57,200	$	270.11	57,200	$	98,619
August	44	265.28		—	98,619
September	58,115	216.36		58,115	86,045
Total	115,359	243.03		115,315	86,045

 

1 The current share repurchase plan has no expiration date.

2 Of the shares repurchased in the third quarter of 2022, 44 were related to tax withholding upon the vesting of RSUs.

47

Item 6. Exhibits

The following exhibits are filed herewith and this list is intended to constitute the exhibit index.

3.1	Restated Articles of Incorporation of Lithia Motors, Inc. (incorporated by reference to exhibit 3.1 to the Company’s Form 10-Q filed July 28, 2021).
3.2	Second Amended and Restated Bylaws of Lithia Motors, Inc. (incorporated by reference to exhibit 3.2 to the Company’s Form 8-K filed April 25, 2019).
10.1	Amendment No. 2 to Amended and Restated Loan Agreement, dated September 14, 2021, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
10.2	Amendment No. 3 to Amended and Restated Loan Agreement, dated November 10, 2021, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
10.3	Amendment No. 4 to Amended and Restated Loan Agreement, dated February 8, 2022, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
10.4	Amendment No. 5 to Amended and Restated Loan Agreement, dated June 23, 2022, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
10.5	Amendment No. 6 to Amended and Restated Loan Agreement, dated July 29, 2022, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
10.6	Amendment No. 7 to Amended and Restated Loan Agreement, dated September 26, 2022, among SCFC Business Services LLC, Chariot Funding LLC and JPMorgan Chase Bank, N.A.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover page formatted as Inline XBRL and contained in Exhibit 101.

48

SIGNATURE

Pursuant to the requirements 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.

Date: October 27, 2022	LITHIA MOTORS, INC.
	Registrant
	By:	/s/ Tina Miller
		Tina Miller
		Chief Financial Officer, Senior Vice President, and Principal Accounting Officer

49

EX-10.1

150428610v2 AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 2, dated as of September 14, 2021 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendment to the Loan Agreement. The Loan Agreement is hereby amended by deleting the reference to "September 15, 2021" contained in clause (p) of Section 7.13 and replacing it with a reference to "November 5, 2021." SECTION 2. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members).

- 2 - 150428610v2 (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 3. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon the delivery of a fully executed copy hereof to the Administrative Agent. (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby and (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the Loan Agreement or to such terms as modified hereby. The parties hereto acknowledge and agree that this Amendment shall constitute a Basic Document. This Amendment does not constitute a novation or termination of the Loan Agreement or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein. SECTION 4. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 7. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 8. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment.

- 3 - 150428610v2 SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. SCFC BUSINESS SERVICES LLC, as Borrower By: ~wt Name: Charles D. Lietz Title: President ACKNOWLEDGED AND AGREED: DRIVEWAY FINANCE CORPORATION, as Servicer and Collateral Custodian By: ft, Name: Cha;;s D.Lletz Title: President 4. J vf Rnorice_ CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By:--------------- [Signature Page to Amendment No. 2 lo A&R Loan Agt. (SCFC Business Services LLC)] 15042~610v2

[Signature Page to Amendment No. 2 to A&R Loan Agt. (SCFC Business Services LLC)] 150428610v2 CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Elizabeth S. Trainor Title: Executive Director JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Elizabeth S. Trainor Title: Executive Director

EX-10.2

EXECUTION COPY 150870610v5 AMENDMENT NO. 3 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 3, dated as of November 10, 2021 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendments to the Loan Agreement. The Loan Agreement is hereby amended as follows: (a) Section 1.01 is amended by deleting the definitions of "Account Collateral," "Basic Documents," "Lockbox Account," "Lockboxes," "Permitted Liens," and "Stop-Funding Event" set forth therein in their entirety and replacing them, respectively, with the following: "'Account Collateral' means, the Collection Account, together with all cash, securities, financial assets (as defined in Section 8-102(a)(9) of the UCC) and investments and other property from time to time deposited or credited to the Collection Account and all proceeds thereof." "'Basic Documents' means this Agreement, the Purchase Agreement, each Purchase Agreement Supplement, the Fee Letter, all Hedging Agreements, the Control Agreement, the Performance Guaranty, and any other document, certificate, opinion, agreement or writing the execution of which is necessary or incidental to carrying out the transactions contemplated by this Agreement or any of the other foregoing documents."

- 2 - 150870610v5 "'Lockbox Account' means one or more deposit accounts established and maintained at the Lockbox Bank by DFC." "'Lockboxes' means one or more post office boxes or operating accounts established by DFC and maintained at the Lockbox Bank." "'Permitted Liens' means (i) Liens in favor of the Borrower created pursuant to the Purchase Agreement, (ii) Liens in favor of any Agent or the Administrative Agent, as agent for the Secured Parties created pursuant to this Agreement or any other Basic Document, (iii) Liens for taxes and assessments not yet due or for taxes which the Borrower is contesting in good faith and by appropriate legal proceedings the validity, applicability or amount thereof and such contest does not materially endanger any right or interest of the Secured Parties under the Basic Documents, (iv) Liens arising in the ordinary course of business by virtue of any contractual, statutory or common law provision relating to banker's Liens, rights of set-off or similar rights and remedies covering deposit or securities accounts (including funds or other assets credited thereto) or other funds maintained with a depository institution or securities intermediary, (v) Liens created pursuant to the Control Agreement, and (vi) mechanics' liens and other liens arising by operation of law." "'Stop-Funding Event' means the occurrence of any of the following: (i) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Delinquency Ratio for the three previous Collection Periods is greater than 4.50%; (ii) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Prime) for the three previous Collection Periods is greater than 6.00%; (iii) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Non-Prime) for the three previous Collection Periods is greater than 11.50%; (iv) either (a) no Backup Servicing Agreement has been executed and become effective by the date required by Section 7.09(a) or (b) after the date on which the Borrower initially enters into a Backup Servicing Agreement, such Backup Servicing Agreement is thereafter terminated without the consent of the Required Lenders; or (v) the Servicer has not received written confirmation from the Administrative Agent on or prior to September 30, 2022 that either (A) in the commercially reasonable judgment of the Administrative Agent, any arrangement that is then in place and that provides the Administrative Agent, on behalf of the lenders, with protections relating to Collections prior to their deposit to the Collection Account is sufficient to provide the Administrative Agent and the Lenders with substantially similar

- 3 - 150870610v5 protections, or a substantially similar level of protections, with respect to Collections as they had prior to the termination of the Amended and Restated Blocked Account Control Agreement, dated as of December 31, 2020, by and among DFC, the Administrative Agent, and the Lockbox Bank (provided, that the Administrative Agent acknowledges and agrees that entry by the Servicer into one or more commercially reasonable agreements that together (1) appoint a 'collateral agent' (or similarly named party) who is reasonably acceptable to the Administrative Agent, (2) who has 'control' (within the meaning of the UCC) of the Lockbox Account and any other account or accounts into which Collections are then being deposited prior to their deposit to the Collection Account, on behalf of all parties who, from time to time, have interests in amounts on deposit in the Lockbox Account and any such other account or accounts (including the Administrative Agent and the Lenders with respect to Collections while on deposit in the Lockbox Account or such other account or accounts), and (3) contain intercreditor provisions governing all such interestholders' rights with respect to the respective deposits in which each has an interest, will be deemed to be an arrangement that provides substantially similar protections, or a substantially similar level of protections, with respect to Collections as required by this subclause (A)) or (B) the Administrative Agent has, in its sole discretion, waived the requirement to implement arrangements of the type described in clause (A). Any Stop-Funding Event that occurs will be deemed to be continuing until the earlier of (a) either (1) with respect to the Stop-Funding Events set forth in clauses (i), (ii) and (iii), the first Reporting Date on which none of the events described in such clauses exists, (2) with respect to the Stop-Funding Event set forth in clause (iv), the first date thereafter on which a Backup Servicing Agreement becomes effective in accordance with the terms of this Agreement or (b) the effective date of any waiver that is provided by the Required Lenders with respect to the related Step-up Event, or (3) with respect to the Stop-Funding Event set forth in clause (v), the first date thereafter on which the requirements of subclause (A) or (B) thereof are satisfied." (b) Section 1.01 is further amended by deleting the definition of "Blocked Account Control Agreement," set forth therein in its entirety. (c) Section 2.08 is amended by deleting clauses (a), (b) and (c) thereof in their entirety and replacing them with the following: "(a) On or before the applicable Funding Date, the Borrower or the Servicer shall direct and instruct all related Obligors to make payments in respect of the related Receivables that are made (i) by mail to be made directly to the Lockboxes and (ii) by electronic payments to be made to the Lockbox Account. On and after the applicable Funding Date, the Borrower and the Servicer shall use commercially reasonable efforts to ensure that all Collections are deposited to the

- 4 - 150870610v5 Lockbox Account (unless this Agreement specifically provides that such Collections are to be deposited directly to the Collection Account). (b) The Servicer shall instruct the Lockbox Bank to remove all Collections from the Lockbox Account and deposit such amounts into the Collection Account within two Business Days of their deposit to the Lockbox Account. The Servicer and the Borrower shall deposit all other Collections to the Collection Account as soon as practicable, but in no event later than two Business Days after receipt thereof, and at all times prior to such deposit to the Collection Account the Servicer or the Borrower, as applicable, shall hold such Collections in trust for the benefit of the Administrative Agent. Notwithstanding the foregoing, the Servicer shall be permitted to make all deposits in accordance with Section 7.03(c)(v) whenever the conditions set forth in that Section are satisfied. (c) The Servicer shall be entitled to retain and to reimbursement of all amounts remitted by or on behalf of the Obligors to the Servicer under the terms of, or with respect to, the related Receivables, that represent Ancillary Fees." (d) Section 3.01 is amended by deleting sub-clauses (a)(iv) and (a)(xiii) thereof in their entirety and replacing them, respectively, with the following: "(iv) the Borrower's rights to Collections on deposit in the Lockbox Account;" "(xiii) all deposit accounts, monies, deposits, funds, accounts and instruments relating to the foregoing (subject to the Control Agreement);" (e) Section 3.06 is deleted in its entirety and replaced with the following: "Section 3.06 [Reserved]." (f) Section 5.01 is amended by deleting clause (o) thereof in its entirety and replacing it with the following: "(o) Lockboxes; Lockbox Account; Collection Account. None of the Lockboxes, the Lockbox Account nor any interest therein is currently pledged or assigned to any party. The Collection Account or any interest therein has not been pledged or assigned to any party other than the Administrative Agent." (g) Section 5.03 is amended by deleting clause (j) thereof in its entirety and replacing it with the following: "(j) Lockbox Account; Collection Account. Neither the Lockbox Account nor amounts on deposit therein is currently subject to a pledge made by the Servicer and neither is currently subject to a control agreement entered into by the Servicer. The Servicer has neither pledged nor entered into a control agreement (other than the Control Agreement) with respect to the Collection Account or amounts on deposit therein."

- 5 - 150870610v5 (h) Section 6.05 is amended by deleting clause (a) thereof in its entirety and replacing it with the following: "(a) Lockboxes; Lockbox Account; Collection Account. The Servicer shall not create or participate in the creation of, or solely in the case of the initial Servicer, permit to exist, any Liens (other than Permitted Liens) with respect to the Lockboxes, the Lockbox Account or the Collection Account. The Servicer shall not enter into any "control agreement" (as defined in the relevant UCC) with respect to the Lockboxes, the Lockbox Account or the Collection Account (other than the Control Agreement). Without the prior written Consent of the Administrative Agent, the Servicer shall not move the Lockboxes, the Lockbox Account or the Collection Account to an institution other than the one at which it is held as of the Closing Date." (i) Section 7.03 is amended by deleting sub-clauses (c)(ii) and (c)(iv) thereof in their entirety and replacing them, respectively, with the following: "(ii) Consistent with the Credit and Collection Policy, if any Receivable is past due or delinquent, in whole or in part, the Servicer will make reasonable and customary efforts to contact the Obligor. The Servicer shall continue its efforts to obtain payment from an Obligor who is past due or delinquent on a Receivable until the related Financed Vehicle has been repossessed and sold or the Servicer has determined that all amounts collectable on the Receivable have been collected. The Servicer shall use commercially reasonable efforts, consistent with the Credit and Collection Policy and the standard of care set forth in Section 7.03(a), to collect funds on a Defaulted Receivable and by the close of business on the second Business Day following receipt of such Collections to cause such Collections to be deposited into the Collection Account." "(iv) The Servicer shall deposit or cause to be deposited by electronic funds transfer all Collections to the Collection Account no later than two Business Days after the earlier of the deposit of such amounts into the Lockbox Account or the receipt of such amounts by or on behalf of the Servicer or the Borrower. Notwithstanding the foregoing, in no event shall any Successor Servicer be obligated to transfer funds in excess of the available funds in the Lockbox Account." (j) Section 8.02 is amended by deleting clause (b) thereof in its entirety and replacing it with the following: "(b) The Administrative Agent may take any action permitted under the Basic Documents, including, without limitation, delivering any shifting control or similar notice under the Control Agreement." (k) Schedule E is amended by deleting Item 4 thereof in its entirety and replacing it with the following: "4. [Reserved]."

- 6 - 150870610v5 SECTION 2. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members). (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 3. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon (i) the delivery of a fully executed copy hereof to the Administrative Agent and (ii) the effectiveness of the termination of the Amended and Restated Blocked Account Control Agreement, dated as of December 31, 2020, by and among DFC, the Administrative Agent, and the Lockbox Bank. (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby and (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the Loan Agreement or to such terms as modified hereby. The parties hereto acknowledge and agree that this Amendment shall constitute a Basic Document. This Amendment does not constitute a novation or termination of the Loan Agreement or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein.

- 7 - 150870610v5 SECTION 4. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 7. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 8. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment. SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

[Signature Page to Amendment No. 3 to A&R Loan Agt. (SCFC Business Services LLC)] CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Title: JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Title: Elizabeth S. Trainor Executive Director Elizabeth S. Trainor Executive Director

EX-10.3

Execution Copy 151841956v3 AMENDMENT NO. 4 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 4, dated as of February 8, 2022 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; WHEREAS, the Consenting Lenders desire to provide the waivers set forth below, in accordance with Section 13.01 of the Loan Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendments to the Loan Agreement. The Loan Agreement is hereby amended as follows: (a) Section 1.01 is amended by deleting the definitions of "Borrowing Base" and "Certificate of Title" set forth therein in their entirety and replacing them, respectively, with the following: "'Borrowing Base' means, as of any date of determination, an amount equal to (i) the difference of (a) the Net Eligible Pool Balance as of such date, after giving effect to the related additions or removals of Receivables on such date, minus (b) the Required Overcollateralization as of such date, minus (c) the aggregate Adjusted Principal Balance of all Receivables that are owned by the Borrower on such date, after giving effect to the related additions or removals of Receivables on such date, for which no Certificate of Title of the type described in clause (i) or (ii) of the definition thereof was obtained by the 180th day following the day on which the related Receivable was originated (provided, that if any such Certificate of Title is obtained after such 180th day, the Adjusted

- 2 - 151841956v3 Principal Balance of the related Receivable will no longer be deducted pursuant to this clause (c)), plus (ii) the amount of Collections in respect of principal payments that are on deposit in the Collection Account on such." "'Certificate of Title' means, with respect to a Financed Vehicle, (i) the original certificate of title relating thereto, (ii) if the applicable Registrar of Titles issues a letter or other form of evidence of lien in lieu of a certificate of title (including electronic titling), the original lien entry letter, or (iii) prior to the time that a certificate of title of the type described in clause (i) or (ii) is issued, copies of correspondence to the applicable Registrar of Titles, and all enclosures thereto, for issuance of the original certificate of title or the original lien entry letter or form, as applicable, and which, in all of the foregoing cases, shall name the related Obligor as the owner of such Financed Vehicle and DFC, the Borrower or the Administrative Agent, as secured party (provided, that 'Southern Cascades Finance Corporation' may be named as secured party on the Certificates of Title relating to those Receivables that are listed on Schedule A to Amendment No. 4 to the Loan Agreement, dated February 8, 2022, by and among the Borrower, Chariot, as a Conduit Lender, and JPMorgan, as the Administrative Agent, a Committed Lender, and Agent for the JPMorgan Lender Group, and acknowledged and agreed to by the Servicer and Collateral Custodian). For Financed Vehicles registered in States that issue confirmation of the lienholder's interest electronically, the 'Certificate of Title' may consist of notification of an electronic recordation, by either a third party service provider or the relevant Registrar of Titles, which indicates that the lien of the secured party on the Financed Vehicle is recorded on the original certificate of title on the electronic lien and title system of the applicable State." SECTION 2. Waiver. (a) The Borrower and the Servicer acknowledge that from time to time since the Closing Date, they calculated the "Borrowing Base" (as defined prior to the changes to such term that are effected by this Amendment) without giving effect to the deduction described in prior clause (c)(2) thereof, which led to the Borrowing Base being overstated from time to time. In accordance with Section 13.01 of the Loan Agreement, the Borrower hereby requests that the Required Lenders waive any Early Amortization Event, Termination Event, Servicer Termination Event, breach of representation and warranty, or breach of covenant that arose under any Basic Document solely due to such miscalculation of the Borrowing Base, including but not limited to any such event resulting from (i) the Servicer or the Borrower having reported such miscalculated amount to any Lender, any Agent, or the Administrative Agent in any certificate, report, or other writing delivered pursuant to any Basic Document; (ii) any Loan having been requested and funded in an improper amount due to such miscalculation; or (iii) any payments having been made pursuant to Section 2.06 of the Loan Agreement or any other provision of any Basic Document in an incorrect amount due to such miscalculation. The JPMorgan Agent, on behalf of the Required Lenders, grants such waiver, subject to the condition that the no Borrowing Base Deficiency exists on the date of this Amendment, after giving effect to the changes to the definition of "Borrowing Base" that are effected by this Amendment.

- 3 - 151841956v3 (b) Except as specifically set forth herein, the Administrative Agent, the JPMorgan Agent, and the Required Lenders reserve all of their respective rights and remedies under the Loan Agreement. (c) The Borrower acknowledges and agrees that the Administrative Agent, the JPMorgan Agent, and the Required Lenders (i) except to the extent expressly specified by the terms of this Section 2, intend to strictly enforce the terms of the Loan Agreement and (ii) hereby reserve all rights, powers and remedies under the Loan Agreement. SECTION 3. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members). (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 4. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon the delivery of a fully executed copy hereof to the Administrative Agent. (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby and (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the

- 4 - 151841956v3 Loan Agreement or to such terms as modified hereby. The parties hereto acknowledge and agree that this Amendment shall constitute a Basic Document. This Amendment does not constitute a novation or termination of the Loan Agreement or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein. SECTION 5. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 7. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 8. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 9. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment. SECTION 10. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

Charles D. Lietz President Charles D. Lietz President

[Signature Page to Amendment No. 4 to A&R Loan Agt. (SCFC Business Services LLC)] 151841956v3 CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Title: JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Title: Elizabeth S. Trainor Executive Director Elizabeth S. Trainor Executive Director

A-1 151841956v3 Schedule A The following Receivables are those described in the definition of "Certificate of Title" set forth in the Loan Agreement that may list "Southern Cascades Finance Corporation" as secured party in the related Certificate of Title: SD179648 SD202169 SD180017 SD202264 SD180187 SD202267 SD180215 SD202306 SD180381 SD202318 SD180401 SD202470 SD180612 SD202509 SD180741 SD202566 SD180828 SD202568 SD180896 SD202596 SD180984 SD202602 SD181233 SD202626 SD181436 SD202682 SD181444 SD202689 SD181529 SD202691 SD181639 SD202705 SD181704 SD202812 SD181842 SD202880 SD181943 SD202918 SD182110 SD202956 SD182278 SD203009 SD182419 SD203011 SD182476 SD203013 SD182551 SD203064 SD182585 SD203074 SD182641 SD203153 SD182688 SD203181 SD182859 SD203253 SD182897 SD203260 SD183037 SD203296 SD183103 SD203327 SD183215 SD203336 SD183247 SD203403 SD183262 SD203407 SD183284 SD203452 SD183344 SD203493 SD183353 SD203508 SD183413 SD203543 SD183433 SD203577 SD183466 SD203594 SD183479 SD203599 SD183548 SD203602 SD183584 SD203613 SD183710 SD203621 SD183730 SD203654 SD183782 SD203670 SD183964 SD203748 SD183990 SD203779 SD184151 SD203805 SD184179 SD203827 SD184196 SD203832 SD184330 SD203874 SD184344 SD204092 SD184345 SD204095 SD184392 SD204118 SD184419 SD204139 SD184575 SD204164 SD184700 SD204188 SD184717 SD204209 SD185008 SD204242 SD185128 SD204245 SD185138 SD204339 SD185173 SD204392 SD185202 SD204414 SD185217 SD204428 SD185285 SD204436 SD185300 SD204448 SD185333 SD204452 SD185387 SD204469 SD185423 SD204498 SD185431 SD204512 SD185441 SD204542 SD185522 SD204560 SD185568 SD204573 SD185581 SD204642 SD185665 SD204669 SD185686 SD204676 SD185731 SD204688 SD185765 SD204699 SD185773 SD204792 SD185910 SD204795 SD185913 SD204814 SD185918 SD204908 SD185928 SD204933 SD185980 SD204936 SD186009 SD204941 SD186034 SD205214 SD186097 SD205223 SD186284 SD205226 SD186358 SD205276 SD186375 SD205295 SD186386 SD205364 SD186403 SD205379 SD186510 SD205395 SD186515 SD205398 SD186642 SD205450 SD186683 SD205452 SD186699 SD205492 SD186725 SD205600 SD186743 SD205609 SD186753 SD205645 SD186805 SD205646 SD186833 SD205691 SD187007 SD205733 SD187080 SD205785 SD187122 SD205936 SD187142 SD205937 SD187200 SD205965 SD187258 SD205988 SD187273 SD206091 SD187524 SD206097 SD187527 SD206162 SD187655 SD206182 SD187673 SD206207 SD187780 SD206244 SD187858 SD206266 SD187870 SD206285 SD187878 SD206304 SD188122 SD206354 SD188160 SD206362 SD188282 SD206430 SD188287 SD206457 SD188370 SD206480

