REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

Disaggregation of Revenue

Revenue from contracts with customers consists of the following:



	For the year ended December 31,
	2019		2018
Revenue:
New vehicle	$	3,863.3	$	3,788.7
Used vehicle retail	1,941.3		1,783.3
Used vehicle wholesale	190.3		189.1
New and used vehicle	5,994.9		5,761.1
Sale of vehicle parts and accessories	148.8		139.2
Vehicle repair and maintenance services	750.6		681.8
Parts and services	899.4		821.0
Finance and insurance, net	316.0		292.3
Total revenue	$	7,210.3	$	6,874.4

New vehicle and used vehicle retail

Revenue from the sale of new and used vehicles (which excludes sales and other taxes) is recognized when the terms of the customer contract are satisfied which generally occurs with the signing of the sales contract and transfer of control of the vehicle to the customer. Costs associated with incidental items that are immaterial in the context of the contract are accrued at the time of sale.

Used vehicle wholesale

Proceeds from the sale of these vehicles are recognized in used vehicle revenue upon transfer of control to end-users at auction.

Sale of vehicle parts and accessories

The Company recognizes revenue upon transfer of control to the customer which occurs at a point in time. When the Company performs shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized.

Vehicle repair and maintenance services

The Company provides vehicle repair and maintenance services to its customers pursuant to the terms and conditions included within the customer contract ("repair order"). Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements. As such, the Company recognizes revenue over time as the Company satisfies its performance obligation. Additionally, the Company has determined that parts and labor are not individually distinct in the context of a repair order and therefore treated as a single performance obligation.

Finance and Insurance, net

We receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle service contracts, guaranteed asset protection (known as "GAP") debt cancellation, and other insurance, to end-users. Finance and insurance commission revenue is recognized at the point of sale since our performance obligation is to arrange financing or facilitating the sale of a third party's products or services to our customers.

The Company's commission arrangements with third-party lenders and insurance administrators consists of fixed ("upfront") and variable consideration. Variable consideration includes commission chargebacks ("chargebacks") in the event a contract is prepaid, defaulted upon, or terminated by the end-user. The Company reserves for future chargebacks based on historical chargeback experience and the termination provisions of the applicable contract and these reserves are established in the same period that the related revenue is recognized.

We also participate in future profits pursuant to retrospective commission arrangements, which meet the definition of variable consideration, for certain insurance products associated with a third-party portfolio. The Company estimates the amount of variable consideration to be included in the transaction price based on historical payment trends and further constrains the variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur. In making these assessments the Company considers the likelihood and magnitude of a potential reversal of revenue and updates its assessment when uncertainties associated with the constraint are removed.

Contract Assets

Changes in contract assets during the period are reflected in the table below. Contract assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer.



	Vehicle Repair and Maintenance Services			Finance and Insurance, net			Total
	(In millions)
Contract Assets (Current), January 1, 2019	$	4.1		$	10.6		$	14.7
Transferred to receivables from contract assets recognized at the beginning of the period	(4.1		)	(3.3		)	(7.4		)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	4.4			3.3			7.7
Contract Assets (Current), March 31, 2019	4.4			10.6			15.0
Transferred to receivables from contract assets recognized at the beginning of the period	(4.4		)	(3.2		)	(7.6		)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	4.8			4.6			9.4
Contract Assets (Current), June 30, 2019	4.8			12.0			16.8
Transferred to receivables from contract assets recognized at the beginning of the period	(4.8		)	(2.6		)	(7.4		)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	4.9			2.1			7.0
Contract Assets (Current), September 30, 2019	4.9			11.5			16.4
Transferred to receivables from contract assets recognized at the beginning of the period	$	(4.9	)	$	(3.9	)	$	(8.8	)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	$	4.8		$	4.7		$	9.5
Contract Assets (Current), December 31, 2019	$	4.8		$	12.3		$	17.1