A-2 151841956v3 SD188488 SD206673 SD188548 SD206681 SD188641 SD206789 SD188856 SD206793 SD188858 SD206804 SD188871 SD206816 SD188920 SD206830 SD189247 SD206851 SD189289 SD206853 SD189346 SD206890 SD189350 SD206907 SD189399 SD206919 SD189400 SD206933 SD189415 SD207032 SD189466 SD207065 SD189571 SD207078 SD189602 SD207093 SD189612 SD207107 SD189663 SD207124 SD189790 SD207134 SD189809 SD207252 SD189865 SD207306 SD190014 SD207472 SD190036 SD207474 SD190054 SD207559 SD190352 SD207645 SD190454 SD207674 SD190505 SD207786 SD190546 SD207809 SD190562 SD207858 SD190566 SD207881 SD190624 SD207884 SD190630 SD207886 SD190650 SD207983 SD190775 SD208042 SD190882 SD208050 SD190978 SD208069 SD191000 SD208073 SD191044 SD208125 SD191065 SD208145 SD191100 SD208174 SD191144 SD208185 SD191195 SD208249 SD191200 SD208272 SD191213 SD208277 SD191399 SD208308 SD191490 SD208371 SD191502 SD208392 SD191585 SD208508 SD191618 SD208561 SD191634 SD208593 SD191653 SD208718 SD191832 SD208740 SD191853 SD208745 SD191898 SD208753 SD191906 SD208941 SD191934 SD208942 SD191991 SD208952 SD192008 SD209064 SD192054 SD209100 SD192058 SD209117 SD192110 SD209120 SD192122 SD209138 SD192194 SD209146 SD192198 SD209190 SD192232 SD209191 SD192235 SD209220 SD192236 SD209226 SD192249 SD209257 SD192255 SD209390 SD192344 SD209398 SD192387 SD209404 SD192399 SD209455 SD192456 SD209472 SD192505 SD209483 SD192560 SD209491 SD192587 SD209512 SD192778 SD209554 SD192818 SD209567 SD192829 SD209578 SD192901 SD209615 SD192916 SD209634 SD193043 SD209653 SD193061 SD209674 SD193096 SD209707 SD193139 SD209824 SD193161 SD209827 SD193172 SD209840 SD193191 SD209895 SD193219 SD209901 SD193310 SD210018 SD193383 SD210029 SD193422 SD210037 SD193599 SD210059 SD193635 SD210123 SD193652 SD210124 SD193654 SD210132 SD193668 SD210145 SD193686 SD210209 SD193779 SD210260 SD193828 SD210268 SD193943 SD210303 SD193990 SD210312 SD194023 SD210317 SD194064 SD210332 SD194138 SD210356 SD194153 SD210411 SD194158 SD210522 SD194300 SD210566 SD194370 SD210711 SD194388 SD210713 SD194406 SD210723 SD194455 SD210732 SD194456 SD210737 SD194472 SD210755 SD194493 SD210760 SD194508 SD210769 SD194534 SD210848 SD194544 SD210852 SD194548 SD210886 SD194653 SD210980 SD194677 SD211014 SD194745 SD211041 SD194767 SD211063 SD194818 SD211126 SD194827 SD211129 SD194876 SD211216 SD194917 SD211249 SD194975 SD211336 SD194992 SD211342 SD195009 SD211393 SD195029 SD211517 SD195114 SD211800 SD195128 SD211842 SD195139 SD211856 SD195154 SD211873 SD195200 SD211902 SD195214 SD211926

A-3 151841956v3 SD195217 SD211974 SD195252 SD211987 SD195336 SD212035 SD195407 SD212111 SD195459 SD212117 SD195472 SD212124 SD195501 SD212201 SD195531 SD212261 SD195624 SD212262 SD195630 SD212357 SD195654 SD212366 SD195722 SD212505 SD195758 SD212532 SD195777 SD212545 SD195878 SD212549 SD195980 SD212562 SD195984 SD212571 SD195987 SD212605 SD195990 SD212660 SD196037 SD212670 SD196086 SD212779 SD196095 SD212792 SD196098 SD212809 SD196110 SD212812 SD196125 SD212844 SD196136 SD212903 SD196145 SD212909 SD196248 SD213010 SD196313 SD213065 SD196324 SD213097 SD196325 SD213131 SD196345 SD213159 SD196370 SD213180 SD196444 SD213212 SD196524 SD213298 SD196566 SD213306 SD196574 SD213315 SD196615 SD213319 SD196692 SD213327 SD196708 SD213338 SD196728 SD213362 SD196750 SD213363 SD196770 SD213386 SD196870 SD213467 SD196941 SD213470 SD197065 SD213486 SD197212 SD213571 SD197272 SD213713 SD197320 SD213814 SD197352 SD213869 SD197354 SD213921 SD197360 SD213956 SD197389 SD213961 SD197422 SD214052 SD197631 SD214164 SD197661 SD214166 SD197687 SD214210 SD197712 SD214295 SD197768 SD214348 SD197787 SD214351 SD197812 SD214461 SD197839 SD214489 SD197842 SD214543 SD197902 SD214554 SD197923 SD214571 SD197985 SD214635 SD198014 SD214732 SD198065 SD214774 SD198127 SD214785 SD198177 SD214848 SD198182 SD214856 SD198191 SD214865 SD198193 SD214868 SD198207 SD214890 SD198295 SD215092 SD198336 SD215101 SD198362 SD215145 SD198425 SD215195 SD198473 SD215272 SD198494 SD215285 SD198535 SD215398 SD198730 SD215414 SD198752 SD215438 SD198818 SD215603 SD198837 SD215674 SD198839 SD215742 SD198867 SD215758 SD198888 SD215771 SD198906 SD215842 SD198935 SD216029 SD198953 SD216067 SD198972 SD216136 SD198974 SD216266 SD199011 SD216268 SD199195 SD216328 SD199265 SD216369 SD199281 SD216401 SD199453 SD216406 SD199460 SD216464 SD199489 SD216470 SD199490 SD216511 SD199504 SD216513 SD199509 SD216527 SD199593 SD216649 SD199597 SD216691 SD199622 SD216721 SD199631 SD216727 SD199764 SD216751 SD199776 SD216857 SD199784 SD216984 SD199796 SD216991 SD199797 SD217007 SD199863 SD217010 SD199870 SD217027 SD199881 SD217035 SD199923 SD217045 SD199931 SD217073 SD199946 SD217129 SD199998 SD217361 SD200016 SD217431 SD200017 SD217447 SD200035 SD217484 SD200095 SD217492 SD200098 SD217724 SD200106 SD217862 SD200138 SD217950 SD200142 SD217951 SD200174 SD218006 SD200301 SD218077 SD200394 SD218091 SD200403 SD218139 SD200419 SD218306 SD200478 SD218360 SD200524 SD218391 SD200546 SD218471 SD200556 SD218495 SD200578 SD218587 SD200629 SD218610

A-4 151841956v3 SD200783 SD218715 SD200786 SD218787 SD200881 SD219033 SD200933 SD219231 SD200939 SD220841 SD201023 SD220852 SD201029 SD221242 SD201061 SD221450 SD201080 SD221592 SD201088 SD222278 SD201108 SD222623 SD201178 SD222678 SD201188 SD222760 SD201197 SD224065 SD201224 SD226080 SD201262 SD228006 SD201273 SD228092 SD201342 SD228350 SD201349 SD228738 SD201363 SD229863 SD201393 SD231938 SD201416 SD233338 SD201428 SD236881 SD201469 SD237387 SD201487 SD240517 SD201561 SD246500 SD201563 SD247722 SD201597 SD252451 SD201607 SD254374 SD201659 SD258312 SD201672 SD262649 SD201698 SD265860 SD201706 SD268418 SD201721 SD270174 SD201735 SD271889 SD201742 SD274003 SD201752 SD275093 SD201788 SD285205 SD201834 SD297816 SD201836 SD301578 SD201887 SD309052 SD201987 SD316733 SD202034 SD345547 SD347971 SD346130

EX-10.4

Execution Copy 153479441v2 AMENDMENT NO. 5 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 5, dated as of June 23, 2022 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; WHEREAS, the Consenting Lenders desire to provide the waivers set forth below, in accordance with Section 13.01 of the Loan Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendment to the Loan Agreement. Schedule A (Lender Supplement (JPMorgan Lender Group)) to the Loan Agreement is amended by deleting the "Mandatory Commitment" row set forth therein in its entirety and replacing it with the following: "Mandatory Commitment: $400,000,000"

- 2 - 153479441v2 SECTION 2. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members). (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 3. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon (i) the delivery of a fully executed copy hereof to the Administrative Agent and (ii) the payment to JPMorgan for its own account, or as directed by JPMorgan, of $250,000, which the parties hereto agree constitutes "Structuring Fee" for all purposes under the Basic Documents and which shall be payable subject to all terms and conditions set forth in the Fee Letter (except that such amount shall be due on the date hereof, rather than on the date of the Fee Letter) (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby and (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the Loan Agreement or to such terms as modified hereby. The parties hereto acknowledge and agree that this Amendment shall constitute a Basic Document. This Amendment does not constitute a novation or termination of the Loan Agreement or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein.

- 3 - 153479441v2 SECTION 4. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 7. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 8. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment. SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

[Signature Page to Amendment No. 5 to A&R Loan Agt. (SCFC Business Services LLC)] 153479441v2 CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Title: JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Title: Elizabeth S. Trainor Executive Director Elizabeth S. Trainor Executive Director

EX-10.5

Execution Copy 153325876v6 AMENDMENT NO. 6 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 6, dated as of July 29, 2022 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; WHEREAS, the Consenting Lenders desire to provide the waivers set forth below, in accordance with Section 13.01 of the Loan Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendments to the Loan Agreement. The Loan Agreement is hereby amended as follows: (a) Section 1.01 (Definitions) is amended by deleting the definitions of "Account Collateral," "Adjusted Principal Balance," "Alternate Base Rate," "Basic Documents," "Benchmark," "Benchmark Replacement," "Benchmark Replacement Adjustment," "Benchmark Replacement Conforming Changes," "Benchmark Replacement Date," "Benchmark Transition Event," "Benchmark Unavailability Period," "Commitment Termination Date," "Committed Lender Rate," "Conduit Portfolio Net Loss Ratio (Non-Prime)," "Conduit Portfolio Net Loss Ratio (Prime)," "Daily Simple SOFR," "Default Rate," "Early Amortization Event," "Eligible Receivable," "Excess Concentration Amounts," "Excess Spread," "Excess Spread (Adjusted)," "Fee Letter," "Financial Covenants (DFC)" "Floor," "Interest," "Overnight Bank Funding Rate," "Reference Time," "Relevant Governmental Body," "Required Overcollateralization Percentage," "Required Rate," "Serviced Portfolio Net Loss Ratio (Non-Prime)," "Serviced Portfolio Net Loss Ratio (Prime)," "SOFR," "Step-up Event," "Stop-Funding Event," and "Tangible Chattel Paper" set forth therein in their entirety and replacing them, respectively, with the following:

- 2 - 153325876v6 "'Account Collateral' means the Collection Account and the Hedge Reserve Account, together with all cash, securities, financial assets (as defined in Section 8- 102(a)(9) of the UCC as then in effect in the relevant State) and investments and other property from time to time deposited or credited to the Collection Account or the Hedge Reserve Account, and all proceeds of the foregoing." "'Adjusted Principal Balance' means, as of any date for any Receivable, (i) if the related amount of Excess Spread as of such date is at least equal to the Target Rate for such Receivable, the Principal Balance of such Receivable as of such date, and (ii) if the related amount of Excess Spread as of such date is less than the Target Rate for such Receivable, then (A) if the APR of such Receivable is less than the Required Rate, the present value (calculated using a discount rate equal to the Required Rate) of all Scheduled Payments (including past due Scheduled Payments) remaining on such Receivable, assuming that all such Scheduled Payments are paid on a timely basis after such date or (B) if the APR of such Receivable is equal to or greater than the Required Rate, the Principal Balance of such Receivable as of such date." "'Alternate Base Rate' means, with respect to any date, a rate per annum equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the NYFRB Rate in effect on such day plus ½ of 1%, and (iii) Adjusted Daily Simple SOFR plus 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate, or Adjusted Daily Simple SOFR shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate, or Adjusted Daily Simple SOFR, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.17 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.17(b)), then the Alternate Base Rate shall be the greater of clauses (i) and (ii) above and shall be determined without reference to clause (iii) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 0%, such rate shall be deemed to be 0% for purposes of this Agreement." "'Basic Documents' means this Agreement, the Purchase Agreement, each Purchase Agreement Supplement, the Fee Letter, all Hedging Agreements, the Control Agreement, the Performance Guaranty, each Electronic Vault Services Agreement, and any other document, certificate, opinion, agreement or writing the execution of which is necessary or incidental to carrying out the transactions contemplated by this Agreement or any of the other foregoing documents." "'Benchmark' means, with respect to the portion of the Loans Outstanding that is funded or maintained either (i) by a Conduit Lender other than by issuing Commercial Paper Notes or (ii) by a Committed Lender, initially, Daily Simple SOFR; provided, that if a Benchmark Transition Event and the related Benchmark Replacement Date have occurred with respect to Daily Simple SOFR or the then- current Benchmark, then 'Benchmark' means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.17."

- 3 - 153325876v6 "'Benchmark Replacement' means, with respect to the portion of the Loans Outstanding that is funded or maintained either (i) by a Conduit Lender other than by issuing Commercial Paper Notes or (ii) by a Committed Lender, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark giving due consideration to (1) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (2) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar- denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment. If the Benchmark Replacement as determined pursuant to the above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Basic Documents." "'Benchmark Replacement Adjustment' means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time." "'Benchmark Replacement Conforming Changes' " means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of 'Alternate Base Rate,' the definition of 'Business Day,' the definition of 'U.S. Government Securities Business Day,' the definition of 'Interest Period,' timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative, or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in

- 4 - 153325876v6 connection with the administration of this Agreement and the other Basic Documents)." "'Benchmark Replacement Date' means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark: (i) in the case of clause (i) or (ii) of the definition of 'Benchmark Transition Event,' the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide such Benchmark (or such component thereof); or (ii) in the case of clause (iii) of the definition of 'Benchmark Transition Event,' the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (iii). For the avoidance of doubt, (1) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (2) the 'Benchmark Replacement Date' will be deemed to have occurred in the case of clause (i) or (ii) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to such Benchmark (or the published component used in the calculation thereof)." "'Benchmark Transition Event' means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark: (i) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof), permanently or indefinitely; provided, that at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof); (ii) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution

- 5 - 153325876v6 authority with jurisdiction over the administrator for such Benchmark (or such component), or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) permanently or indefinitely; provided, that at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof); or (iii) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) is no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a 'Benchmark Transition Event' will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to such Benchmark (or the published component used in the calculation thereof)." "'Benchmark Unavailability Period' means, with respect to any Benchmark, the period (if any) (i) beginning at the time that a Benchmark Replacement Date pursuant to clauses (i) or (ii) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Basic Document in accordance with Section 2.17 and (ii) ending at the time that a Benchmark Replacement has replaced such then- current Benchmark for all purposes hereunder and under any Basic Document in accordance with Section 2.17." "'Committed Lender Rate' means, with respect to any date during an Interest Period on which all or any portion of a Loan is funded by a Committed Lender, an interest rate per annum equal to the sum of (i) Adjusted Daily Simple SOFR on such date plus (ii) the Applicable Margin." "'Commitment Termination Date' means July 29, 2024 or, with respect to any Committed Lender, such later date to which the Commitment Termination Date may be extended for such Committed Lender in accordance with Section 2.04(a)." "'Conduit Portfolio Net Loss Ratio (Non-Prime)' means, with respect to any date of determination, the product of (i) the percentage equivalent of a fraction, (a) the numerator of which is the difference of (1) the aggregate Principal Balance of all Non-Prime Receivables that became Defaulted Receivables during the most recently completed Collection Period minus (2) all Recoveries received during such Collection Period with respect to Non-Prime Receivables and (b) the denominator of which is the aggregate Principal Balance of all Non-Prime Receivables as of the first day of such Collection Period times (ii) twelve."

- 6 - 153325876v6 "'Conduit Portfolio Net Loss Ratio (Prime)' means, with respect to any date of determination, the product of (i) the percentage equivalent of a fraction, (a) the numerator of which is the difference of (1) the aggregate Principal Balance of all Prime Receivables that became Defaulted Receivables during the most recently completed Collection Period minus (2) all Recoveries received during such Collection Period with respect to Prime Receivables and (b) the denominator of which is the aggregate Principal Balance of all Prime Receivables as of the first day of such Collection Period times (ii) twelve." "'Daily Simple SOFR' means, with respect to any date (a 'SOFR Rate Day'), a rate per annum equal to the greater of (i) SOFR for the day (such day, the related 'SOFR Determination Date') that is five U.S. Government Securities Business Day prior to (a) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day, or (b) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator's Website and (ii) 0%. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower." "'Default Rate' means a per annum rate equal to the sum of (i) the Alternate Base Rate and (ii) 2.75%." "'Early Amortization Event' means, on any date of determination, that: (i) as of any Reporting Date, the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Prime) for the three Collection Periods immediately preceding such Reporting Date is greater than 4.00% (provided, that no Early Amortization Event will occur under this clause (i) if a Significant Take-out Date occurred during any of such three Collection Periods); (ii) as of any Reporting Date, the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Non-Prime) for the three Collection Periods immediately preceding such Reporting Date is greater than 6.00% (provided, that no Early Amortization Event will occur under this clause (ii) if a Significant Take-out Date occurred during any of such three Collection Periods); (iii) as of any Reporting Date, the arithmetic mean of the Conduit Portfolio Delinquency Ratio for the three Collection Periods immediately preceding such Reporting Date is greater than 4.00% (provided, that no Early Amortization Event will occur under this clause (iii) if a Significant Take-out Date occurred during any of such three Collection Periods); (iv) as of any Reporting Date, the arithmetic mean of the Conduit Portfolio Deferral Ratio for the three Collection Periods immediately

- 7 - 153325876v6 preceding such Reporting Date is greater than 1.50% (provided, that no Early Amortization Event will occur under this clause (iv) if a Significant Take-out Date occurred during any of such three Collection Periods); (v) a Borrowing Base Deficiency exists that has not been cured for at least three Business Days; provided, that if such Borrowing Base Deficiency would not have occurred but for the occurrence of a Step-up Event, then no Early Amortization Event will occur under this clause (v) unless such Borrowing Base Deficiency continues to exist as of the Reporting Date that occurs during the third Collection Period after the Collection Period during which such Borrowing Base Deficiency first existed; (vi) a breach of any Financial Covenant (Lithia) or any Financial Covenant (DFC) has occurred; (vii) any Servicer Termination Event (other than a Servicer Termination Event of the type specified in subsections (l), (m), (n) or (o) of Section 7.13) occurs; (viii) a Termination Event has occurred; or (ix) a Material Adverse Change has occurred; provided, that any Early Amortization Event may be waived in a writing by the Consenting Lenders to the Borrower, with a copy to the Administrative Agent and the Servicer." "'Eligible Receivable' means, as of any date of determination, any Receivable (i) for which the related Receivable File is in the possession or 'control' (within the meaning of Section 9-105 of the UCC as then in effect in the relevant State) of the Collateral Custodian, (ii) which is identified on the Schedule of Receivables delivered by the Borrower to the Administrative Agent as part of a Funding Request and (iii) which satisfies each of the eligibility requirements set forth on Schedule B hereto, in each case as of such date of determination; provided, that no Receivable for which the related Contract is an Electronic Contract (A) that is initially sold to the Borrower pursuant to the Purchase Agreement on or after July 29, 2022 may at any time be an Eligible Receivable or (B) that was initially sold to the Borrower pursuant to the Purchase Agreement prior to July 29, 2022 may be an Eligible Receivable from and after August 28, 2022, unless in either case the Electronic Chattel Paper Condition has been satisfied with respect to the related Electronic Vault Provider for such Electronic Contract. For the avoidance of doubt, if the Electronic Chattel Paper Condition has been satisfied with respect to an Electronic Vault Provider, then the foregoing proviso shall no longer be of any force or effect with respect to Electronic Contracts for which such entity is the Electronic Vault Provider and no Receivable that would otherwise constitute an Eligible Receivable at any time thereafter shall fail to qualify as an Eligible Receivable solely due to the terms of such proviso."

- 8 - 153325876v6 "'Excess Concentration Amounts' means, as of any date of determination and without duplication, the sum of: (i) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligor has a billing address in the State with the highest concentration of Receivables by Obligor billing address as of such date minus (b) an amount equal to the product of (1) 43.0% times (2) the Eligible Pool Balance on such date; (ii) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligor has a billing address in the State with the second highest concentration of Receivables by Obligor billing address as of such date minus (b) an amount equal to the product of (1) 33.0% times (2) the Eligible Pool Balance on such date; (iii) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligor has a billing address in the State with the third highest concentration of Receivables by Obligor billing address as of such date minus (b) an amount equal to the product of (1) 23.0% times (2) the Eligible Pool Balance on such date; (iv) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligor has a billing address in any State other than those States accounted for in clauses (i), (ii), and (iii), above, minus (b) an amount equal to the product of (1) 20.0% times (2) the Eligible Pool Balance on such date; (v) without duplication, the sum of (a) the positive difference, if any, of (1) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligors had FICO Scores of less than 700 minus (2) the product of (A) 75.0% times (B) the Eligible Pool Balance as of such date plus (b) the positive difference, if any, of (1) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligors had FICO Scores of less than 620 minus (2) the product of (A) 17.5% times (B) the Eligible Pool Balance as of such date; (vi) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Obligors did not have a FICO Score or had a FICO Score of zero minus (b) the product of (1) 5.0% times (2) the Eligible Pool Balance as of such date; (vii) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Loan- to-Value Ratios were greater than 125% at the time of underwriting minus

- 9 - 153325876v6 (b) the product of (1) 30.0% times (2) the Eligible Pool Balance as of such date; (viii) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables that had original Principal Balances of greater than $40,000 minus (b) the product of (1) 60.0% times (2) the Eligible Pool Balance as of such date; (ix) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables which or on any prior date were (but which no longer are as of such date of determination) Serviced Portfolio Defaulted Receivables minus (b) the product of (1) 1.0% times (2) the Eligible Pool Balance as of such date; (x) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Financed Vehicle was a Used Vehicle at the time such Receivable was originated minus (b) the product of (1) 80.0% times (2) the Eligible Pool Balance as of such date; (xi) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the original term to maturity was more than 75 months minus (b) the product of (1) 27.5% times (2) the Eligible Pool Balance as of such date; (xii) the aggregate Adjusted Principal Balance of the Eligible Receivables that had FICO Scores of less than 665 at the time of their underwriting that would need to be subtracted from the Eligible Pool Balance on such date in order to cause the weighted average FICO Score of all Eligible Receivables (excluding Receivables that do not have a FICO Score or have a FICO Score of zero) to 665, with such weighted average calculated using the FICO Score of each such Receivable at the time of its underwriting; (xiii) the aggregate Adjusted Principal Balance of the Eligible Receivables that had Loan-to-Value Ratios at the time of their underwriting of greater than 118% that would need to be subtracted from the Eligible Pool Balance on such date in order to cause the weighted average Loan-to- Value Ratio of all Eligible Receivables at the time of their underwriting to equal 118%; (xiv) the aggregate Adjusted Principal Balance of the Eligible Receivables that had Payment-to-Income Ratios of greater than 12.0% at the time of their underwriting that would need to be subtracted from the Eligible Pool Balance on such date in order to cause the weighted average Payment-to-Income Ratios of all Eligible Receivables at the time of their underwriting to equal 12.0%;

- 10 - 153325876v6 (xv) the aggregate Adjusted Principal Balance of the Eligible Receivables that had Debt-to-Income Ratios of greater than 37.5% at the time of their underwriting that would need to be subtracted from the Eligible Pool Balance on such date in order to cause the weighted average Debt-to- Income Ratio of all Eligible Receivables at the time of their underwriting to equal 37.5%; and (xvi) the positive difference, if any, of (a) the aggregate Adjusted Principal Balance of the Eligible Receivables for which the related Financed Vehicle had an odometer reading of more than 125,000 miles at the time such Receivable was originated minus (b) the product of (1) 2.0% times (2) the Eligible Pool Balance as of such date." "'Excess Spread' means as of any date of determination, either: (i) with respect to any Receivable that is a Prime Receivable, the difference of (a) the weighted average APR of all Prime Receivables that are Eligible Receivables as of such date (weighted by the Principal Balance of such Eligible Receivables) minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate; (ii) with respect to any Receivable that is a Near Prime Receivable, the difference of (a) the weighted average APR of all Near Prime Receivables that are Eligible Receivables as of such date (weighted by the Principal Balance of such Eligible Receivables) minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate; or (iii) with respect to any Receivable that is a Subprime Receivable, the difference of (a) the weighted average APR of all Subprime Receivables that are Eligible Receivables as of such date (weighted by the Principal Balance of such Eligible Receivables) minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate." "'Excess Spread (Adjusted)' means, as of any date of determination, either: (i) with respect to any Receivable that is a Prime Receivable, the difference of (a) the percentage equivalent of a fraction, (1) the numerator of which equals the sum of (A) for each Eligible Receivable that is a Prime Receivable that has an APR that is less than the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date times (y) the related Required Rate plus (B) for each Eligible Receivable that is a Prime Receivable that has an APR that is greater than or equal to the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date

- 11 - 153325876v6 times (y) the APR of such Eligible Receivable and (2) the denominator of which is the sum of the Adjusted Principal Balances as of such date of all Eligible Receivables that are Prime Receivables minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate; (ii) with respect to any Receivable that is a Near Prime Receivable, the difference of (a) the percentage equivalent of a fraction, (1) the numerator of which equals the sum of (A) for each Eligible Receivable that is a Near Prime Receivable that has an APR that is less than the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date times (y) the related Required Rate plus (B) for each Eligible Receivable that is a Near Prime Receivable that has an APR that is greater than or equal to the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date times (y) the APR of such Eligible Receivable and (2) the denominator of which is the sum of the Adjusted Principal Balances as of such date of all Eligible Receivables that are Near Prime Receivables minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate; or (iii) with respect to any Receivable that is a Subprime Receivable, the difference of (a) the percentage equivalent of a fraction, (1) the numerator of which equals the sum of (A) for each Eligible Receivable that is a Subprime Receivable that has an APR that is less than the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date times (y) the related Required Rate plus (B) for each Eligible Receivable that is a Subprime Receivable that has an APR that is greater than or equal to the related Required Rate, the product of (x) the Adjusted Principal Balance of such Eligible Receivable as of such date times (y) the APR of such Eligible Receivable and (2) the denominator of which is the sum of the Adjusted Principal Balances as of such date of all Eligible Receivables that are Subprime Receivables minus (b) the Servicing Fee Rate minus (c) the Program Fee Rate minus (d) the Weighted Average Hedge Rate as of such date minus (e) the Backup Servicing Fee Rate." "'Fee Letter' means the "Second Amended and Restated Fee Letter", dated as of the July 29, 2022, among the Borrower, the initial Servicer and the Administrative Agent, setting forth, among other things, the Program Fee Rate, the Structuring Fee, the Supplemental Structuring Fee Rate, the Applicable Margin, the Credit Adjustment, and the Unused Commitment Fee Rate." "'Financial Covenants (DFC)' means each of: (i) DFC's Tangible Net Worth for the most recently ended fiscal quarter shall at least equal (a) on or prior to June 29, 2023, $300,000,000,

- 12 - 153325876v6 (b) from and including June 30, 2023 and through and including December 30, 2023, $330,000,000, (c) from and including December 31, 2023 and through and including June 29, 2024, $375,000,000, and (d) from and including June 30, 2024 and on all dates thereafter, $525,000,000; and (ii) DFC's Debt-to-Equity Ratio for the most recently ended fiscal quarter shall not exceed 7.50 to 1.0." "'Floor' means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the CP Rate or Daily Simple SOFR, as applicable. For the avoidance of doubt the initial Floor for each of the CP Rate or Adjusted Daily Simple SOFR shall be 0%." "'Interest' means, for any Interest Period and each Loan outstanding during such Interest Period, interest on the Principal Amount of such Loan computed pursuant to Sections 2.05(b) and 2.05(d); provided, that (i) no provision of this Agreement shall require or permit the collection of Interest in excess of the Maximum Lawful Rate and (ii) Interest shall not be considered paid by any distribution if at any time such distribution is rescinded or must otherwise be returned for any reason." "'Overnight Bank Funding Rate' means, for any date, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB's Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate." "'Reference Time' means, with respect to any setting of the then-current Benchmark, (i) if such Benchmark is Daily Simple SOFR, then four Business Days prior to such setting or (ii) if such Benchmark is not Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion." "'Relevant Governmental Body' means the Federal Reserve Board and/or the NYFRB, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto." "'Required Overcollateralization Percentage' means, as of any date, (i) with respect to Prime Receivables, either (a) on any date of determination as of which no Step-up Event (Prime) has occurred and is continuing, 12.00% or (b) on any date of determination as of which a Step-up Event (Prime) has occurred and is continuing, 17.00%, (ii) with respect to Near Prime Receivables, either (a) on any date of determination as of which no Step-up Event (Non-Prime) has occurred and is continuing, 20.00% or (b) on any date of determination as of which as Step-up Event (Non-Prime) has occurred and is continuing, 25.00%, and (iii) with respect to Subprime Receivables, either (a) on any date of determination as of which no Step-up Event (Non-Prime) has occurred and is continuing, 30.00% or (b) on any

- 13 - 153325876v6 date of determination as of which as Step-up Event (Non-Prime) has occurred and is continuing, 35.00%." "'Required Rate' means, as of any date and any Eligible Receivable, the sum of (i) the Weighted Average Hedge Rate as of such date plus (ii) the Program Fee Rate as of such date plus (iii) the Servicing Fee Rate plus (iv) the Backup Servicing Fee Rate plus (v) the greater of (a) zero percent (0.00%) and (b) the percentage which will result in Excess Spread (Adjusted) that is at least equal to the related Target Rate." "Serviced Portfolio Net Loss Ratio (Non-Prime)" means, with respect to any date of determination, the product of (i) the percentage equivalent of a fraction, (a) the numerator of which is the difference of (1) the aggregate Principal Balance of all Non-Prime Serviced Portfolio Receivables that became Serviced Portfolio Defaulted Receivables during the most recently completed Collection Period minus (2) all Recoveries received during such Collection Period with respect to Non- Prime Serviced Portfolio Receivables and (b) the denominator of which is the aggregate Principal Balance of all Non-Prime Serviced Portfolio Receivables as of the first day of such Collection Period times (ii) twelve. For purposes of this definition, the 'Principal Balance,' 'Recoveries,' and 'Collections' for each Non- Prime Serviced Portfolio Receivable that is not a Receivable shall be determined as if it were a "Receivable" for purposes of all related defined terms. "Serviced Portfolio Net Loss Ratio (Prime)" means, with respect to any date of determination, the product of (i) the percentage equivalent of a fraction, (a) the numerator of which is the difference of (1) the aggregate Principal Balance of all Prime Serviced Portfolio Receivables that became Serviced Portfolio Defaulted Receivables during the most recently completed Collection Period minus (2) all Recoveries received during such Collection Period with respect to Prime Serviced Portfolio Receivables and (b) the denominator of which is the aggregate Principal Balance of all Prime Serviced Portfolio Receivables as of the first day of such Collection Period times (ii) twelve. For purposes of this definition, the 'Principal Balance,' 'Recoveries,' and 'Collections' for each Prime Serviced Portfolio Receivable that is not a Receivable shall be determined as if it were a "Receivable" for purposes of all related defined terms. "'SOFR' means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator." "'Step-up Event' means the occurrence as of any Reporting Date of any of the following events:: (i) the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Prime) for the three previous Collection Periods is greater than 3.50%; (ii) the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Prime) for the three previous Collection Periods is greater than 3.00% (provided, that no Step-up Event will occur under this clause (ii) if a

- 14 - 153325876v6 Significant Take-out Date occurred during any of such three Collection Periods); (iii) the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Non-Prime) for the three previous Collection Periods is greater than 6.00%; (iv) the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Non-Prime) for the three previous Collection Periods is greater than 5.00% (provided, that no Step-up Event will occur under this clause (iv) if a Significant Take-out Date occurred during any of such three Collection Periods); (v) the arithmetic mean of the Serviced Portfolio Delinquency Ratio for the three previous Collection Periods is greater than 3.50%; or (vi) the arithmetic mean of the Conduit Portfolio Delinquency Ratio for the three previous Collection Periods is greater than 3.00% (provided, that no Step-up Event will occur under this clause (vi) if a Significant Take-out Date occurred during any of such three Collection Periods); Any Step-up Event that occurs will be deemed to be continuing until the earlier of (a) the first Reporting Date on which none of the events described above exists or (b) the effective date of any waiver that is provided by the Consenting Lenders with respect to the related Step-up Event." "'Stop-Funding Event' means the occurrence of any of the following: (i) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Delinquency Ratio for the three previous Collection Periods is greater than 4.50%; (ii) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Prime) for the three previous Collection Periods is greater than 5.00%; (iii) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Non-Prime) for the three previous Collection Periods is greater than 7.00%; (iv) either (a) no Backup Servicing Agreement has been executed and become effective by the date required by Section 7.09(a) or (b) after the date on which the Borrower initially enters into a Backup Servicing Agreement, such Backup Servicing Agreement is thereafter terminated without the consent of the Required Lenders; or (v) the Servicer has not received written confirmation from the Administrative Agent on or prior to November 30, 2022 that either (A) in

- 15 - 153325876v6 the commercially reasonable judgment of the Administrative Agent, any arrangement that is then in place and that provides the Administrative Agent, on behalf of the lenders, with protections relating to Collections prior to their deposit to the Collection Account is sufficient to provide the Administrative Agent and the Lenders with substantially similar protections, or a substantially similar level of protections, with respect to Collections as they had prior to the termination of the Amended and Restated Blocked Account Control Agreement, dated as of December 31, 2020, by and among DFC, the Administrative Agent, and the Lockbox Bank (provided, that the Administrative Agent acknowledges and agrees that entry by the Servicer into one or more commercially reasonable agreements that together (1) appoint a 'collateral agent' (or similarly named party) who is reasonably acceptable to the Administrative Agent, (2) who has 'control' (within the meaning of the UCC as then in effect in the relevant State) of the Lockbox Account and any other account or accounts into which Collections are then being deposited prior to their deposit to the Collection Account, on behalf of all parties who, from time to time, have interests in amounts on deposit in the Lockbox Account and any such other account or accounts (including the Administrative Agent and the Lenders with respect to Collections while on deposit in the Lockbox Account or such other account or accounts), and (3) contain intercreditor provisions governing all such interestholders' rights with respect to the respective deposits in which each has an interest, will be deemed to be an arrangement that provides substantially similar protections, or a substantially similar level of protections, with respect to Collections as required by this subclause (A)) or (B) the Administrative Agent has, in its sole discretion, waived the requirement to implement arrangements of the type described in clause (A). Any Stop-Funding Event that occurs will be deemed to be continuing until the earlier of (a) either (1) with respect to the Stop-Funding Events set forth in clauses (i), (ii) and (iii), the first Reporting Date on which none of the events described in such clauses exists, (2) with respect to the Stop-Funding Event set forth in clause (iv), the first date thereafter on which a Backup Servicing Agreement becomes effective in accordance with the terms of this Agreement or (b) the effective date of any waiver that is provided by the Required Lenders with respect to the related Step-up Event, or (3) with respect to the Stop-Funding Event set forth in clause (v), the first date thereafter on which the requirements of subclause (A) or (B) thereof are satisfied."

- 16 - 153325876v6 (b) Section 1.01 (Definitions) is further amended by adding the following definitions of "Adjusted Daily Simple SOFR," "Credit Adjustment," "Early Adoption Increased Costs," "Early Adoption Increased Costs Representation," "Electronic Chattel Paper Condition," "Electronic Contract," "Electronic Vault," "Electronic Vault Provider," Electronic Vault Services Agreement," "Electronic Vault System," "Fully Hedged," "Hedge Reserve Account," "Hedge Reserve Account Required Amount," "Mandatory Hedging Condition," "SOFR Determination Date," "SOFR Rate Day," "Tangible Contract," "Target Rate," and "U.S. Government Securities Business Day" thereto in appropriate alphabetical order: "'Adjusted Daily Simple SOFR' means an interest rate per annum equal to (i) the Daily Simple SOFR plus (ii) the Credit Adjustment." "'Credit Adjustment' has the meaning given to such term in the Fee Letter." "'Early Adoption Increased Costs' has the meaning given to such term in Section 2.10." "'Early Adoption Increased Costs Representation' has the meaning given to such term in Section 2.10." "'Electronic Chattel Paper Condition' means, with respect to any Receivable, the Contract of which is an Electronic Contract, the satisfaction of the following conditions: (i) delivery to the Administrative Agent of a legal opinion in a form reasonably acceptable to the Administrative Agent from a nationally recognized law firm to the effect that, as a legal matter, the Collateral Custodian has 'control' (within the meaning of Section 9-105 of the UCC as then in effect in the relevant State) of each Electronic Contract pledged to the Administrative Agent pursuant to this Agreement, in accordance with the related documents and procedures described in such legal opinion and with respect to the applicable Electronic Vault System and (ii) written approval by the Administrative Agent of the related Electronic Vault Provider in connection therewith." "'Electronic Contract' means a Contract that constitutes ‘electronic chattel paper’ (under and as defined in Article 9 of the UCC as then in effect in the relevant State) evidencing any Receivable." "'Electronic Vault' means the electronic vault wherein custody of Electronic Contracts shall be maintained in electronic form through a third-party Electronic Vault Provider that enables electronic contracting pursuant to the related Electronic Vault Services Agreement." "'Electronic Vault Provider' means a third-party provider of the technology platform on which the Electronic Vault operates " "'Electronic Vault Services Agreement' means an agreement among the Collateral Custodian and an Electronic Vault Provider pursuant to which the Electronic Vault Provider maintains the related Electronic Vault."

- 17 - 153325876v6 "'Electronic Vault System' means the electronic vault system with characteristics reasonably acceptable to the Administrative Agent provided by the Electronic Vault Provider pursuant to the Electronic Vault Services Agreement that enables electronic contracting." "'Fully Hedged' means a condition that exists as of any date of determination if the aggregate notional amount under all Hedge Transactions as of such date is at least equal to 100% of the Loans Outstanding as of such date (after giving effect to any changes to the Loans Outstanding on such date)." "'Hedge Reserve Account' means a segregated account established by the initial Servicer, on behalf of the Borrower, with the Account Bank in the name of the Administrative Agent for the benefit of the Secured Parties, into which amounts may be deposited by the Borrower in accordance with Section 6.03(a) and which, at all times from and after the time of its establishment, will be subject to the Control Agreement" "'Hedge Reserve Account Required Amount' means, as of any date of determination on which the aggregate notional amount of all outstanding Hedge Transactions is less than the Loans Outstanding (after giving effect to any changes to the Loans Outstanding on such date), an amount equal to the product of (i) 110% times (ii) the quoted purchase price from any Lender, any Agent, or any Affiliate of any Lender or Agent (which price shall be reasonably determined based on prevailing market conditions and such Lender or Agent's pricing of caps of a similar size, duration and cap rate) most recently received by the Borrower (or the Servicer on behalf of the Borrower) pursuant to Section 6.03(a)(ii) hereof (which quote shall, for purpose of this definition, continue in effect until the next succeeding date on which such a quote is received pursuant to Section 6.03(a)(ii) hereof), for an interest rate cap (A) that has a notional amount, duration, and amortization that is agreed upon by the Borrower and the Administrative Agent for such date and (B) the cap rate for which is the maximum cap rate that would cause the Excess Spread to equal the 'Average Target Rate' if a Hedge Transaction in the form of an interest rate cap having such strike rate and having the notional amount referenced in clause (A) was included in the calculation of 'Weighted Average Hedge Rate' on such date. For purposes of this definition, the 'Average Target Rate' as of any date of determination is the weighted average Target Rate of all Eligible Receivables (weighted by the Principal Balance of such Eligible Receivables)." "'Mandatory Hedging Condition' means that, as of any date of determination, one or more of the following events has occurred and the occurrence of a Mandatory Hedging Condition has not been expressly waived in accordance with Section 13.01 (regardless of whether any such event, or any other consequences of such event, have been waived, either in accordance with Section 13.01 or otherwise): (i) any Event of Default has occurred; (ii) any Servicer Termination Event has occurred; and (iii) the Commitment Termination Date occurs."

- 18 - 153325876v6 "'SOFR Determination Date' has the meaning given to such term in the definition of 'Daily Simple SOFR.'" "'SOFR Rate Day' has the meaning given to such term in the definition of 'Daily Simple SOFR.'" "'Tangible Contract' means a Contract that constitutes 'tangible chattel paper' (under and as defined in the UCC as then in effect in the relevant State) evidencing any Receivable." "'Target Rate' means (i) with respect to any Prime Receivable, 0.00%, (ii) with respect to any Near Prime Receivable, 3.00%, and (iii) with respect to any Subprime Receivable, 7.50%." "'U.S. Government Securities Business Day' means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities." (c) Section 1.01 (Definitions) is further amended by deleting the definitions of "Adjusted Eurodollar Rate," "Available Tenor," "Early Opt-in Election," "Eurodollar Reserve Percentage," "FCA," "Interpolated Rate," "LIBOR," "Term SOFR," "Term SOFR Notice," and "Term SOFR Transition Event" therefrom. (d) Section 2.05 (Payments) is deleted in its entirety and is replaced with the following: "Section 2.05. Payments. (a) Each Loan shall bear interest at a rate per annum calculated in accordance with this Section 2.05. (b) Interest computed by reference to Daily Simple SOFR hereunder shall be computed on the basis of a year of 360 days. Interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate, Adjusted Daily Simple SOFR or Daily Simple SOFR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. (c) The Borrower shall pay Interest on the unpaid Principal Amount of each Loan for the period from the related Funding Date until the

- 19 - 153325876v6 date that such Loan shall be paid in full. Interest shall accrue during each Interest Period and be payable on the Loans Outstanding on each Payment Date in accordance with Section 2.06. (d) The principal of and Interest on the Loans shall be paid as provided herein. In the case of Loans owned by an Agent as agent for its Lender Group, such Agent shall allocate to the members of its Lender Group each payment in respect of the Loans received by such Agent as provided herein. Payments in respect of principal and Interest (including pursuant to Section 2.13) shall be allocated and applied to Owners of such Loan based on their respective Invested Percentages, or in any such case in such other proportions as each affected Lender may agree upon in writing from time to time with such Agent and the Borrower; provided, that from and after the Commitment Termination Date for each Dissenting Lender until the earlier to occur of (i) the Termination Date and (ii) the date on which the aggregate amount of payments in reduction of Loans Outstanding made after the date of the occurrence of the related Partial Expiration Event equals the Partial Expiration Event Amount, except as otherwise provided in Section 2.07, payments pursuant to Section 2.07(vi)(B) in reduction of the Partial Expiration Event Amount shall be allocated and applied to Non-Extending Lenders pro rata based on their respective Lender Percentages as of the date of the related Partial Expiration Event. (e) The interest rate on a Loan may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.17(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including

- 20 - 153325876v6 direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. (f) At or before 3:00 p.m., New York City time, on the third Business Day prior to each Reporting Date, (i) each Lender shall notify the Agent for its Lender Group of (A) Daily Simple SOFR in effect for each day during the related Interest Period, and (B) if applicable, the date on which the Alternate Base Rate became applicable to its Invested Percentage of the Loans Outstanding or a portion thereof. At or before 5:00 p.m., New York City time, on the third Business Day prior to each Reporting Date, the Agents shall then notify the Borrower of all such rates. For such purposes, the Agents may rely conclusively on notices from Lenders as to the interest rate or rates from time to time applicable to their respective Invested Percentage of the Loans Outstanding. Each determination by a Lender of Daily Simple SOFR pursuant to this Agreement shall be conclusive and binding on the Lenders, each Agent, the Borrower, the Servicer, and the Collateral Custodian, in the absence of manifest error. (g) Notwithstanding any other provision of this Agreement or the other Basic Documents, if at any time the rate of interest payable by any Person under the Basic Documents exceeds the Maximum Lawful Rate, then, so long as the Maximum Lawful Rate would be exceeded, such rate of interest shall be equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest so payable is less than the Maximum Lawful Rate, such Person shall continue to pay Interest at the Maximum Lawful Rate until such time as the total interest received from such Person is equal to the total Interest that would have been received had Applicable Law not limited the interest rate so payable. In no event shall the total Interest received by a Lender under this Agreement and the other Basic Documents exceed the amount which such Lender could lawfully have received, had the Interest due been calculated from the Closing Date at the Maximum Lawful Rate." (e) Section 2.08 (Collections and Allocations; Investment of Funds) is amended by deleting clause (d) thereof in its entirety and replacing it with the following: "(d) To the extent there are uninvested amounts on deposit in the Collection Account or the Hedge Reserve Account, such amounts shall be invested in Permitted Investments that mature no later than the Business Day before the next Payment Date, which Permitted Investments shall be selected (i) prior to the occurrence of any Termination Event, by the Borrower or (ii) from and after the occurrence of any Termination Event, by the Administrative Agent. Absent the written instruction of the Borrower or the Administrative Agent, the Account Bank shall invest funds on deposit in the Collection Account and the Hedge Reserve Account in Permitted Investments described in clause (v) of the definition thereof. No

- 21 - 153325876v6 Permitted Investment may be purchased at a premium. Any earnings (and losses) on the foregoing investments shall be for the account of the Borrower. (e) At any time that any amounts are on deposit in the Hedge Reserve Account, (i) the Administrative Agent may, in its sole discretion, enter into one or more Hedge Transactions on behalf of the Borrower in the form of interest rate cap transactions, any up-front payments related to which will be paid with amounts that are withdrawn from the Hedge Reserve Account or (ii) if a Mandatory Hedging Condition exists, the Borrower may elect to withdraw amounts that are on deposit in the Hedge Reserve Account in order to fund any up-front payments that it is required to pay under Hedge Transactions that it enters into in order to ensure that it is Fully Hedged. With respect to any Hedge Transaction entered into by the Administrative Agent pursuant to clause (i), the Administrative Agent shall provide a copy of all applicable documentation related to such Hedge Transaction to the Borrower and the Servicer. (f) If on any Payment Date no Termination Event or Unmatured Termination Event has occurred and is continuing, then if the amount on deposit in the Hedge Reserve Account is greater than the Hedge Reserve Account Required Amount as of such Payment Date, the initial Servicer may withdraw such excess amount and pay such amount to, or at the direction of, the Borrower. Furthermore, any amounts remaining on deposit in the Hedge Reserve Account (i) while a Mandatory Hedging Condition exists and (ii) at any time that the Borrower is Fully Hedged, may be withdrawn from the Hedge Reserve Account by the initial Servicer and paid to, or as directed by, the Borrower." (f) Section 2.17 (Alternate Rate of Interest) is deleted in its entirety and is replaced with the following: "Section 2.17. Alternate Rate of Interest. (a) Subject to clauses (b), (c), (d) and (e) of this Section 2.17, if: (i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR or Daily Simple SOFR; or (ii) the Administrative Agent is advised by the Required Lenders that at any time, the applicable Adjusted Daily Simple SOFR or Daily Simple SOFR will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;

- 22 - 153325876v6 then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark, the Loans shall bear interest at the Alternate Base Rate. (b) Notwithstanding anything to the contrary herein or in any other Basic Document (and any Hedging Agreements shall be deemed not to be a 'Basic Document' for purposes of this Section 2.17), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then- current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Basic Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Basic Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. (c) Notwithstanding anything to the contrary herein or in any other Basic Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Basic Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Basic Document. (d) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.17, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Basic Document, except, in each case, as expressly required pursuant to this Section 2.17. (e) Upon the Borrower's receipt of notice of the commencement of a Benchmark Unavailability Period, and at all times during the

- 23 - 153325876v6 continuation of a Benchmark Unavailability Period, the Loans will bear interest at the Alternate Base Rate. (f) Notwithstanding anything to the contrary herein or in any other Basic Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of 'Interest Period' for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of 'Interest Period' for all Benchmark settings at or after such time to reinstate such previously removed tenor." (g) Section 3.01 (Collateral) is amended by deleting subclause (v) from clause (a) thereof in its entirety and replacing it with the following: "(v) subject to the Control Agreement, the Borrower's rights to the Collection Account and the Hedge Reserve Account;" (h) Section 6.03 (Covenant of the Borrower Relating to Hedging) is deleted in its entirety and is replaced with the following: "Section 6.03 Covenants of the Borrower Relating to Hedging. (a) Beginning on the date that is thirty days after the date of the Initial Loan, the Borrower shall at all times that the Loans Outstanding are greater than zero, (i) maintain one or more Hedge Transactions in form and substance satisfactory to the Administrative Agent, each of which may be in the form of an interest rate swap or an interest rate cap transaction and/or (ii) maintain amounts on deposit in the Hedge Reserve Account, in all cases to ensure that either (x) the Borrower is Fully Hedged or (y) if the Borrower is not Fully Hedged, the Hedge Reserve Account has been established and an amount not less than the Hedge Reserve Account Required Amount is on deposit therein at all times thereafter; provided, that if on any date any Mandatory Hedging Condition exists, then within two (2) Business Days of such date the Borrower must be Fully Hedged, and the Borrower must remain Fully Hedged at all times thereafter while a Mandatory Hedging Condition exists, regardless of whether any amounts are then on deposit in

- 24 - 153325876v6 the Hedge Reserve Account. If at any time the Hedge Reserve Account Required Amount is greater than zero, then (A) no later than three Business Days prior to each Funding Date and no later than three Business Days prior to each Payment Date the Borrower (or the initial Servicer on behalf of the Borrower) shall obtain a quote for the purchase price of an interest rate cap that allows it to recalculate the Hedge Reserve Account Required Amount on such date and (B) beginning on the related Funding Date or Payment Date, as applicable, such quote shall be used to determine the 'Hedge Reserve Account Required Amount' until the next succeeding Funding Date or Payment Date, as applicable. It is acknowledged and agreed that any Hedge Transaction entered into by the Administrative Agent on behalf of the Borrower pursuant to Section 2.08(f) shall be deemed to have been entered into by the Borrower for purposes of Borrower’s obligations under this Section 6.03(a). (b) Each Hedge Transaction shall be entered into with a Hedge Counterparty and be governed by a Hedging Agreement. Any Hedge Transaction that is in the form of an interest rate swap shall provide for the payment on each Payment Date to the Hedge Counterparty of an amount calculated by reference to the notional amount thereunder and a fixed rate of interest per annum and for the payment on each Payment Date to the Borrower of an amount calculated by reference to the same notional amount thereunder and a floating rate of interest (per annum equal to SOFR or a related rate), in each case for each day during the related Interest Period. Furthermore, the notional amount of each such Hedge Transaction shall amortize monthly based on an assumed 'ABS Rate' agreed upon by the Borrower and the Administrative Agent, (ii) the 'Termination Events' and 'Events of Default' that are applicable under each such Hedge Transaction shall have been approved by the Required Lenders to the Administrative Agent prior to the effectiveness of such Hedge Transaction, and (iii) each such Hedge Transaction shall have a final maturity date reflecting the expected repayment of the Receivables, taking into account anticipated losses and prepayments. If a Hedge Counterparty, other than a Hedge Counterparty as defined in clause (i) of the definition thereof, met the Short- Term Ratings Requirement and/or the Long-Term Ratings Requirement at the time the related Hedge Transaction was entered into and is downgraded or has any ratings withdrawn such that it no longer meets the Short-Term Ratings Requirement and/or the Long-Term Ratings Requirement, as applicable, then within thirty (30) days of the related downgrade or withdrawal either (A) the Borrower must enter into a new Hedging Agreement or (B) the Hedge Counterparty must post collateral pursuant to a credit support annex in an amount satisfactory to the Required Lenders. (c) If on any date any Hedge Transactions are in the form of interest rate swaps and the aggregate notional amount under all outstanding Hedge Transactions as of such date is either (x) less than 95% of the Loans Outstanding as of such date (after giving effect to any changes to the Loans

- 25 - 153325876v6 Outstanding on such date) or (y) more than 105% of the Loans Outstanding as of such date (after giving effect to any changes to the Loans Outstanding on such date), then on the related 'Adjustment Date' (which shall be either such date (if such date is a Payment Date) or otherwise the next Business Day after such date that is a Payment Date), the Administrative Agent may direct the Borrower to enter into one or more Hedge Transactions, increase the notional amount of one or more Hedge Transactions, or decrease the notional amount of one or more Hedge Transactions, in all cases as necessary such that immediately thereafter the aggregate notional amount under all Hedge Transactions is neither (I) less than 95% of the Loans Outstanding as of the Adjustment Date (after giving effect to any changes to the Loans Outstanding on such date) nor (II) more than one 105% of the Loans Outstanding as of the Adjustment Date (after giving effect to any changes to the Loans Outstanding on such date). (d) The Borrower shall establish and thereafter maintain a segregated trust account in the name of the Borrower with respect to each Hedge Counterparty (each, a 'Hedge Counterparty Collateral Account;) with a Qualified Institution in trust and for the benefit of the Lenders and the related Hedge Counterparty. In the event that pursuant to the terms of the applicable Hedging Agreement, the related Hedge Counterparty is required to deposit cash or securities as collateral to secure its obligations ('Posted Collateral'), the Borrower shall deposit all Posted Collateral received from the Hedge Counterparty into the Hedge Counterparty Collateral Account. All sums on deposit and securities held in any Hedge Counterparty Collateral Account shall be used only for the purposes set forth in the related credit support annex ('Credit Support Annex') to the Hedging Agreement. The only permitted withdrawal from or application of funds on deposit in, or otherwise to the credit of, a Hedge Counterparty Collateral Account shall be (i) for application to the obligations of the applicable Hedge Counterparty under the related Hedging Agreement in accordance with the terms of the related Credit Support Annex and (ii) to return collateral to the Hedge Counterparty when and as required by the Credit Support Annex. Amounts on deposit in each Hedge Counterparty Collateral Account shall be invested at the written direction of the related Hedge Counterparty, and all investment earnings actually received on amounts on deposit in a Hedge Counterparty Collateral Account or distributions on securities held as Posted Collateral shall be distributed to the related Hedge Counterparty in accordance with the terms of the related Credit Support Annex. Any amounts applied by the Borrower to the obligations of the Hedge Counterparty under the Hedging Agreement in accordance with the terms of the Credit Support Annex shall be deposited in the Collection Account and applied in accordance with Section 2.06 of this Agreement. The Borrower agrees to give the Hedge Counterparty prompt notice if it obtains knowledge that the Hedge Counterparty Collateral Account or any funds on deposit therein or otherwise to the credit of the Hedge Counterparty Collateral Account, shall or have become subject

- 26 - 153325876v6 to any writ, order, judgment, warrant of attachment, execution or similar process. (e) Within 30 days after the occurrence of any event defined as an "Event of Default" or "Termination Event" in a Hedging Agreement, the Borrower shall cause such Hedge Counterparty to assign its obligations under the Hedging Agreement to a new Hedge Counterparty which satisfies the requirements set forth in the definition of "Hedge Counterparty." (f) The Borrower shall deliver to the Administrative Agent a copy of all documents related to any Hedging Agreement, including confirmations, schedules and an aggregate notional amortization schedule. (g) All reasonably documented out-of-pocket costs and expenses (including reasonable legal fees and disbursements) incurred by the Administrative Agent and the Lenders incurred with each Hedge Transaction shall be paid by the Borrower. (h) As additional security hereunder, the Borrower has granted a security interest to the Administrative Agent all right, title and interest of the Borrower in the Hedge Collateral. The Borrower acknowledges that, as a result of that pledge, the Borrower may not, without the prior written Consent of the Administrative Agent, exercise any rights under any Hedging Agreement or Hedge Transaction, except for the Borrower's right under any Hedging Agreement to enter into Hedge Transactions in order to meet the Borrower's obligations hereunder. Nothing herein shall have the effect of releasing the Borrower from any of its obligations under any Hedging Agreement or any Hedge Transaction, nor be construed as requiring the consent of any Secured Party for the performance by the Borrower of any such obligations." (i) Section 6.05 (Negative Covenants of the Servicer) is amended by deleting clause (f) thereof in its entirety and replacing it with the following: "(f) [Reserved].” (j) Section 7.03 (Duties of the Servicer) is amended by adding the following clause (j) immediately following clause (i) thereof: "(j) Control of Electronic Contracts. The Servicer, in its capacity as Collateral Custodian, shall at all times maintain 'control' (within the meaning of the UCC as then in effect in the relevant State) of the Electronic Contracts. Neither the Collateral Custodian nor the Borrower will communicate, or permit any custodian or vaulting agent thereof to communicate, an authoritative copy of any Electronic Contract to any Person other than the Electronic Vault Provider, the Servicer, the Borrower or the Administrative Agent."

- 27 - 153325876v6 (k) Section 7.07 (Reports and Audit) is amended by deleting clause (a) thereof in its entirety and replacing it with the following: "(a) Monthly Reports. On each Reporting Date, the Servicer will provide to the Borrower, the Administrative Agent, the Backup Servicer and, to the extent requested or required by a Hedge Counterparty, such Hedge Counterparty, a Monthly Report. No such Monthly Report is required to have been executed by a Responsible Officer unless such Monthly Report is delivered on a Funding Date." (l) Section 7.13 (Servicer Termination Events) is amended by deleting clauses (l), (m), (n), and (o) thereof in their entirety and replacing them, respectively, with the following: "(l) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Delinquency Ratio for the three previous Collection Periods is greater than 6.00%;" "(m) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Prime) for the three previous Collection Periods is greater than 6.00%;" "(n) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Net Loss Ratio (Non-Prime) for the three previous Collection Periods is greater than 8.50%;" "(o) as of any Reporting Date, the arithmetic mean of the Serviced Portfolio Deferral Ratio for the three previous Collection Periods is greater than 2.00%; or" (m) Section 7.18 (Duties of Collateral Custodian) is amended by deleting clause (b) thereof in its entirety and replacing it with the following: "(b) Maintenance of and Access to Records. The Collateral Custodian shall maintain each Receivable File at one of the locations specified in Schedule D or, if a material portion of the Receivables Files are to be held in any other location, the Collateral Custodian will provide 30 days' prior written notice thereof to the Administrative Agent, each Agent and each Lender. The Collateral Custodian may temporarily move individual Receivable Files or any portion thereof without notice as necessary to conduct collection and other servicing activities in accordance with its customary practices and procedures. The Collateral Custodian shall make available to the Secured Parties or their duly authorized representatives, attorneys or auditors a list of locations of the Receivable Files, the Receivable Files and the related accounts, records and computer systems maintained by the Servicer at such times during normal business hours as any Secured Party shall reasonably request."

- 28 - 153325876v6 (n) Section 7.18 (Duties of Collateral Custodian) is further amended by inserting a new clause (h) immediately following clause (g) thereof "(h) Delegation of Duties. (i) The Collateral Custodian may perform any of its duties through one or more custodial agents without the consent of any Person, except as set forth in clause (iii) below. No such delegation will relieve the Collateral Custodian of its responsibilities with respect to such duties and the Collateral Custodian will remain primarily responsible with respect to such duties, and the Collateral Custodian acknowledges that it remains primarily responsible for the safeguarding of all such Receivable Files and shall be liable for any acts or omissions of such custodial agents while acting on its behalf. The Collateral Custodian will be responsible for the fees of any such custodial agents. (ii) (A) With respect to the Electronic Contracts, the Collateral Custodian has engaged or may engage one or more an Electronic Vault Providers to hold such Electronic Contracts and (B) with respect to Tangible Contracts, the Collateral Custodian has engaged each of Record Xpress of California and Iron Mountain Information Management, LLC to act as a custodial agent to hold such signed documentation and other contents of the related Receivable File on its behalf. (iii) Upon termination of, or resignation by, any custodial agent or the appointment of any new custodial agent, the Collateral Custodian shall provide written notice of such termination, resignation or appointment to the Administrative Agent." (o) Section 8.01 (Termination Events) is amended by deleting subclauses (xiv), (xvii), (xviii), and (xix) from clause (a) thereof in their entirety and replacing them, respectively, with the following: "(xiv) (A) failure on the part of the Borrower (x) to establish one or more Hedge Transactions in fulfillment of the requirements set forth in Section 6.03 within thirty days of the date on which the Initial Loan is made hereunder or (y) at any time thereafter to both (1) maintain one or more Hedge Transactions having notional amounts which, in the aggregate, equal at least 100% of the Loans Outstanding and (2) cause an amount that is at least equal to the Hedge Reserve Account Required Amount to be on deposit in the Hedge Reserve Account; (B) failure on the part of the Borrower within thirty days of receiving direction from the Administrative Agent pursuant to Section 6.03(c) to enter into one or more Hedge Transactions, increase the notional amount of one or more Hedge Transactions, or decrease the notional amount of one or more Hedge Transactions, in each case as directed by the Administrative Agent and in the manner set forth in such Section 6.03(c); or (C) any other failure on the

- 29 - 153325876v6 part of the Borrower to maintain one or more Hedge Transactions in fulfillment of the requirements set forth in Section 6.03;" '"(xvii) as of any Reporting Date, if no Significant Take-out Date occurred during any of the three previous Collection Periods, the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Prime) for such three previous Collection Periods is greater than 5.50%;" "(xviii) as of any Reporting Date, if no Take-out Date occurred during any of the three previous Collection Periods, the arithmetic mean of the Conduit Portfolio Net Loss Ratio (Non-Prime) for such three previous Collection Periods is greater than 7.50%; and" "(xix) as of any Reporting Date, if no Take-out Date occurred during any of the three previous Collection Periods, the arithmetic mean of the Conduit Portfolio Delinquency Ratio for such three previous Collection Periods is greater than 5.50%;" (p) Schedule A (Lender Supplement (JPMorgan Lender Group)) is amended by deleting the "Commitment" and "Mandatory Commitment" rows set forth therein in their entirety and replacing them, respectively, with the following: "Commitment: $1,000,000,000" "Mandatory Commitment: $700,000,000" (q) Schedule B (Eligible Receivable Criteria) is amended by deleting clauses 5, 6, 17 and 20 set forth therein in their entirety and replacing them, respectively, with the following: "5. which has a Principal Balance of at least $500 but not more than $100,000;" "6. which constitutes an 'account,' '"tangible chattel paper,' 'electronic chattel paper,' or a 'payment intangible' under and as defined in Article 9 of the UCC as then in effect in the relevant State;" "17. either (a) with respect to Receivables that are 'tangible chattel paper' under and as defined in Article 9 of the UCC as then in effect in the relevant State, (i) there is only one original executed copy of each Contract, (ii) such Contract is in the possession of the Collateral Custodian, (iii) such Contract has not been sold, transferred, assigned, or pledged by DFC to any Person other than the Borrower, and (iv) such Contract has not been stamped or otherwise marked to show any interest of any Person other than the Borrower; or (b) with respect to Receivables that are 'electronic chattel paper' under and as defined in Article 9 of the UCC as then in effect in the relevant

- 30 - 153325876v6 State, (i) there is only one authoritative copy of each Contract within the meaning of Article 9 of the UCC as then in effect in the relevant State, (ii) such authoritative copy is unique, identifiable, and unalterable (other than with the participation of the Collateral Custodian in the case of an addition or amendment of an identified assignee and other than a revision that is readily identifiable as an authorized or unauthorized revision), (iii) such authoritative copy has been communicated to and is maintained by or on behalf of the Custodian solely for the benefit of the Secured Parties, (iv) each copy of the authoritative copy and any copy of a copy are readily identifiable as copies that are not the authoritative copy, (v) the related Receivable was established in a manner such that all copies or revisions that add or change an identified assignee of the authoritative copy of such Contract must be made with the participation of the Custodian, (vi) the related Receivable was established in a manner such that all revisions of the authoritative copy of the Contract is readily identifiable as an authorized or unauthorized revision, and (vii) such authoritative copy communicated to the Collateral Custodian has no marks or notations indicating that it has been pledged, assigned, or otherwise conveyed to any person such Contract has not been sold, transferred, assigned or pledged by DFC to any Person other than the Borrower;" "20. which at the time of underwriting did not have a Loan-to-Value Ratio of greater than 160%;" (r) Schedule D (Location of Receivables Files) is amended by adding the following addresses thereto: "Iron Mountain Information Management, LLC, at the following locations: Building ID Address City State ZIP F1 811 Route 33 OPM# 000738 RM Freehold NJ 07728 F2 811 Route 33 OPM# 000738 RM Freehold NJ 07728 F3 811 Route 33 OPM# 000738 RM Freehold NJ 07728 F7 811 Route 33 Freehold NJ 07728 M1 26 South Middlesex Ave. Monroe NJ 08831 M2 26 South Middlesex Ave. Monroe NJ 08831 CR 12958 Midway Place Cerritos CA 90703 LP 5911 Fresca Dr. La Palma CA 90623 PC 8700 Mercury Lane Pico Rivera CA 90660 2A 218 W. Yard Rd. Feura Bush NY 12067 PG Route 9W South Port Ewen NY 12466 2 4561 Oak Fair Blvd. Tampa FL 33610 5 4758 Oak Fair Blvd. Tampa FL 33610 BT 700 Burning Tree Rd. Fullerton CA 92833 1 6298 W 44th Ave. Spokane WA 99224 ”

- 31 - 153325876v6 SECTION 2. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members). (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 3. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon the delivery of a fully executed copy hereof to the Administrative Agent. (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby, (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the Loan Agreement or to such terms as modified hereby, and (iii) each reference in the Loan Agreement or in any other Basic Document to the Fee Letter or to any terms defined in the Fee Letter shall mean and be references to the Fee Letter as defined herein and to such terms as defined in such Fee Letter. The parties hereto acknowledge and agree that this Amendment and the Fee Letter (as defined herein) shall each constitute a Basic Document. Neither this Amendment nor the Fee Letter (as defined herein) constitutes a novation or termination of the Loan Agreement, the Fee Letter, or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein.

- 32 - 153325876v6 SECTION 4. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 7. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 8. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment. SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. SCFC BUSINESS SERVICES LLC, as Borrower Name: Title: ACKNOWLEDGED AND AGREED: DRIVEWAY FINANCE CORPORATION, as Servicer and Collateral Custodian Ill A ,c( !7: By: ___ ___::_{1!.,__~ _ I\J:e...:...-_~-+------ Name: Title: [Signature Page to Amendment No. 6 to A&R Loan Agt. (SCFC Business Services LLC)] 15H25R761·4 Charles Lietz President Charles Lietz President

[Signature Page to Amendment No. 6 to A&R Loan Agt. (SCFC Business Services LLC)] 153325876v4 CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Title: JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Title: Elizabeth S. Trainor Executive Director Elizabeth S. Trainor Executive Director

EX-10.6

Execution Copy 154468526v2 AMENDMENT NO. 7 TO AMENDED AND RESTATED LOAN AGREEMENT This AMENDMENT NO. 7, dated as of September 26, 2022 (this "Amendment"), is executed by and among SCFC BUSINESS SERVICES LLC (the "Borrower"), CHARIOT FUNDING LLC ("Chariot"), and JPMORGAN CHASE BANK, N.A. ("JPMorgan"), in its capacities as administrative agent (in such capacity, the "Administrative Agent"), as a Committed Lender, and as the Agent for the JPMorgan Lender Group (in such capacity, the "JPMorgan Agent"), and amends the Amended and Restated Loan Agreement, dated as of December 31, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among the Borrower, Driveway Finance Corporation ("DFC"), as the servicer and the collateral custodian, the lenders from time to time parties thereto, the agents from time to time parties thereto, and JPMorgan, as Administrative Agent and as the account bank. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Loan Agreement. WITNESSETH: WHEREAS, as of the date of this Amendment, Chariot is the sole Conduit Lender under the Loan Agreement and JPMorgan is the sole Committed Lender under the Loan Agreement (Chariot and JPMorgan, together in such respective capacities, the "Lenders"); WHEREAS, the Borrower and the Lenders desire to amend the Loan Agreement, in accordance with Section 13.01 thereof, on the terms set forth herein; WHEREAS, the Consenting Lenders desire to provide the waivers set forth below, in accordance with Section 13.01 of the Loan Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendment to the Loan Agreement. Schedule A (Lender Supplement (JPMorgan Lender Group)) to the Loan Agreement is amended by deleting the "Mandatory Commitment" row set forth therein in its entirety and replacing it with the following: "Mandatory Commitment: $1,000,000,000"

- 2 - 154468526v2 SECTION 2. Representations, Warranties and Confirmations. The Borrower hereby confirms that all representations and warranties made by it pursuant to Sections 5.01 and 5.02 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. By its acknowledgment of this Amendment, DFC hereby confirms that all representations and warranties made by it pursuant to Section 5.03 of the Loan Agreement were true and correct as of the date as of which they were made and that it is in compliance with all covenants made by it pursuant to the Loan Agreement as of the date hereof. Furthermore, the Borrower and DFC each hereby represents and warrants as to itself that: (a) It has the power to execute, deliver and perform this Amendment and the transactions contemplated hereby. (b) The execution and delivery of this Amendment and the performance of this Amendment and the Loan Agreement (as amended hereby) have been duly authorized by it by all necessary company action (including any necessary action by its members). (c) This Amendment has been duly executed and delivered on its behalf. This Amendment and the Loan Agreement (as amended hereby) constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (d) It is in compliance in all material respects with all Applicable Laws. SECTION 3. Effectiveness of Amendment. (a) This Amendment shall be effective, as of the date hereof, upon (i) the delivery of a fully executed copy hereof to the Administrative Agent and (ii) the payment to JPMorgan for its own account, or as directed by JPMorgan, of $675,000, which the parties hereto agree constitutes "Structuring Fee" for all purposes under the Basic Documents and which shall be payable subject to all terms and conditions set forth in the Fee Letter (except that such amount shall be due on the date hereof, rather than on the date of the Fee Letter) (b) Except as expressly amended by the terms of this Amendment, all terms and conditions of the Loan Agreement shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is effective only for the specific purpose for which it is given and shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Loan Agreement. Upon the effectiveness of this Amendment, (i) each reference in the Loan Agreement to "this Agreement" or "this Loan Agreement" or words of like import shall mean and be references to the Loan Agreement as amended hereby and (ii) each reference in any other Basic Document to the Loan Agreement or to any terms defined in the Loan Agreement which are modified hereby shall mean and be references to the Loan Agreement or to such terms as modified hereby. The parties hereto acknowledge and agree that this Amendment shall constitute a Basic Document. This Amendment does not constitute a novation or termination of the Loan Agreement or any other Basic Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein.

- 3 - 154468526v2 SECTION 4. Amendments, etc. No provision of this Amendment shall be waived, amended or otherwise modified except as provided in Section 13.01 of the Loan Agreement. SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Severability. If one or more of the covenants, agreements, provisions or terms of this Amendment shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the other provisions of this Amendment or the Loan Agreement as amended hereby. SECTION 7. Binding Effect. This Amendment shall be binding upon and shall be enforceable by the parties hereto and their respective successors and permitted assigns. SECTION 8. Captions, etc. The captions and section numbers appearing in this Amendment are inserted only as a matter of convenience and do not define, limit, construe or describe the scope or intent of the provisions of this Amendment. SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a ".pdf" file shall be effective as delivery of a manually executed counterpart of this Amendment. Each party agrees that this Amendment and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Amendment or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. [Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. SCFC BUSINESS SERVICES LLC, as Borrower By: __ __ /J. _tf__,__• _ Name: Title: ACKNOWLEDGED AND AGREED: DRIVEWAY FINANCE CORPORATION, as Servicer and Collateral Custodian By: ---'-8/u4--=-/J. ---'-'--~ -- Name: Title: [Signature Page to Amendment No. 7 to A&R Loan Agt. (SCFC Business Services LLC)] I 54468526v2

[Signature Page to Amendment No. 7 to A&R Loan Agt. (SCFC Business Services LLC)] 154468526v2 CHARIOT FUNDING LLC, as Conduit Lender By: JPMORGAN CHASE BANK, N.A., as its attorney-in-fact By: Name: Title: JPMORGAN CHASE BANK N.A., as JPMorgan Agent, as a Committed Lender, and as Administrative Agent By: Name: Title: Elizabeth S. Trainor Executive Director Elizabeth S. Trainor Executive Director

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Bryan B. DeBoer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lithia Motors, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 27, 2022

/s/ Bryan B. DeBoer

Bryan B. DeBoer

President and Chief Executive Officer

Lithia Motors, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Tina Miller, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lithia Motors, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 27, 2022

/s/ Tina Miller

Tina Miller

Senior Vice President and Chief Financial Officer

Lithia Motors, Inc.

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Lithia Motors, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan B. DeBoer, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bryan B. DeBoer

Bryan B. DeBoer

President and Chief Executive Officer

Lithia Motors, Inc.

October 27, 2022

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Lithia Motors, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tina Miller, Senior Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Tina Miller

Tina Miller

Senior Vice President and Chief Financial Officer

Lithia Motors, Inc.

October 27, 2022

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Oct. 27, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-14733
Entity Registrant Name	LITHIA MOTORS INC
Entity Incorporation, State or Country Code	OR
Entity Tax Identification Number	93-0572810
Entity Address, Address Line One	150 N. Bartlett Street
Entity Address, City or Town	Medford,
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97501
City Area Code	541
Local Phone Number	776-6401
Title of 12(b) Security	Common stock without par value
Trading Symbol	LAD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		27,338,411
Entity Central Index Key	0001023128
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash, restricted cash, and cash equivalents	$ 233.0	$ 174.8
Accounts receivable, net of allowance for doubtful accounts of $37.0 and $17.3	1,004.6	910.0
Inventories, net	3,309.3	2,385.5
Other current assets	135.4	63.0
Total current assets	4,682.3	3,533.3
Property and equipment, net of accumulated depreciation of $490.5 and $422.6	3,473.0	3,052.6
Operating lease right-of-use assets	373.2	395.9
Goodwill	1,463.1	977.3
Franchise value	1,866.8	799.1
Other non-current assets	2,216.1	2,388.7
Total assets	14,074.5	11,146.9
Current liabilities:
Floor plan notes payable	454.8	354.2
Floor plan notes payable: non-trade	1,208.1	835.9
Current maturities of long-term debt	113.4	223.7
Trade payables	241.3	235.4
Accrued liabilities	809.0	753.6
Total current liabilities	2,826.6	2,402.8
Long-term debt, less current maturities	5,222.3	3,185.7
Deferred revenue	219.9	191.2
Deferred income taxes	254.5	191.0
Non-current operating lease liabilities	337.7	361.7
Other long-term liabilities	185.3	151.3
Total liabilities	9,046.3	6,483.7
Redeemable non-controlling interest	40.5	34.0
Equity:
Preferred stock - no par value; authorized 15.0 shares; none outstanding	0.0	0.0
Common stock - no par value; authorized 125.0 shares; issued and outstanding 27.5 and 29.5	1,107.1	1,711.6
Additional paid-in capital	69.0	58.3
Accumulated other comprehensive loss	(21.5)	(3.0)
Retained earnings	3,829.1	2,859.5
Total stockholders’ equity - Lithia Motors, Inc.	4,983.7	4,626.4
Non-controlling interest	4.0	2.8
Total equity	4,987.7	4,629.2
Total liabilities, redeemable non-controlling interest and equity	$ 14,074.5	$ 11,146.9

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ (37.0)	$ (17.3)
Property and equipment, accumulated depreciation	$ (490.5)	$ (422.6)
Preferred stock, authorized (in shares)	15,000,000.0	15,000,000.0
Preferred stock, outstanding (in shares)	0	0
Common stock, authorized (in shares)	125,000,000.0	125,000,000.0
Common stock, issued (in shares)	27,500,000	29,500,000
Common stock, outstanding (in shares)	27,500,000	29,500,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Total revenues	$ 7,295.7	$ 6,169.8	$ 21,241.3	$ 16,522.2
Cost of sales:
Total cost of sales	5,981.5	4,980.7	17,298.0	13,507.0
Gross profit	1,314.2	1,189.1	3,943.3	3,015.2
Asset impairments	0.0	1.9	0.0	1.9
Selling, general and administrative	749.2	673.3	2,256.8	1,757.6
Depreciation and amortization	41.9	34.4	122.1	91.5
Operating income	523.1	479.5	1,564.4	1,164.2
Floor plan interest expense	(10.7)	(3.6)	(19.4)	(17.0)
Other interest expense, net	(49.6)	(28.0)	(114.1)	(79.6)
Other expense, net	(7.1)	(25.7)	(37.0)	(14.6)
Income before income taxes	455.7	422.2	1,393.9	1,053.0
Income tax provision	(125.4)	(113.2)	(382.1)	(282.9)
Net income	330.3	309.0	1,011.8	770.1
(Net income) loss attributable to non-controlling interest	0.5	(0.8)	(3.9)	(0.8)
Net income attributable to redeemable non-controlling interest	(1.2)	(0.3)	(4.5)	(0.3)
Net income attributable to Lithia Motors, Inc.	$ 329.6	$ 307.9	$ 1,003.4	$ 769.0
Basic earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.97	$ 10.18	$ 35.23	$ 27.12
Shares used in basic per share calculations (in shares)	27.5	30.3	28.5	28.4
Diluted earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.92	$ 10.11	$ 35.10	$ 26.91
Shares used in diluted per share calculations (in shares)	27.6	30.5	28.6	28.6
Cash dividends paid per share (in dollars per share)	$ 0.42	$ 0.35	$ 1.19	$ 1.01
New vehicle retail
Revenues:
Total revenues	$ 3,306.9	$ 2,898.2	$ 9,619.4	$ 8,237.7
Cost of sales:
Total cost of sales	2,903.2	2,548.9	8,403.9	7,418.0
Used vehicle retail
Revenues:
Total revenues	2,465.8	2,079.5	7,197.0	5,236.6
Cost of sales:
Total cost of sales	2,264.5	1,846.9	6,533.6	4,635.2
Used vehicle wholesale
Revenues:
Total revenues	363.2	260.9	1,131.5	613.5
Cost of sales:
Total cost of sales	374.8	255.2	1,131.5	586.8
Finance and insurance
Revenues:
Total revenues	333.3	297.0	977.0	765.0
Service, body and parts
Revenues:
Total revenues	712.2	578.3	2,022.6	1,503.4
Cost of sales:
Total cost of sales	328.0	275.8	945.9	704.3
Fleet and other
Revenues:
Total revenues	114.3	55.9	293.8	166.0
Cost of sales:
Total cost of sales	$ 111.0	$ 53.9	$ 283.1	$ 162.7

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 330.3	$ 309.0	$ 1,011.8	$ 770.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(16.4)	0.2	(20.3)	0.2
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9) respectively	0.0	0.5	1.8	2.5
Total other comprehensive income (loss), net of tax	(16.4)	0.7	(18.5)	2.7
Comprehensive income	313.9	309.7	993.3	772.8
Comprehensive (income) loss attributable to non-controlling interest	0.5	(0.8)	(3.9)	(0.8)
Comprehensive income attributable to redeemable non-controlling interest	(1.2)	(0.3)	(4.5)	(0.3)
Comprehensive income attributable to Lithia Motors, Inc.	$ 313.2	$ 308.6	$ 984.9	$ 771.7

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Gain (loss) on cash flow hedges, tax (expense) benefit	$ 0.0	$ (0.2)	$ (0.7)	$ (0.9)

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CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST - USD ($) $ in Millions		Total	Common stock		Common stock Class B		Additional paid-in capital	Accumulated other comprehensive loss	Retained earnings	Noncontrolling Interest
Beginning Balance at Dec. 31, 2020		$ 2,661.5	$ 788.2	[1]	$ 0.0	[1]	$ 41.4	$ (6.3)	$ 1,838.2	$ 0.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation for stock and stock option issuances and excess tax benefits from option exercises			16.2				9.4
Issuance of stock in connection with employee stock plans			17.6
Repurchase of common stock			(15.9)
Equity issuances, net of issuance costs			1,110.3
Class B common stock converted to class A common stock	[1]		0.0		0.0
Foreign currency translation adjustment		0.2						0.2
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9), respectively		2.5						2.5
Contribution of non-controlling interest										1.1
Net income (loss) attributable to non-controlling interest		770.1							769.0	0.8
Dividends paid									(28.2)
Ending Balance at Sep. 30, 2021		4,544.6	1,916.4	[1]	0.0	[1]	50.8	(3.6)	2,579.1	1.9
Redeemable non-controlling interest, beginning balances at Dec. 31, 2020		0.0
Increase (Decrease) in Temporary Equity [Roll Forward]
Contribution (distribution) of redeemable non-controlling interest		33.0
Net income attributable to redeemable non-controlling interest		0.3
Redeemable non-controlling interest, ending balances at Sep. 30, 2021		33.3
Beginning Balance at Jun. 30, 2021		4,228.4	1,906.9	[1]	0.0	[1]	44.0	(4.3)	2,281.8	0.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation for stock and stock option issuances and excess tax benefits from option exercises			1.6				6.8
Issuance of stock in connection with employee stock plans			8.0
Repurchase of common stock			0.0
Equity issuances, net of issuance costs			(0.1)
Class B common stock converted to class A common stock	[1]		0.0		0.0
Foreign currency translation adjustment		0.2						0.2
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9), respectively		0.5						0.5
Contribution of non-controlling interest										1.1
Net income (loss) attributable to non-controlling interest		309.0							307.9	0.8
Dividends paid									(10.6)
Ending Balance at Sep. 30, 2021		4,544.6	1,916.4	[1]	0.0	[1]	50.8	(3.6)	2,579.1	1.9
Redeemable non-controlling interest, beginning balances at Jun. 30, 2021		0.0
Increase (Decrease) in Temporary Equity [Roll Forward]
Contribution (distribution) of redeemable non-controlling interest		33.0
Net income attributable to redeemable non-controlling interest		0.3
Redeemable non-controlling interest, ending balances at Sep. 30, 2021		33.3
Beginning Balance at Dec. 31, 2021		4,629.2	1,711.6	[1]	0.0	[1]	58.3	(3.0)	2,859.5	2.8
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation for stock and stock option issuances and excess tax benefits from option exercises			21.0				10.7
Issuance of stock in connection with employee stock plans			28.1
Repurchase of common stock			(653.6)
Equity issuances, net of issuance costs			0.0
Class B common stock converted to class A common stock	[1]		0.0		0.0
Foreign currency translation adjustment		(20.3)						(20.3)
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9), respectively		1.8						1.8
Distribution of non-controlling interest										(2.7)
Net income (loss) attributable to non-controlling interest		1,011.8							1,003.4	3.9
Dividends paid									(33.8)
Ending Balance at Sep. 30, 2022		4,987.7	1,107.1	[1]	0.0	[1]	69.0	(21.5)	3,829.1	4.0
Redeemable non-controlling interest, beginning balances at Dec. 31, 2021		34.0
Increase (Decrease) in Temporary Equity [Roll Forward]
Contribution (distribution) of redeemable non-controlling interest		2.0
Net income attributable to redeemable non-controlling interest		4.5
Redeemable non-controlling interest, ending balances at Sep. 30, 2022		40.5
Beginning Balance at Jun. 30, 2022		4,698.0	1,123.9	[1]	0.0	[1]	62.2	(5.1)	3,510.8	6.1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation for stock and stock option issuances and excess tax benefits from option exercises			1.9				6.8
Issuance of stock in connection with employee stock plans			9.4
Repurchase of common stock			(28.1)
Equity issuances, net of issuance costs			0.0
Class B common stock converted to class A common stock	[1]		0.0		0.0
Foreign currency translation adjustment		(16.4)						(16.4)
Gain on cash flow hedges, net of tax expense of $—, ($0.2), ($0.7), and ($0.9), respectively		0.0						0.0
Distribution of non-controlling interest										(1.6)
Net income (loss) attributable to non-controlling interest		330.3							329.6	(0.5)
Dividends paid									(11.3)
Ending Balance at Sep. 30, 2022		4,987.7	$ 1,107.1	[1]	$ 0.0	[1]	$ 69.0	$ (21.5)	$ 3,829.1	$ 4.0
Redeemable non-controlling interest, beginning balances at Jun. 30, 2022		39.8
Increase (Decrease) in Temporary Equity [Roll Forward]
Contribution (distribution) of redeemable non-controlling interest		(0.5)
Net income attributable to redeemable non-controlling interest		1.2
Redeemable non-controlling interest, ending balances at Sep. 30, 2022		$ 40.5

[1] Prior to June 7, 2021, common stock was classified as Class A common stock. The Class A common stock reclassification as common stock occurred in connection with the elimination of our classified common stock structure following the conversion of all Class B common stock to Class A common stock.

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CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Stockholders' Equity [Abstract]
Gain (loss) on cash flow hedges, tax (expense) benefit	$ 0.0	$ (0.2)	$ (0.7)	$ (0.9)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income	$ 1,011.8	$ 770.1
Adjustments to reconcile net income to net cash used for operating activities:
Asset impairments	0.0	1.9
Depreciation and amortization	122.1	91.5
Stock-based compensation	31.7	25.6
Loss on redemption of senior notes	0.0	10.3
Gain on disposal of other assets	(0.4)	(2.5)
(Gain) loss on disposal of franchise	(49.6)	5.2
Unrealized investment loss	32.6	22.3
Deferred income taxes	63.5	25.6
Amortization of operating lease right-of-use assets	37.6	27.0
(Increase) decrease (net of acquisitions and dispositions):
Accounts receivable, net	(54.0)	(85.0)
Inventories	(852.4)	1,003.2
Other assets	(1,032.5)	(338.4)
Increase (net of acquisitions and dispositions):
Floor plan notes payable	101.1	91.3
Trade payables	9.3	97.2
Accrued liabilities	19.1	236.9
Other long-term liabilities and deferred revenue	42.6	19.7
Net cash provided by (used in) operating activities	(517.5)	2,001.9
Cash flows from investing activities:
Capital expenditures	(209.8)	(194.1)
Proceeds from sales of assets	16.4	4.6
Cash paid for other investments	(9.3)	(9.8)
Cash paid for acquisitions, net of cash acquired	(962.6)	(2,409.5)
Proceeds from sales of stores	148.0	45.7
Net cash used in investing activities	(1,017.3)	(2,563.1)
Cash flows from financing activities:
Borrowings (repayments) on floor plan notes payable, net: non-trade	429.6	(840.9)
Borrowings on lines of credit	9,178.4	1,642.5
Repayments on lines of credit	(7,430.0)	(1,631.6)
Principal payments on long-term debt and finance lease liabilities, scheduled	(181.1)	(24.7)
Principal payments on long-term debt and finance lease liabilities, other	(70.0)	(483.6)
Proceeds from issuance of long-term debt	337.8	817.5
Payment of debt issuance costs	(4.7)	(10.9)
Proceeds from issuance of common stock	28.1	1,127.9
Repurchase of common stock	(644.4)	(15.9)
Dividends paid	(33.8)	(28.2)
Payment of contingent consideration related to acquisitions	(7.2)	(1.4)
Other financing activity	(2.7)	0.0
Net cash provided by financing activities	1,600.0	550.7
Effect of exchange rate changes on cash and cash equivalents	(3.3)	0.9
Increase (decrease) in cash, restricted cash, and cash equivalents	61.9	(9.6)
Cash, restricted cash, and cash equivalents at beginning of year	178.4	162.4
Cash, restricted cash, and cash equivalents at end of period	240.3	152.8
Reconciliation of cash, restricted cash, and cash equivalents to the consolidated balance sheets
Cash, restricted cash, and cash equivalents	172.7	137.8
Restricted cash from collections on auto loans receivable and customer deposits	60.3	15.0
Cash, restricted cash, and cash equivalents	233.0	152.8
Restricted cash on deposit in reserve accounts, included in other non-current assets	7.3	0.0
Total cash, restricted cash, and cash equivalents reported in the Consolidated Statements of Cash Flows	240.3	152.8
Supplemental cash flow information:
Cash paid during the period for interest	122.2	89.5
Cash paid during the period for income taxes, net	380.0	237.3
Debt paid in connection with store disposals	23.6	8.7
Non-cash activities:
Debt issued in connection with acquisitions	0.0	355.4
Contingent consideration in connection with acquisitions	21.7	0.9
Debt assumed in connection with acquisitions	0.7	4.0
Acquisition of finance leases in connection with acquisitions	78.2	0.0
Right-of-use assets obtained in exchange for lease liabilities	22.3	131.2
Unsettled repurchases of common stock	$ 9.2	$ 0.0

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INTERIM FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

INTERIM FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS

Basis of Presentation

These condensed Consolidated Financial Statements contain unaudited information as of September 30, 2022, and for the three and nine months ended September 30, 2022 and 2021. The unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America for annual financial statements are not included herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2021 audited Consolidated Financial Statements and the related notes thereto. The financial information as of December 31, 2021, is derived from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain immaterial reclassifications of amounts previously reported have been made to the accompanying condensed Consolidated Financial Statements to maintain consistency and comparability between periods presented.

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CONTRACT LIABILITIES AND ASSETS

9 Months Ended

Sep. 30, 2022

Disaggregation of Revenue [Abstract]

CONTRACT LIABILITIES AND ASSETS

CONTRACT LIABILITIES AND ASSETS

Contract Liabilities

We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $274.0 million and $239.0 million as of September 30, 2022, and December 31, 2021, respectively; and we recognized $10.4 million and $32.5 million of revenue in the three and nine months ended September 30, 2022 related to our contract liability balance at December 31, 2021. Our contract liability balance is included in accrued liabilities and deferred revenue.

Contract Assets

Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related 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. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract. Our contract asset balances associated with future estimated variable consideration were $12.7 million and $9.6 million as of September 30, 2022 and December 31, 2021, respectively; and are included in trade receivables and other non-current assets.

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS

ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS

Accounts receivable consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
Contracts in transit	$	356.9	$	304.9
Trade receivables	115.2		125.5
Vehicle receivables	114.0		106.6
Manufacturer receivables	145.8		120.5
Auto loan and lease receivables	1,821.5		829.2
Other receivables	17.2		43.2
	2,570.6		1,529.9
Less: Allowance for doubtful accounts	(37.0)		(17.3)
Less: Long-term portion of accounts receivable, net1	(1,529.0)		(602.6)
Total accounts receivable, net	$	1,004.6	$	910.0

1The long-term portions of accounts receivable and allowance for doubtful accounts were included as a component of other non-current assets in the Consolidated Balance Sheets.

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 approximately ten days after selling a vehicle.

•Trade receivables are comprised of amounts due from customers for open charge accounts, 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.

•Auto loan receivables include amounts due from customers related to vehicle sales financed through Driveway Finance Corporation.

•Lease receivables include amounts related to vehicles leased to customers through Pfaff Leasing.

Interest income on auto loan 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 loan originations are capitalized and expensed as an offset to interest income when recognized on the loans. All other receivables are recorded at invoice and do not bear interest until they are 60 days past due.

The balances of auto loan and lease receivables are made up of loans secured by the related vehicles. More than 98% of the portfolio is aged less than 60 days past due with less than 2% on non-accrual status.

(Dollars in millions)	September 30, 2022		December 31, 2021
Total Auto loan and lease receivables	$	1,821.5	$	829.2
Less: Allowance for loan and lease losses	(52.4)		(25.0)
Auto loan and lease receivables, net	$	1,769.1	$	804.2

Below is a breakdown of the current and long term portions of our auto loan and lease receivables:

(Dollars in millions)	September 30, 2022		December 31, 2021
Current portion of auto loan and lease receivables, net of allowance of $33.8 and $13.6	$	267.7	$	224.5
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,501.4		579.7
Auto loan and lease receivables, net	$	1,769.1	$	804.2

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

	Nine Months Ended September 30,
(Dollars in millions)	2022		2021
Allowance for loan losses at beginning of period	$	22.5	$	12.9
Charge-offs	(36.3)		(9.7)
Recoveries	12.2		6.1
Provision expense	49.7		6.0
Allowance for loan losses at end of period	48.1		15.3
Allowance for lease losses	4.3		1.9
Total allowance for loan and lease losses balance at end of period	$	52.4	$	17.2

Ending auto loan receivables (principal balances) by FICO score:

(Dollars in millions)	September 30, 2022		December 31, 2021
<5991	$	97.9	$	83.2
600-699	811.7		437.6
700-774	526.4		166.8
775+	250.5		37.4
Total auto loan receivables	1,686.5		725.0
Lease portfolio and accrued interest	135.0		104.2
Total auto loan and lease receivables	$	1,821.5	$	829.2

1Includes loans that are originated with no FICO score available.

In accordance with Topic 326, the allowance for loan and lease losses is estimated based on our historical write-off experience, current conditions and forecasts, as well as the value of any underlying assets securing these loans. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance upon reaching 120 days past due status. The remainder of our receivables are due primarily from manufacturer partners and various third-party lenders. The historical losses related to these balances are immaterial.

The long-term portion of auto loan and lease receivables was included as a component of other non-current assets in the Consolidated Balance Sheets as follows:

(Dollars in millions)	September 30, 2022		December 31, 2021
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	$	1,501.4	$	579.7
Unallocated acquisition purchase price	456.6		1,554.6
Other	258.1		254.4
Other non-current assets	$	2,216.1	$	2,388.7

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INVENTORIES

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

The components of inventories, net, consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
New vehicles	$	1,292.8	$	812.9
Used vehicles	1,826.5		1,418.3
Parts and accessories	190.0		154.3
Total inventories	$	3,309.3	$	2,385.5

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GOODWILL AND FRANCHISE VALUE

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND FRANCHISE VALUE

GOODWILL AND FRANCHISE VALUE

The changes in the carrying amounts of goodwill are as follows:

(in millions)	Domestic		Import		Luxury		Corporate and Other		Consolidated
Balance as of December 31, 2020 ¹	$	204.5	$	287.9	$	100.6	$	—	$	593.0
Additions through acquisitions 2	101.0		188.7		105.8		—		395.5
Reductions through divestitures	(1.5)		(8.4)		(1.3)		—		(11.2)
Balance as of December 31, 2021 ¹	304.0		468.2		205.1		—		977.3
Additions through acquisitions 3	121.0		219.1		137.3		23.0		500.4
Reductions through divestitures	(5.8)		(8.8)		—		—		(14.6)
Balance as of September 30, 2022 ¹	$	419.2	$	678.5	$	342.4	$	23.0	$	1,463.1

1 Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008.

2 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $395.5 million of goodwill.

3 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $500.4 million of goodwill. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and goodwill is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

The changes in the carrying amounts of franchise value are as follows:

(in millions)	Franchise Value
Balance as of December 31, 2020	$	350.2
Additions through acquisitions 1	459.7
Reductions through divestitures	(8.9)
Reductions from impairments	(1.9)
Balance as of December 31, 2021	799.1
Additions through acquisitions 2	1,088.3
Reductions through divestitures	(20.6)
Balance as of September 30, 2022	$	1,866.8

1 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $459.7 million of franchise value.

2 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $1,088.3 million of franchise value. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and franchise value is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

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CREDIT FACILITIES AND LONG-TERM DEBT

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

CREDIT FACILITIES AND LONG-TERM DEBT

CREDIT FACILITIES AND LONG-TERM DEBT

US Bank Credit Facility

On June 2, 2022, we entered into a Second Amendment to our Fourth Amended and Restated Loan Agreement with U.S. Bank National Association as agent for the lenders, and each of the lenders party to the loan agreement, as lenders. The credit facility continues to provide for a total financing commitment of $3.75 billion, which may be further expanded under the Second Amendment, subject to lender approval and the satisfaction of other conditions, up to a total of $4.5 billion. Among other changes, the Second Amendment:

•Incorporates the adoption of the Secured Overnight Financing Rate (SOFR) as a replacement of the London Interbank Offered Rate (LIBOR).

•Modifies the initial allocation of the financing commitment to up to $1.0 billion in used vehicle inventory floorplan financing, up to $1.5 billion in revolving financing for general corporate purposes, including acquisitions and working capital, up to $1.2 billion in new vehicle inventory floorplan financing, and up to $50 million in service loaner vehicle floorplan financing.

•Modifies our option to reallocate the commitments under the credit facility, such that the new and used vehicle floor plan commitments may have unlimited allocation and the aggregate revolving loan commitment may not be more than the 40% 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.

•Modifies the conditions for including real property in the Revolving Loan Borrowing Base to better facilitate borrowing against real estate and modifies the overall cap to $1.0 billion.

All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities.

The interest rate on the credit facility varies based on the type of debt, with the rate One-month Term SOFR plus 1.20% for new vehicle floor plan financing, Daily Simple SOFR plus 1.50% for used vehicle floor plan financing, 1.30% for service loaner floor plan financing and 1.10% for our working capital revolver. The annual interest rates associated with our floor plan commitments are as follows:

Commitment	Annual Interest Rate at September 30, 2022
New vehicle floor plan	4.30%
Used vehicle floor plan	4.48%
Service loaner floor plan	4.28%
Revolving line of credit	4.08%

Other Credit Facilities and Lines of Credit

On June 3, 2022, we entered into a credit agreement with The Bank of Nova Scotia (BNS), Royal Bank of Canada, Bank of Montreal, The Toronto-Dominion Bank, VW Credit Canada, Inc. and BMW Group Financial Services, as lenders, and BNS, as administrative agent for the lenders. Pursuant to the credit agreement, the lenders assumed all of the indebtedness under our original commitment letter, dated August 30, 2021, between us and BNS, including the letters of credit issued thereunder, and agreed to certain new and amended terms. Among other things, the credit agreement establishes a total financing commitment of approximately $1.125 billion CAD, including (i) up to $100.0 million CAD to finance our working capital and for general corporate purposes; (ii) up to $500.0 million CAD to finance the purchase of new motor vehicles (Wholesale Flooring Facility); (iii) up to $100.0 million CAD to finance the purchase of used motor vehicles for sale in Canada and for export to the United States; (iv) up to $400.0 million CAD for the wholesale lease financing of leased units and finance contracts, and (v) up to $25.0 million CAD to finance certain motor vehicle leases. The credit agreement also establishes sublimits for swingline commitments and/or letter of credit commitments under certain of the Canadian facilities and incorporates an accordion feature to increase maximum potential borrowings under the Wholesale Flooring Facility by up to $200.0 million CAD and under the other Canadian facilities by up to $200.0 million CAD in aggregate. Borrowings under the credit agreement accrue interest at rates equal to the greater of BNS’ prime lending rate or the Canadian Dollar Offered Rate plus, in each case, a spread, with the spreads ranging from 0.25% per annum to 1.30% per annum. All Canadian Facilities other than the Wholesale Flooring Facility, which is a demand facility, mature on June 3, 2025.

Other Credit Facilities and Lines of Credit

In 2022, we amended our securitization facility agreement, increasing our commitment for borrowings of up to $1.0 billion and extending the maturity date to July 2024. As of September 30, 2022, we had $350.0 million drawn on the securitization facility.

Non-Recourse Notes Payable

Driveway Finance Corporation auto loans receivable are primarily funded through our warehouse facilities and asset-backed term funding transactions. These non-recourse funding vehicles are structured to legally isolate the auto loans receivable, 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 auto loans receivable. We do, however, continue to have the rights associated with the interest we retain in these non-recourse funding vehicles.

In August 2022, we issued $298.1 million in non-recourse notes payable related to the asset-backed term funding transaction.

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EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS

EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS

Repurchases of Common Stock

Repurchases of our common stock occurred under a repurchase authorization granted by our Board of Directors and related to shares withheld as part of the vesting of restricted stock units (RSUs). On November 30, 2021, our Board of Directors approved an additional $750 million repurchase authorization of our common stock, increasing our total repurchase authorization to $1.25 billion when combined with the amount previously authorized by the Board for repurchase. Share repurchases under this authorization were as follows:

	Repurchases Occurring in 2022			Cumulative Repurchases as of September 30, 2022
	Shares	Average Price		Shares	Average Price
Share Repurchase Authorization	2,254,193	$	282.46	6,730,124	$	172.95

As of September 30, 2022, we had $86.0 million available for repurchases pursuant to our share repurchase authorization.

In addition, during 2022, we repurchased 56,867 shares at an average price of $296.94 per share, for a total of $16.9 million, related to tax withholding associated with the vesting of RSUs. The repurchase of shares related to tax withholding associated with stock awards does not reduce the number of shares available for repurchase as approved by our Board of Directors.

ATM Equity Offering

In 2020, we entered into an ATM Equity Offering Sales Agreement, which allows us to offer and sell, from time to time, shares of our common stock, no par value, having an aggregate gross sales price of up to $400 million. The shares will be issued pursuant to a registration statement on Form S-3 (File No. 333-239969), which became effective upon its filing on July 21, 2020. Under this agreement, we may enter into forward share purchase transactions. As of September 30, 2022, no amounts have been issued in relation to the ATM Equity Offering Sales Agreement.

Redeemable Non-Controlling Interest

In 2021, we expanded into Canada through a partnership with Toronto-based Pfaff Automotive Partners. As part of the acquisition, we were granted the right to purchase (Call Option), and granted Pfaff Automotive a right to sell (Put Option), the remaining interest after a three-year period, with a purchase price based on Pfaff’s pro rata share of assets at the date of exercise of the Call or Put Option, as applicable. As a result of this redemption feature, we recorded redeemable non-controlling interest that is classified as mezzanine equity in the accompanying Consolidated Balance Sheets. The non-controlling interest is adjusted each reporting period for income (loss) attributable to the non-controlling interest.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

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 that the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities 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 investments primarily consisting of our investment in Shift Technologies, Inc. (Shift), a San Francisco-based digital retail company. Shift has a readily determinable fair value following Shift going public in a reverse-merger deal with Insurance Acquisition, a special purpose acquisition company, in the fourth quarter of 2020. We calculated the fair value of this investment using quoted prices for the identical security (Level 1) and recorded the fair value as part of other non-current assets. An additional component of our investment in Shift consists of shares in escrow subject to release upon certain market conditions being met. The fair value of this component of our investment in Shift is measured using observable Level 2 market expectations at each measurement date and is recorded as part of other non-current assets. For the three and nine months ended September 30, 2022, we recognized a $0.3 million and $32.6 million unrealized investment gain and loss related to Shift, respectively. For the three and nine months ended September 30, 2021, we recognized a $23.2 million and $22.3 million unrealized investment loss related to Shift, respectively. These amounts were recorded as a component of Other expense, net.

We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using 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. As of September 30, 2022, our real estate mortgages and other debt, which includes capital leases, had maturity dates between October 1, 2022, and July 1, 2038.

We have derivative instruments consisting of interest rate caps and have had an interest rate collar in prior periods. The fair value of derivative assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is recorded as 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.

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 nine-month period ended September 30, 2022.

Below are our investments that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	8.3	$	—	$	—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	40.4	$	0.5	$	—

Below are our derivative assets and liabilities that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	23.8	$	—
Derivative liability	—		23.8		—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	6.4	$	—
Derivative liability	—		8.9		—

A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows:

(in millions)	September 30, 2022		December 31, 2021
Carrying value
4.625% Senior notes due 2027	$	400.0	$	400.0
4.375% Senior notes due 2031	550.0		550.0
3.875% Senior notes due 2029	800.0		800.0
Non-recourse notes payable	494.1		317.6
Real estate mortgages and other debt	477.5		477.6
	$	2,721.6	$	2,545.2
Fair value
4.625% Senior notes due 2027	$	360.0	$	420.0
4.375% Senior notes due 2031	442.8		583.0
3.875% Senior notes due 2029	642.0		815.0
Non-recourse notes payable	482.0		316.8
Real estate mortgages and other debt	421.5		488.7
	$	2,348.3	$	2,623.5

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NET INCOME PER SHARE

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

NET INCOME PER SHARE

NET INCOME PER SHARE

We compute net income per share using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding common shares underlying equity awards that are unvested or subject to forfeiture. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the common shares issuable upon the net exercise of stock options and unvested RSUs and is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumed the conversion of Class B common stock, while the diluted net income per share of Class B common stock did not assume the conversion of those shares.

Prior to June 7, 2021, our common stock was classified as Class A common stock. The Class A common stock reclassification as common stock occurred pursuant to an amendment and restatement of our Articles of Incorporation in connection with the elimination of our classified common stock structure following the conversion of all Class B common stock to Class A common stock. Prior to the reclassification, except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock were identical. Under our Articles

of Incorporation, the Class A and Class B common stock shared equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation that would adversely alter the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year were allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights were identical, the undistributed earnings were allocated on a proportionate basis.

The following is a reconciliation of net income and weighted average shares used for our basic earnings per share (EPS) and diluted EPS:

Three Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Common Stock
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	329.6	$	307.9
Weighted average common shares outstanding – basic	27.5		30.3
Effect of dilutive stock options on weighted average common shares	0.1		0.2
Weighted average common shares outstanding – diluted	27.6		30.5
Basic earnings per share attributable to Lithia Motors, Inc.	$	11.97	$	10.18
Diluted earnings per share attributable to Lithia Motors, Inc.	$	11.92	$	10.11

The effect of antidilutive securities on Class A and Class B common stock was evaluated for the three-month periods ended September 30, 2022, and 2021 and was determined to be immaterial.

Nine Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Class A		Class B
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic	$	1,003.4	$	768.4	$	0.6
Conversion of class B common shares into class A common shares	—		0.6		—
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	1,003.4	$	769.0	$	0.6
Weighted average common shares outstanding – basic	28.5		28.4		—
Conversion of class B common shares into class A common shares	—		—		—
Effect of employee stock purchases and restricted stock units on weighted average common shares	0.1		0.2		—
Weighted average common shares outstanding – diluted	28.6		28.6		—
Basic earnings per share attributable to Lithia Motors, Inc.	$	35.23	$	27.12	$	27.12
Diluted earnings per share attributable to Lithia Motors, Inc.	$	35.10	$	26.91	$	26.91

The effect of antidilutive securities on Class A and Class B common stock was evaluated for the nine-month periods ended September 30, 2022, and 2021 and was determined to be immaterial.

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SEGMENTS

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENTS

SEGMENTS

While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury.

Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Stellantis, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, as well as automotive finance and insurance products.

Corporate and other revenue and income includes the results of operations of our stand-alone body shops offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase income for Corporate and other while decreasing segment income for the reportable 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 employees within our corporate headquarters who perform certain dealership functions.

We define our chief operating decision maker (CODM) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM does not regularly review capital expenditures on a reporting unit level. Performance measurement of each reportable segment by the CODM are based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of and to allocate resources, mainly associated with expected inventory and working capital requirements, to each of the reportable segments.

Certain financial information on a segment basis is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Revenues:
Domestic
New vehicle retail	$	1,078.3	$	766.1	$	3,083.1	$	2,305.3
Used vehicle retail	832.9		699.7		2,418.7		1,803.7
Used vehicle wholesale	115.4		74.5		376.3		174.4
Finance and insurance	98.9		80.5		284.6		217.7
Service, body and parts	206.7		170.2		597.5		450.0
Fleet and other	69.7		28.2		182.0		67.4
	2,401.9		1,819.2		6,942.2		5,018.5
Import
New vehicle retail	1,389.0		1,376.9		4,022.9		3,730.7
Used vehicle retail	1,015.5		847.9		2,920.9		2,127.8
Used vehicle wholesale	112.7		99.5		361.2		247.8
Finance and insurance	178.9		162.9		532.3		408.9
Service, body and parts	292.1		235.3		802.5		596.9
Fleet and other	12.7		4.9		27.6		37.5
	3,000.9		2,727.4		8,667.4		7,149.6
Luxury
New vehicle retail	840.3		750.9		2,513.2		2,204.1
Used vehicle retail	618.2		530.3		1,861.9		1,309.9
Used vehicle wholesale	92.1		72.8		300.5		171.9
Finance and insurance	61.2		56.1		187.2		145.7
Service, body and parts	200.3		162.8		580.3		434.7
Fleet and other	30.9		22.2		81.4		59.5
	1,843.0		1,595.1		5,524.5		4,325.8
	7,245.8		6,141.7		21,134.1		16,493.9
Corporate and other	49.9		28.1		107.2		28.3
	$	7,295.7	$	6,169.8	$	21,241.3	$	16,522.2
Segment income1:
Domestic	$	127.9	$	123.6	$	400.1	$	335.6
Import	261.5		255.4		782.8		573.2
Luxury	109.5		108.5		366.6		249.8
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6

1Segment income for each of the segments is a Non-GAAP measure defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net.

Reconciliation of total segment income for reportable segments to our consolidated income before income taxes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6
Corporate and other	55.4		22.8		117.6		80.1
Depreciation and amortization	(41.9)		(34.4)		(122.1)		(91.5)
Other interest expense	(49.6)		(28.0)		(114.1)		(79.6)
Other income (expense), net	(7.1)		(25.7)		(37.0)		(14.6)
Income before income taxes	$	455.7	$	422.2	$	1,393.9	$	1,053.0

Total assets by reportable segments is as follows:

(in millions)	September 30, 2022		December 31, 2021
Total assets:
Domestic	$	2,504.1	$	1,574.7
Import	2,855.4		1,858.1
Luxury	2,007.3		1,407.1
Corporate and other	6,707.7		6,307.0
	$	14,074.5	$	11,146.9

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LEASES

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

LEASES

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 balance sheet; 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 from one to 25 years or more. 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.

Our finance lease liabilities are included in long-term debt, with the current portion included in current maturities of long-term debt. The related assets are included in property, plant and equipment, net of accumulated amortization. These amounts are included in other non-current assets until we finalize our purchase accounting.

We rent or sublease certain real estate to third parties.

LEASES

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 balance sheet; 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 from one to 25 years or more. 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.

Our finance lease liabilities are included in long-term debt, with the current portion included in current maturities of long-term debt. The related assets are included in property, plant and equipment, net of accumulated amortization. These amounts are included in other non-current assets until we finalize our purchase accounting.

We rent or sublease certain real estate to third parties.

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DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

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. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (AOCI) in equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.

In 2019, to hedge the business exposure to rising interest rates on a portion of our variable rate debt, we entered into a five-year, zero-cost interest rate collar, with an aggregate notional amount of $300 million, effective June 1, 2019. This instrument hedged interest rate risk related to a portion of our $1.2 billion of non-trade floor plan notes payable.

The table below presents the liabilities related to the zero-cost interest rate collar:

(Dollars in millions)	Accrued Liabilities		Other Long-Term Liabilities		Other Non-Current Assets		Total
Balance as of December 31, 2020	$	(2.6)	$	(6.0)	$	—	$	(8.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.6)		2.4		—		1.8
Balance as of March 31, 2021	(2.5)		(3.6)		—		(6.1)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.2		—		(0.5)
Balance as of June 30, 2021	(2.5)		(3.4)		—		(5.9)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.7		—		—
Balance as of September 30, 2021	(2.5)		(2.7)		—		(5.2)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.1)		2.0		—		1.9
Balance as of December 31, 2021	(1.9)		(0.7)		—		(2.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	1.2		0.7		2.7		4.6
Balance as of March 31, 2022	—		—		2.7		2.7
Amounts reclassified from AOCI to floorplan interest expense	—		—		(2.7)		(2.7)
(Loss) gain recorded from interest rate collar	—		—		—		—
Balance as of June 30, 2022	$	—	$	—	$	—	$	—

During the three months ended June 30, 2022, we terminated our zero-cost interest rate collar, resulting in a $2.7 million reclassification from AOCI to floorplan interest expense.

In 2020, we entered into two offsetting derivative arrangements that do not qualify for hedge accounting. These are both related to a securitization facility, effective October 2, 2020. We purchased and sold offsetting interest rate caps, both of which have a five-year term with notional amounts of $100 million.

In 2021, we entered into two additional offsetting derivative arrangements that do not qualify for hedge accounting. These are both related to a securitization facility, effective June 15, 2021. We purchased and sold offsetting interest rate caps, both of which have a five-year term with notional amounts of $100 million.

As of September 30, 2022, the balance on all four agreements was an offsetting $23.8 million and was recorded in other current assets and accrued liabilities, respectively.

See Note 8 – Fair Value Measurements for information on the fair value of the derivative contracts.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

ACQUISITIONS

In the first nine months of 2022, we completed the following acquisitions:

•In January 2022, John L. Sullivan Chevrolet, John L. Sullivan Chrysler Dodge Jeep Ram, and Roseville Toyota in California.

•In March 2022, Sahara Chrysler Dodge Jeep Ram, Desert 215 Superstore, and Jeep Only in Nevada.

•In May 2022, Sisley Honda in Canada.

•In June 2022, Esserman International Volkswagen & Acura in Florida.

•In June 2022, Henderson Hyundai Superstore in Nevada.

•In June 2022, Lehman Auto Group in Florida.

•In July 2022, Elk Grove Ford in California.

•In September 2022, Wilde Honda, Wilde Subaru, Wilde Chrysler Dodge Jeep Ram, Wilde Toyota, and Wilde East Towne Honda in Wisconsin.

Revenue and operating income contributed by the 2022 acquisitions subsequent to the date of acquisition were as follows (in millions):

Nine Months Ended September 30,	2022
Revenue	$	812.6
Operating income	43.2

In the first nine months of 2021, we completed the following acquisitions:

•In February 2021, Fields Chrysler Jeep Dodge Ram and Land Rover Orlando in Florida.

•In March 2021, Fink Auto Group in Florida.

•In March 2021, Avondale Nissan in Arizona.

•In April 2021, Suburban Collection Auto Group in Michigan.

•In April 2021, Planet Honda in New Jersey.

•In May 2021, Las Vegas Hyundai Superstore Auto Group in Nevada.

•In May 2021, BMW of Sherman Oaks and Acura of Sherman Oaks in California.

•In June 2021, Southwest Kia Group in Arizona.

•In June 2021, Herrin-Gear Toyota in Mississippi.

•In June 2021, Michael’s Subaru and Michael’s Toyota in Washington.

•In July 2021, Subaru of Mobile in Alabama.

•In August 2021, Rock Honda in California.

•In September 2021, Curry Honda in GA.

•In September 2021, Orange Coast Chrysler, Dodge, Jeep, Ram and Ford.

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 2022 acquisitions and the preliminary purchase price allocations for identified assets acquired and liabilities assumed as of the acquisition date:

(in millions)	Consideration
Cash paid, net of cash acquired	$	958.5

(in millions)	Assets Acquired and Liabilities Assumed
Accounts receivable	$	0.1
Inventories	$	166.1
Franchise value	63.7
Property and equipment	325.2
Other non-current assets	459.5
Floor plan notes payable	(0.7)
Debt and finance lease obligations	(78.2)
Other long-term liabilities	(7.3)
	928.4
Goodwill	30.1
	$	958.5

The purchase price allocations for the acquisitions from the first quarter of 2022 through the third quarter of 2022 are preliminary, and we have not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects. We recorded the purchase price allocations based upon information that is currently available and recorded unallocated items as a component of other non-current assets in the Consolidated Balance Sheets.

We expect substantially all of the goodwill related to acquisitions completed in 2022 to be deductible for federal income tax purposes.

In the three and nine-month periods ended September 30, 2022, we recorded $2.0 million and $10.1 million, respectively, in acquisition-related expenses as a component of selling, general and administrative expense.

Comparatively, we recorded $6.3 million and $17.9 million, respectively, of acquisition-related expenses in the same periods of 2021.

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three and nine-month periods ended September 30, 2022 and 2021 had occurred on January 1, 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2022		2021		2022		2021
Revenue	$	7,411.1	$	6,791.7	$	22,300.4	$	18,194.2
Net income attributable to Lithia Motors, Inc.	337.3		343.9		1,065.0		857.3
Basic earnings attributable to Lithia Motors, Inc. per share	12.25		11.37		37.39		30.23
Diluted earnings attributable to Lithia Motors, Inc. per share	12.20		11.29		37.26		30.00

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 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 nonrecurring proforma adjustments directly attributable to the acquisitions are included in the reported proforma revenues and earnings.

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NET INVESTMENT IN OPERATING LEASES

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

NET INVESTMENT IN OPERATING LEASES

NET INVESTMENT IN OPERATING LEASES

In 2021, we purchased a leasing entity and the sales-type financing and operating leases it manages.

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:

(in millions)	September 30, 2022		December 31, 2021
Vehicles, at cost1	$	86.8	$	66.0
Accumulated depreciation1	(6.4)		(0.9)
Net investment in operating leases	$	80.4	$	65.1

1Vehicles, at cost and accumulated depreciation are recorded in other current assets, on the Consolidated Balance Sheets.

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INTERIM FINANCIAL STATEMENTS (Policies)

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

These condensed Consolidated Financial Statements contain unaudited information as of September 30, 2022, and for the three and nine months ended September 30, 2022 and 2021. The unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America for annual financial statements are not included herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2021 audited Consolidated Financial Statements and the related notes thereto. The financial information as of December 31, 2021, is derived from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Reclassifications

Certain immaterial reclassifications of amounts previously reported have been made to the accompanying condensed Consolidated Financial Statements to maintain consistency and comparability between periods presented.

Revenue Recognition

Contract Liabilities

We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $274.0 million and $239.0 million as of September 30, 2022, and December 31, 2021, respectively; and we recognized $10.4 million and $32.5 million of revenue in the three and nine months ended September 30, 2022 related to our contract liability balance at December 31, 2021. Our contract liability balance is included in accrued liabilities and deferred revenue.

Contract Assets

Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related 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. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract. Our contract asset balances associated with future estimated variable consideration were $12.7 million and $9.6 million as of September 30, 2022 and December 31, 2021, respectively; and are included in trade receivables and other non-current assets.

Accounts Receivable and Contract Assets

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 approximately ten days after selling a vehicle.

•Trade receivables are comprised of amounts due from customers for open charge accounts, 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.

•Auto loan receivables include amounts due from customers related to vehicle sales financed through Driveway Finance Corporation.

•Lease receivables include amounts related to vehicles leased to customers through Pfaff Leasing.

Interest income on auto loan 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 loan originations are capitalized and expensed as an offset to interest income when recognized on the loans. All other receivables are recorded at invoice and do not bear interest until they are 60 days past due.

In accordance with Topic 326, the allowance for loan and lease losses is estimated based on our historical write-off experience, current conditions and forecasts, as well as the value of any underlying assets securing these loans. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance upon reaching 120 days past due status. The remainder of our receivables are due primarily from manufacturer partners and various third-party lenders. The historical losses related to these balances are immaterial.

The long-term portion of auto loan and lease receivables was included as a component of other non-current assets in the Consolidated Balance Sheets as follows:

(Dollars in millions)	September 30, 2022		December 31, 2021
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	$	1,501.4	$	579.7
Unallocated acquisition purchase price	456.6		1,554.6
Other	258.1		254.4
Other non-current assets	$	2,216.1	$	2,388.7

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 that the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities 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 investments primarily consisting of our investment in Shift Technologies, Inc. (Shift), a San Francisco-based digital retail company. Shift has a readily determinable fair value following Shift going public in a reverse-merger deal with Insurance Acquisition, a special purpose acquisition company, in the fourth quarter of 2020. We calculated the fair value of this investment using quoted prices for the identical security (Level 1) and recorded the fair value as part of other non-current assets. An additional component of our investment in Shift consists of shares in escrow subject to release upon certain market conditions being met. The fair value of this component of our investment in Shift is measured using observable Level 2 market expectations at each measurement date and is recorded as part of other non-current assets. For the three and nine months ended September 30, 2022, we recognized a $0.3 million and $32.6 million unrealized investment gain and loss related to Shift, respectively. For the three and nine months ended September 30, 2021, we recognized a $23.2 million and $22.3 million unrealized investment loss related to Shift, respectively. These amounts were recorded as a component of Other expense, net.

We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using 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. As of September 30, 2022, our real estate mortgages and other debt, which includes capital leases, had maturity dates between October 1, 2022, and July 1, 2038.

We have derivative instruments consisting of interest rate caps and have had an interest rate collar in prior periods. The fair value of derivative assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is recorded as 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.

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.

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS (Tables)

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

Schedule of Accounts Receivable

Accounts receivable consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
Contracts in transit	$	356.9	$	304.9
Trade receivables	115.2		125.5
Vehicle receivables	114.0		106.6
Manufacturer receivables	145.8		120.5
Auto loan and lease receivables	1,821.5		829.2
Other receivables	17.2		43.2
	2,570.6		1,529.9
Less: Allowance for doubtful accounts	(37.0)		(17.3)
Less: Long-term portion of accounts receivable, net1	(1,529.0)		(602.6)
Total accounts receivable, net	$	1,004.6	$	910.0

1The long-term portions of accounts receivable and allowance for doubtful accounts were included as a component of other non-current assets in the Consolidated Balance Sheets.

(Dollars in millions)	September 30, 2022		December 31, 2021
Total Auto loan and lease receivables	$	1,821.5	$	829.2
Less: Allowance for loan and lease losses	(52.4)		(25.0)
Auto loan and lease receivables, net	$	1,769.1	$	804.2

Below is a breakdown of the current and long term portions of our auto loan and lease receivables:

(Dollars in millions)	September 30, 2022		December 31, 2021
Current portion of auto loan and lease receivables, net of allowance of $33.8 and $13.6	$	267.7	$	224.5
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,501.4		579.7
Auto loan and lease receivables, net	$	1,769.1	$	804.2

Accounts Receivable, Allowance for Credit Loss

The allowances for credit losses related to auto loan and lease receivables consisted of the following changes during the period:

	Nine Months Ended September 30,
(Dollars in millions)	2022		2021
Allowance for loan losses at beginning of period	$	22.5	$	12.9
Charge-offs	(36.3)		(9.7)
Recoveries	12.2		6.1
Provision expense	49.7		6.0
Allowance for loan losses at end of period	48.1		15.3
Allowance for lease losses	4.3		1.9
Total allowance for loan and lease losses balance at end of period	$	52.4	$	17.2

Financing Receivable Credit Quality Indicators

Ending auto loan receivables (principal balances) by FICO score:

(Dollars in millions)	September 30, 2022		December 31, 2021
<5991	$	97.9	$	83.2
600-699	811.7		437.6
700-774	526.4		166.8
775+	250.5		37.4
Total auto loan receivables	1,686.5		725.0
Lease portfolio and accrued interest	135.0		104.2
Total auto loan and lease receivables	$	1,821.5	$	829.2

1Includes loans that are originated with no FICO score available.

Schedule of Other Non-Current Assets

The long-term portion of auto loan and lease receivables was included as a component of other non-current assets in the Consolidated Balance Sheets as follows:

(Dollars in millions)	September 30, 2022		December 31, 2021
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	$	1,501.4	$	579.7
Unallocated acquisition purchase price	456.6		1,554.6
Other	258.1		254.4
Other non-current assets	$	2,216.1	$	2,388.7

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventories

The components of inventories, net, consisted of the following:

(in millions)	September 30, 2022		December 31, 2021
New vehicles	$	1,292.8	$	812.9
Used vehicles	1,826.5		1,418.3
Parts and accessories	190.0		154.3
Total inventories	$	3,309.3	$	2,385.5

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GOODWILL AND FRANCHISE VALUE (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amounts of goodwill are as follows:

(in millions)	Domestic		Import		Luxury		Corporate and Other		Consolidated
Balance as of December 31, 2020 ¹	$	204.5	$	287.9	$	100.6	$	—	$	593.0
Additions through acquisitions 2	101.0		188.7		105.8		—		395.5
Reductions through divestitures	(1.5)		(8.4)		(1.3)		—		(11.2)
Balance as of December 31, 2021 ¹	304.0		468.2		205.1		—		977.3
Additions through acquisitions 3	121.0		219.1		137.3		23.0		500.4
Reductions through divestitures	(5.8)		(8.8)		—		—		(14.6)
Balance as of September 30, 2022 ¹	$	419.2	$	678.5	$	342.4	$	23.0	$	1,463.1

1 Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008.

2 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $395.5 million of goodwill.

3 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $500.4 million of goodwill. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and goodwill is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

Schedule of Franchise Value

The changes in the carrying amounts of franchise value are as follows:

(in millions)	Franchise Value
Balance as of December 31, 2020	$	350.2
Additions through acquisitions 1	459.7
Reductions through divestitures	(8.9)
Reductions from impairments	(1.9)
Balance as of December 31, 2021	799.1
Additions through acquisitions 2	1,088.3
Reductions through divestitures	(20.6)
Balance as of September 30, 2022	$	1,866.8

1 Our purchase price allocation for the 2020 acquisitions were finalized in 2021. As a result, we added $459.7 million of franchise value.

2 Our purchase price allocations for the 2021 acquisitions and a portion of the 2022 acquisitions were finalized in 2022. As a result, we added $1,088.3 million of franchise value. Our purchase price allocation for the remaining 2022 acquisitions is preliminary and franchise value is not yet allocated to our reporting units. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 13 – Acquisitions.

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CREDIT FACILITIES AND LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Line of Credit Facilities

The annual interest rates associated with our floor plan commitments are as follows:

Commitment	Annual Interest Rate at September 30, 2022
New vehicle floor plan	4.30%
Used vehicle floor plan	4.48%
Service loaner floor plan	4.28%
Revolving line of credit	4.08%

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EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of Share Repurchases

Share repurchases under this authorization were as follows:

	Repurchases Occurring in 2022			Cumulative Repurchases as of September 30, 2022
	Shares	Average Price		Shares	Average Price
Share Repurchase Authorization	2,254,193	$	282.46	6,730,124	$	172.95

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Summary of Long-Lived Assets Measured at Fair Value

Below are our investments that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	8.3	$	—	$	—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Investments	$	40.4	$	0.5	$	—

Below are our derivative assets and liabilities that are measured at fair value (in millions):

Fair Value at September 30, 2022	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	23.8	$	—
Derivative liability	—		23.8		—

Fair Value at December 31, 2021	Level 1		Level 2		Level 3
Measured on a recurring basis:
Derivative asset	$	—	$	6.4	$	—
Derivative liability	—		8.9		—

Schedule of Aggregate Carrying Values and Fair Values of Long-term Fixed Interest Rate Debt

A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows:

(in millions)	September 30, 2022		December 31, 2021
Carrying value
4.625% Senior notes due 2027	$	400.0	$	400.0
4.375% Senior notes due 2031	550.0		550.0
3.875% Senior notes due 2029	800.0		800.0
Non-recourse notes payable	494.1		317.6
Real estate mortgages and other debt	477.5		477.6
	$	2,721.6	$	2,545.2
Fair value
4.625% Senior notes due 2027	$	360.0	$	420.0
4.375% Senior notes due 2031	442.8		583.0
3.875% Senior notes due 2029	642.0		815.0
Non-recourse notes payable	482.0		316.8
Real estate mortgages and other debt	421.5		488.7
	$	2,348.3	$	2,623.5

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NET INCOME PER SHARE (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following is a reconciliation of net income and weighted average shares used for our basic earnings per share (EPS) and diluted EPS:

Three Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Common Stock
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	329.6	$	307.9
Weighted average common shares outstanding – basic	27.5		30.3
Effect of dilutive stock options on weighted average common shares	0.1		0.2
Weighted average common shares outstanding – diluted	27.6		30.5
Basic earnings per share attributable to Lithia Motors, Inc.	$	11.97	$	10.18
Diluted earnings per share attributable to Lithia Motors, Inc.	$	11.92	$	10.11

Nine Months Ended September 30,	2022		2021
(in millions, except per share amounts)	Common Stock		Class A		Class B
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic	$	1,003.4	$	768.4	$	0.6
Conversion of class B common shares into class A common shares	—		0.6		—
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$	1,003.4	$	769.0	$	0.6
Weighted average common shares outstanding – basic	28.5		28.4		—
Conversion of class B common shares into class A common shares	—		—		—
Effect of employee stock purchases and restricted stock units on weighted average common shares	0.1		0.2		—
Weighted average common shares outstanding – diluted	28.6		28.6		—
Basic earnings per share attributable to Lithia Motors, Inc.	$	35.23	$	27.12	$	27.12
Diluted earnings per share attributable to Lithia Motors, Inc.	$	35.10	$	26.91	$	26.91

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SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Certain Information on a Segment Basis

Certain financial information on a segment basis is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Revenues:
Domestic
New vehicle retail	$	1,078.3	$	766.1	$	3,083.1	$	2,305.3
Used vehicle retail	832.9		699.7		2,418.7		1,803.7
Used vehicle wholesale	115.4		74.5		376.3		174.4
Finance and insurance	98.9		80.5		284.6		217.7
Service, body and parts	206.7		170.2		597.5		450.0
Fleet and other	69.7		28.2		182.0		67.4
	2,401.9		1,819.2		6,942.2		5,018.5
Import
New vehicle retail	1,389.0		1,376.9		4,022.9		3,730.7
Used vehicle retail	1,015.5		847.9		2,920.9		2,127.8
Used vehicle wholesale	112.7		99.5		361.2		247.8
Finance and insurance	178.9		162.9		532.3		408.9
Service, body and parts	292.1		235.3		802.5		596.9
Fleet and other	12.7		4.9		27.6		37.5
	3,000.9		2,727.4		8,667.4		7,149.6
Luxury
New vehicle retail	840.3		750.9		2,513.2		2,204.1
Used vehicle retail	618.2		530.3		1,861.9		1,309.9
Used vehicle wholesale	92.1		72.8		300.5		171.9
Finance and insurance	61.2		56.1		187.2		145.7
Service, body and parts	200.3		162.8		580.3		434.7
Fleet and other	30.9		22.2		81.4		59.5
	1,843.0		1,595.1		5,524.5		4,325.8
	7,245.8		6,141.7		21,134.1		16,493.9
Corporate and other	49.9		28.1		107.2		28.3
	$	7,295.7	$	6,169.8	$	21,241.3	$	16,522.2
Segment income1:
Domestic	$	127.9	$	123.6	$	400.1	$	335.6
Import	261.5		255.4		782.8		573.2
Luxury	109.5		108.5		366.6		249.8
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6

1Segment income for each of the segments is a Non-GAAP measure defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net.

Reconciliation of total segment income for reportable segments to our consolidated income before income taxes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Total segment income for reportable segments	$	498.9	$	487.5	$	1,549.5	$	1,158.6
Corporate and other	55.4		22.8		117.6		80.1
Depreciation and amortization	(41.9)		(34.4)		(122.1)		(91.5)
Other interest expense	(49.6)		(28.0)		(114.1)		(79.6)
Other income (expense), net	(7.1)		(25.7)		(37.0)		(14.6)
Income before income taxes	$	455.7	$	422.2	$	1,393.9	$	1,053.0

Reconciliation of Assets from Segment to Consolidated

Total assets by reportable segments is as follows:

(in millions)	September 30, 2022		December 31, 2021
Total assets:
Domestic	$	2,504.1	$	1,574.7
Import	2,855.4		1,858.1
Luxury	2,007.3		1,407.1
Corporate and other	6,707.7		6,307.0
	$	14,074.5	$	11,146.9

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The table below presents the liabilities related to the zero-cost interest rate collar:

(Dollars in millions)	Accrued Liabilities		Other Long-Term Liabilities		Other Non-Current Assets		Total
Balance as of December 31, 2020	$	(2.6)	$	(6.0)	$	—	$	(8.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.6)		2.4		—		1.8
Balance as of March 31, 2021	(2.5)		(3.6)		—		(6.1)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.2		—		(0.5)
Balance as of June 30, 2021	(2.5)		(3.4)		—		(5.9)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.7)		0.7		—		—
Balance as of September 30, 2021	(2.5)		(2.7)		—		(5.2)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	(0.1)		2.0		—		1.9
Balance as of December 31, 2021	(1.9)		(0.7)		—		(2.6)
Amounts reclassified from AOCI to floorplan interest expense	0.7		—		—		0.7
(Loss) gain recorded from interest rate collar	1.2		0.7		2.7		4.6
Balance as of March 31, 2022	—		—		2.7		2.7
Amounts reclassified from AOCI to floorplan interest expense	—		—		(2.7)		(2.7)
(Loss) gain recorded from interest rate collar	—		—		—		—
Balance as of June 30, 2022	$	—	$	—	$	—	$	—

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Pro Forma Summary of All Acquisitions

Revenue and operating income contributed by the 2022 acquisitions subsequent to the date of acquisition were as follows (in millions):

Nine Months Ended September 30,	2022
Revenue	$	812.6
Operating income	43.2

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three and nine-month periods ended September 30, 2022 and 2021 had occurred on January 1, 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2022		2021		2022		2021
Revenue	$	7,411.1	$	6,791.7	$	22,300.4	$	18,194.2
Net income attributable to Lithia Motors, Inc.	337.3		343.9		1,065.0		857.3
Basic earnings attributable to Lithia Motors, Inc. per share	12.25		11.37		37.39		30.23
Diluted earnings attributable to Lithia Motors, Inc. per share	12.20		11.29		37.26		30.00

Summary of Acquisitions

The following tables summarize the consideration paid for the 2022 acquisitions and the preliminary purchase price allocations for identified assets acquired and liabilities assumed as of the acquisition date:

(in millions)	Consideration
Cash paid, net of cash acquired	$	958.5

Assets Acquired and Liabilities Assumed

(in millions)	Assets Acquired and Liabilities Assumed
Accounts receivable	$	0.1
Inventories	$	166.1
Franchise value	63.7
Property and equipment	325.2
Other non-current assets	459.5
Floor plan notes payable	(0.7)
Debt and finance lease obligations	(78.2)
Other long-term liabilities	(7.3)
	928.4
Goodwill	30.1
	$	958.5

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NET INVESTMENT IN OPERATING LEASES (Tables)

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Net Investment in Operating Leases

Net investment in operating leases was as follows:

(in millions)	September 30, 2022		December 31, 2021
Vehicles, at cost1	$	86.8	$	66.0
Accumulated depreciation1	(6.4)		(0.9)
Net investment in operating leases	$	80.4	$	65.1

1Vehicles, at cost and accumulated depreciation are recorded in other current assets, on the Consolidated Balance Sheets.

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CONTRACT LIABILITIES AND ASSETS (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Disaggregation of Revenue [Abstract]
Contract liability	$ 274.0	$ 274.0	$ 239.0
Contract liability, revenue recognized	10.4	32.5
Contract asset	$ 12.7	$ 12.7	$ 9.6

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - Summary of Accounts Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	$ 2,570.6	$ 1,529.9
Less: Allowance for doubtful accounts	(37.0)	(17.3)
Less: Long-term portion of accounts receivable, net	(1,529.0)	(602.6)
Accounts receivable, net	1,004.6	910.0
Contracts in transit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	356.9	304.9
Trade receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	115.2	125.5
Vehicle receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	114.0	106.6
Manufacturer receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	145.8	120.5
Auto loan and lease receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	1,821.5	829.2
Less: Allowance for doubtful accounts	(52.4)	(25.0)
Less: Long-term portion of accounts receivable, net	(1,501.4)	(579.7)
Accounts receivable, net	267.7	224.5
Other receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	$ 17.2	$ 43.2

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period that contracts in transit are outstanding	10 days
Threshold period for interest to bear on receivables	60 days
Auto loan and lease receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, 60 days or less past due, percent	98.00%
Receivables, 60 days or less past due, non-accrual status, percent	2.00%

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - Auto Loan and Lease Receivables (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	$ 2,570.6	$ 1,529.9
Less: Allowance for loan and lease losses	(37.0)	(17.3)
Auto loan and lease receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Auto loan and lease receivables	1,821.5	829.2
Less: Allowance for loan and lease losses	(52.4)	(25.0)
Auto loan and lease receivables, net	$ 1,769.1	$ 804.2

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - Breakdown of Current and Long Term Portions of Auto Loan and Lease Receivables (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current portion of auto loan and lease receivables, net of allowance of $33.8 and $13.6	$ 1,004.6	$ 910.0
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,529.0	602.6
Accounts receivable, allowance for doubtful accounts, current	37.0	17.3
Auto loan and lease receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current portion of auto loan and lease receivables, net of allowance of $33.8 and $13.6	267.7	224.5
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,501.4	579.7
Auto loan and lease receivables, net	1,769.1	804.2
Accounts receivable, allowance for doubtful accounts, current	33.8	13.6
Accounts receivable, allowance for doubtful accounts, noncurrent	$ 18.6	$ 11.4

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - Allowance for Credit Losses Related to Auto Loan and Lease Receivables (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses at beginning of period	$ 17.3
Total allowance for loan and lease losses balance at end of period	37.0
Auto Loan Receivables
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses at beginning of period	22.5	$ 12.9
Charge-offs	(36.3)	(9.7)
Recoveries	12.2	6.1
Provision expense	49.7	6.0
Allowance for loan losses at end of period	48.1	15.3
Allowance for lease losses	4.3	1.9
Total allowance for loan and lease losses balance at end of period	$ 52.4	$ 17.2

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS - FICO Score (Details) - Auto loan and lease receivables - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total auto loan receivables	$ 1,686.5	$ 725.0
Lease portfolio and accrued interest	135.0	104.2
Total auto loan and lease receivables	1,821.5	829.2
Less than 599
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total auto loan receivables	97.9	83.2
600-699
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total auto loan receivables	811.7	437.6
700-774
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total auto loan receivables	526.4	166.8
775+
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total auto loan receivables	$ 250.5	$ 37.4

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ACCOUNTS RECEIVABLE AND OTHER NON-CURRENT ASSETS- Other Non-Current Assets (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	$ 1,529.0	$ 602.6
Unallocated acquisition purchase price	456.6	1,554.6
Other	258.1	254.4
Other non-current assets	2,216.1	2,388.7
Auto loan and lease receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Long term portion of auto loan and lease receivables, net of allowance of $18.6 and $11.4	1,501.4	579.7
Accounts receivable, allowance for doubtful accounts, noncurrent	$ 18.6	$ 11.4

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INVENTORIES (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Inventory [Line Items]
Total inventories	$ 3,309.3	$ 2,385.5
New vehicles
Inventory [Line Items]
Total inventories	1,292.8	812.9
Used vehicles
Inventory [Line Items]
Total inventories	1,826.5	1,418.3
Parts and accessories
Inventory [Line Items]
Total inventories	$ 190.0	$ 154.3

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GOODWILL AND FRANCHISE VALUE - Schedule of Goodwill (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2008
Goodwill [Roll Forward]
Beginning balance	$ 977.3	$ 593.0
Additions through acquisitions	500.4	395.5
Reductions through divestitures	(14.6)	(11.2)
Ending balance	1,463.1	977.3
Accumulated impairment loss			$ 299.3
Corporate and other
Goodwill [Roll Forward]
Beginning balance	0.0	0.0
Additions through acquisitions	23.0	0.0
Reductions through divestitures	0.0	0.0
Ending balance	23.0	0.0
Domestic | Operating segments
Goodwill [Roll Forward]
Beginning balance	304.0	204.5
Additions through acquisitions	121.0	101.0
Reductions through divestitures	(5.8)	(1.5)
Ending balance	419.2	304.0
Import | Operating segments
Goodwill [Roll Forward]
Beginning balance	468.2	287.9
Additions through acquisitions	219.1	188.7
Reductions through divestitures	(8.8)	(8.4)
Ending balance	678.5	468.2
Luxury | Operating segments
Goodwill [Roll Forward]
Beginning balance	205.1	100.6
Additions through acquisitions	137.3	105.8
Reductions through divestitures	0.0	(1.3)
Ending balance	$ 342.4	$ 205.1

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GOODWILL AND FRANCHISE VALUE - Schedule of Franchise Value (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Indefinite-lived Intangible Assets [Roll Forward]
Beginning balance	$ 799.1	$ 350.2
Additions through acquisitions	1,088.3	459.7
Reductions through divestitures	(20.6)	(8.9)
Reductions from impairments		(1.9)
Ending balance	$ 1,866.8	$ 799.1

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CREDIT FACILITIES AND LONG-TERM DEBT - Additional Information (Details)			1 Months Ended
	Jun. 03, 2022 CAD ($)	Jun. 02, 2022 USD ($)	Aug. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)
Non-recourse | Asset Backed Funding Vehicles
Debt Instrument [Line Items]
Notes payable issued			$ 298,100,000
Securitization Facility | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)				$ 1,000,000,000
Total long-term debt outstanding				$ 350,000,000
US Bank Credit Facility | Line of Credit
Debt Instrument [Line Items]
Financing commitment amount		$ 3,750,000,000
Credit facility borrowing capacity (up to)		4,500,000,000
US Bank Credit Facility | Used vehicle floor plan | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)		$ 1,000,000,000
US Bank Credit Facility | Used vehicle floor plan | Line of Credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.50%
US Bank Credit Facility | Revolving line of credit | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)		$ 1,500,000,000
Option to reallocate commitment, maximum aggregate commitment threshold percentage		40.00%
Real property overall cap amount		$ 1,000,000,000
US Bank Credit Facility | New vehicle floor plan | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)		$ 1,200,000,000
US Bank Credit Facility | New vehicle floor plan | Line of Credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.20%
US Bank Credit Facility | Service loaner floor plan | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)		$ 50,000,000
Option to reallocate commitment, maximum aggregate commitment threshold percentage		3.00%
US Bank Credit Facility | Service loaner floor plan | Line of Credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.30%
US Bank Credit Facility | Working capital revolver | Line of Credit | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.10%
Bank Of Nova Scotia Credit Agreement | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	$ 1,125,000,000
Bank Of Nova Scotia Credit Agreement | Line of Credit | Minimum | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
Bank Of Nova Scotia Credit Agreement | Line of Credit | Minimum | Canadian Dollar Offered Rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
Bank Of Nova Scotia Credit Agreement | Line of Credit | Maximum | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.30%
Bank Of Nova Scotia Credit Agreement | Line of Credit | Maximum | Canadian Dollar Offered Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.30%
Bank Of Nova Scotia Credit Agreement | Working Capital And General Corporate Purposes Financing | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	$ 100,000,000
Bank Of Nova Scotia Credit Agreement | Wholesale Flooring Facility | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	500,000,000
Maximum borrowing capacity, accordion feature	200,000,000
Bank Of Nova Scotia Credit Agreement | Used Motor Vehicles For Sale In Canada And For Export To United States | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	100,000,000
Bank Of Nova Scotia Credit Agreement | Wholesale Lease Financing | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	400,000,000
Bank Of Nova Scotia Credit Agreement | Motor Vehicle Leases | Line of Credit
Debt Instrument [Line Items]
Credit facility borrowing capacity (up to)	25,000,000
Bank Of Nova Scotia Credit Agreement | Financing Under Other Canadian Facilities | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity, accordion feature	$ 200,000,000

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CREDIT FACILITIES AND LONG-TERM DEBT - Annual Interest Rates Associated With Floor Plan Commitments (Details) - US Bank Credit Facility - Line of Credit	Sep. 30, 2022
New vehicle floor plan
Debt Instrument [Line Items]
Annual interest rates	4.30%
Used vehicle floor plan
Debt Instrument [Line Items]
Annual interest rates	4.48%
Service loaner floor plan
Debt Instrument [Line Items]
Annual interest rates	4.28%
Revolving line of credit
Debt Instrument [Line Items]
Annual interest rates	4.08%

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EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS - Narrative (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Nov. 30, 2021	Dec. 31, 2020
Equity, Class of Treasury Stock [Line Items]
Additional authorized repurchase amount			$ 750,000,000
Authorized repurchase amount	$ 1,250,000,000
Share repurchase authorization	86,000,000
Redeemable non-controlling interest, redemption feature, period		3 years
ATM Equity Offering
Equity, Class of Treasury Stock [Line Items]
Sale of stock, maximum aggregate gross sales price				$ 400,000,000
Proceeds from issuance of stock	$ 0
Restricted Stock Units (RSUs)
Equity, Class of Treasury Stock [Line Items]
Number of shares repurchased	56,867
Average purchase price per share (in dollars per share)	$ 296.94
Amount related to tax withholdings associated with vesting of RSUs	$ 16,900,000

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EQUITY AND REDEEMABLE NON-CONTROLLING INTERESTS - Summary of Share Repurchases (Details) - $ / shares	9 Months Ended	10 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Equity [Abstract]
Shares repurchased pursuant to repurchase authorizations (in shares)	2,254,193	6,730,124
Average purchase price per share (in dollars per share)	$ 282.46	$ 172.95

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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Fair Value Disclosures [Abstract]
Unrealized gain (loss)	$ 0.3	$ (23.2)	$ (32.6)	$ (22.3)

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FAIR VALUE MEASUREMENTS - Assets Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 8.3	$ 40.4
Derivative asset	0.0	0.0
Derivative liability	0.0	0.0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0.0	0.5
Derivative asset	23.8	6.4
Derivative liability	23.8	8.9
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0.0	0.0
Derivative asset	0.0	0.0
Derivative liability	$ 0.0	$ 0.0

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FAIR VALUE MEASUREMENTS - Long-term Fixed Interest Rate Debt (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Senior Notes | 4.625% Senior notes due 2027
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate (percent)	4.625%
Senior Notes | 4.375% Senior notes due 2031
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate (percent)	4.375%
Senior Notes | 3.875% Senior notes due 2029
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate (percent)	3.875%
Carrying value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 2,721.6	$ 2,545.2
Carrying value | Senior Notes | 4.625% Senior notes due 2027
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	400.0	400.0
Carrying value | Senior Notes | 4.375% Senior notes due 2031
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	550.0	550.0
Carrying value | Senior Notes | 3.875% Senior notes due 2029
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	800.0	800.0
Carrying value | Senior Notes | Non-recourse notes payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	494.1	317.6
Carrying value | Senior Notes | Real estate mortgages and other debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	477.5	477.6
Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	2,348.3	2,623.5
Fair value | Senior Notes | 4.625% Senior notes due 2027
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	360.0	420.0
Fair value | Senior Notes | 4.375% Senior notes due 2031
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	442.8	583.0
Fair value | Senior Notes | 3.875% Senior notes due 2029
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	642.0	815.0
Fair value | Senior Notes | Non-recourse notes payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	482.0	316.8
Fair value | Senior Notes | Real estate mortgages and other debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 421.5	$ 488.7

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NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Weighted average common shares outstanding - basic (in shares)	27.5	30.3	28.5	28.4
Weighted average common shares outstanding – diluted (in shares)	27.6	30.5	28.6	28.6
Basic earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.97	$ 10.18	$ 35.23	$ 27.12
Diluted earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.92	$ 10.11	$ 35.10	$ 26.91
Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic			$ 1,003.4
Conversion of Class B common shares into Class A common shares			0.0
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted	$ 329.6	$ 307.9	$ 1,003.4
Weighted average common shares outstanding - basic (in shares)	27.5	30.3	28.5
Conversion of Class B common shares into Class A common shares (in shares)			0.0
Effect of dilutive share-based payment arrangements on weighted average common shares (in shares)	0.1	0.2	0.1
Weighted average common shares outstanding – diluted (in shares)	27.6	30.5	28.6
Basic earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.97	$ 10.18	$ 35.23
Diluted earnings per share attributable to Lithia Motors, Inc. (in dollars per share)	$ 11.92	$ 10.11	$ 35.10
Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic				$ 768.4
Conversion of Class B common shares into Class A common shares				0.6
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted				$ 769.0
Weighted average common shares outstanding - basic (in shares)				28.4
Conversion of Class B common shares into Class A common shares (in shares)				0.0
Effect of dilutive share-based payment arrangements on weighted average common shares (in shares)				0.2
Weighted average common shares outstanding – diluted (in shares)				28.6
Basic earnings per share attributable to Lithia Motors, Inc. (in dollars per share)				$ 27.12
Diluted earnings per share attributable to Lithia Motors, Inc. (in dollars per share)				$ 26.91
Class B
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - basic				$ 0.6
Conversion of Class B common shares into Class A common shares				0.0
Net income attributable to Lithia Motors, Inc. and applicable to common stockholders - diluted				$ 0.6
Weighted average common shares outstanding - basic (in shares)				0.0
Conversion of Class B common shares into Class A common shares (in shares)				0.0
Effect of dilutive share-based payment arrangements on weighted average common shares (in shares)				0.0
Weighted average common shares outstanding – diluted (in shares)				0.0
Basic earnings per share attributable to Lithia Motors, Inc. (in dollars per share)				$ 27.12
Diluted earnings per share attributable to Lithia Motors, Inc. (in dollars per share)				$ 26.91

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SEGMENTS - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	3

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SEGMENTS - Schedule of Certain Financial Information on a Segment Basis (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Total revenues	$ 7,295.7	$ 6,169.8	$ 21,241.3	$ 16,522.2
Income before income taxes	455.7	422.2	1,393.9	1,053.0
Depreciation and amortization			(122.1)	(91.5)
Other interest expense	(49.6)	(28.0)	(114.1)	(79.6)
Other income (expense), net	(7.1)	(25.7)	(37.0)	(14.6)
Operating segments
Segment Reporting Information [Line Items]
Total revenues	7,245.8	6,141.7	21,134.1	16,493.9
Income before income taxes	498.9	487.5	1,549.5	1,158.6
Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	2,401.9	1,819.2	6,942.2	5,018.5
Income before income taxes	127.9	123.6	400.1	335.6
Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	3,000.9	2,727.4	8,667.4	7,149.6
Income before income taxes	261.5	255.4	782.8	573.2
Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	1,843.0	1,595.1	5,524.5	4,325.8
Income before income taxes	109.5	108.5	366.6	249.8
Corporate and other
Segment Reporting Information [Line Items]
Total revenues	49.9	28.1	107.2	28.3
Income before income taxes	55.4	22.8	117.6	80.1
Segment reconciling items
Segment Reporting Information [Line Items]
Depreciation and amortization	(41.9)	(34.4)	(122.1)	(91.5)
Other interest expense	(49.6)	(28.0)	(114.1)	(79.6)
Other income (expense), net	(7.1)	(25.7)	(37.0)	(14.6)
New vehicle retail
Segment Reporting Information [Line Items]
Total revenues	3,306.9	2,898.2	9,619.4	8,237.7
New vehicle retail | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	1,078.3	766.1	3,083.1	2,305.3
New vehicle retail | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	1,389.0	1,376.9	4,022.9	3,730.7
New vehicle retail | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	840.3	750.9	2,513.2	2,204.1
Used vehicle retail
Segment Reporting Information [Line Items]
Total revenues	2,465.8	2,079.5	7,197.0	5,236.6
Used vehicle retail | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	832.9	699.7	2,418.7	1,803.7
Used vehicle retail | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	1,015.5	847.9	2,920.9	2,127.8
Used vehicle retail | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	618.2	530.3	1,861.9	1,309.9
Used vehicle wholesale
Segment Reporting Information [Line Items]
Total revenues	363.2	260.9	1,131.5	613.5
Used vehicle wholesale | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	115.4	74.5	376.3	174.4
Used vehicle wholesale | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	112.7	99.5	361.2	247.8
Used vehicle wholesale | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	92.1	72.8	300.5	171.9
Finance and insurance
Segment Reporting Information [Line Items]
Total revenues	333.3	297.0	977.0	765.0
Finance and insurance | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	98.9	80.5	284.6	217.7
Finance and insurance | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	178.9	162.9	532.3	408.9
Finance and insurance | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	61.2	56.1	187.2	145.7
Service, body and parts
Segment Reporting Information [Line Items]
Total revenues	712.2	578.3	2,022.6	1,503.4
Service, body and parts | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	206.7	170.2	597.5	450.0
Service, body and parts | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	292.1	235.3	802.5	596.9
Service, body and parts | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	200.3	162.8	580.3	434.7
Fleet and other
Segment Reporting Information [Line Items]
Total revenues	114.3	55.9	293.8	166.0
Fleet and other | Operating segments | Domestic
Segment Reporting Information [Line Items]
Total revenues	69.7	28.2	182.0	67.4
Fleet and other | Operating segments | Import
Segment Reporting Information [Line Items]
Total revenues	12.7	4.9	27.6	37.5
Fleet and other | Operating segments | Luxury
Segment Reporting Information [Line Items]
Total revenues	$ 30.9	$ 22.2	$ 81.4	$ 59.5

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SEGMENTS - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Assets	$ 14,074.5	$ 11,146.9
Operating segments | Domestic
Segment Reporting Information [Line Items]
Assets	2,504.1	1,574.7
Operating segments | Import
Segment Reporting Information [Line Items]
Assets	2,855.4	1,858.1
Operating segments | Luxury
Segment Reporting Information [Line Items]
Assets	2,007.3	1,407.1
Corporate and other
Segment Reporting Information [Line Items]
Assets	$ 6,707.7	$ 6,307.0

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LEASES (Details)	Sep. 30, 2022 option
Lessor, Lease, Description [Line Items]
Lease renewal option	1
Minimum
Lessor, Lease, Description [Line Items]
Lease renewal term	1 year
Maximum
Lessor, Lease, Description [Line Items]
Lease renewal term	25 years

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DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions				3 Months Ended
	Jun. 15, 2021 USD ($) derivative	Oct. 02, 2020 USD ($) derivative	Jun. 01, 2019 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2022 USD ($) derivative
Derivative [Line Items]
Non-trade floor plan notes payable						$ 835.9				$ 1,208.1
Interest Rate Contract
Derivative [Line Items]
Agreement term			5 years
Aggregate notional amount			$ 300.0
Interest Rate Contract | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Derivative [Line Items]
Amounts reclassified from AOCI to floorplan interest expense				$ (2.7)	$ 0.7	0.7	$ 0.7	$ 0.7	$ 0.7
Interest Rate Contract | Other Non-Current Assets | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Derivative [Line Items]
Amounts reclassified from AOCI to floorplan interest expense				$ (2.7)	$ 0.0	$ 0.0	$ 0.0	$ 0.0	$ 0.0
Interest Rate Contract | Not Designated as Hedging Instrument
Derivative [Line Items]
Agreement term	5 years	5 years
Aggregate notional amount	$ 100.0	$ 100.0
Derivative liability										23.8
Derivative asset										$ 23.8
Interest Rate Cap | Not Designated as Hedging Instrument
Derivative [Line Items]
Number of derivative instruments held | derivative	2	2								4

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DERIVATIVE FINANCIAL INSTRUMENTS - Liabilities Related to Zero-Cost Interest Rate Collar (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance		$ 4,629.2	$ 4,544.6	$ 4,228.4		$ 2,661.5
Ending Balance	$ 4,698.0		4,629.2	4,544.6	$ 4,228.4
Interest Rate Contract | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	2.7	(2.6)	(5.2)	(5.9)	(6.1)	(8.6)
Amounts reclassified from AOCI to floorplan interest expense	(2.7)	0.7	0.7	0.7	0.7	0.7
(Loss) gain recorded from interest rate collar	0.0	4.6	1.9	0.0	(0.5)	1.8
Ending Balance	0.0	2.7	(2.6)	(5.2)	(5.9)	(6.1)
Interest Rate Contract | Accrued Liabilities | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	0.0	(1.9)	(2.5)	(2.5)	(2.5)	(2.6)
Amounts reclassified from AOCI to floorplan interest expense	0.0	0.7	0.7	0.7	0.7	0.7
(Loss) gain recorded from interest rate collar	0.0	1.2	(0.1)	(0.7)	(0.7)	(0.6)
Ending Balance	0.0	0.0	(1.9)	(2.5)	(2.5)	(2.5)
Interest Rate Contract | Other Long-Term Liabilities | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	0.0	(0.7)	(2.7)	(3.4)	(3.6)	(6.0)
Amounts reclassified from AOCI to floorplan interest expense	0.0	0.0	0.0	0.0	0.0	0.0
(Loss) gain recorded from interest rate collar	0.0	0.7	2.0	0.7	0.2	2.4
Ending Balance	0.0	0.0	(0.7)	(2.7)	(3.4)	(3.6)
Interest Rate Contract | Other Non-Current Assets | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	2.7	0.0	0.0	0.0	0.0	0.0
Amounts reclassified from AOCI to floorplan interest expense	(2.7)	0.0	0.0	0.0	0.0	0.0
(Loss) gain recorded from interest rate collar	0.0	2.7	0.0	0.0	0.0	0.0
Ending Balance	$ 0.0	$ 2.7	$ 0.0	$ 0.0	$ 0.0	$ 0.0

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ACQUISITIONS - Revenue and Operating Income from Acquisitions (Details) - 2022 Acquisitions $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Business Acquisition [Line Items]
Revenue	$ 812.6
Operating income	$ 43.2

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ACQUISITIONS - Summary of Acquisitions (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
2022 Acquisitions
Business Acquisition [Line Items]
Cash paid, net of cash acquired	$ 958.5

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ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Goodwill	$ 1,463.1	$ 977.3	$ 593.0
2022 Acquisitions
Business Acquisition [Line Items]
Accounts receivable	0.1
Inventories	166.1
Franchise value	63.7
Property and equipment	325.2
Other non-current assets	459.5
Floor plan notes payable	(0.7)
Debt and finance lease obligations	(78.2)
Other long-term liabilities	(7.3)
Assets acquired and liabilities assumed, excluding goodwill	928.4
Goodwill	30.1
Total net assets acquired and liabilities assumed	$ 958.5

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ACQUISITIONS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]
Acquisition-related expenses	$ 2.0	$ 6.3	$ 10.1	$ 17.9

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ACQUISITIONS - Pro Forma Summary of All Acquisitions (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 7,411.1	$ 6,791.7	$ 22,300.4	$ 18,194.2
Net income attributable to Lithia Motors, Inc.	$ 337.3	$ 343.9	$ 1,065.0	$ 857.3
Basic earnings attributable to Lithia Motors, Inc. per share (in dollars per share)	$ 12.25	$ 11.37	$ 37.39	$ 30.23
Diluted earnings attributable to Lithia Motors, Inc. per share (in dollars per share)	$ 12.20	$ 11.29	$ 37.26	$ 30.00

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NET INVESTMENT IN OPERATING LEASES (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Vehicles, at cost	$ 86.8	$ 66.0
Accumulated depreciation	(6.4)	(0.9)
Net investment in operating leases	$ 80.4	$ 65.1