What the changes say
- EV and emissions mandates may reduce after-sales and F&I revenue while making vehicles harder to finance affordably.
- Tesla, Rivian, and Chinese and Indian entrants intensify competition in a mature U.S. market.
- Honda, Toyota, Ford, BMW, and Stellantis represent 25% of sales, creating manufacturer concentration exposure.
- U.K. agency models may reduce reported revenue and change dealerships’ role in vehicle sales.
What changed since the prior 10-K
New
- NewRisks Related to Our Business
Intense competition among automotive retailers and new brands may reduce our vehicle sales and profit margins on vehicle sales and related businesses
Dealership competition and new vehicle brands may reduce sales and margins; LAD lacks geographic exclusivity and purchasing cost advantages.
- NewRisks Related to Our Business
Concerns over the impacts of climate change have led and may continue to lead to governmental initiatives aimed at mitigating those impacts. Consumers may also change their behavior as a result of these concerns, as well as having a preference for vehicles that require less fuel in response to increases in fuel prices
EV mandates and changing consumer preferences may reduce maintenance, after-sales, and F&I revenue, while shifting vehicle demand.
- NewRisks Related to Our Business
uncertain and may include reduced after-sales revenues, as well as changes in the level of sales of certain F&I products such as extended warranty programs and lifetime lube, oil, and filter contracts
Tighter fuel-economy and carbon-emissions rules could raise compliance costs, reduce vehicle affordability, and restrict inventory financing.
- NewRisks Related to Our Business
New vehicles from five manufacturers, Honda, Toyota, Ford, BMW, and Stellantis, represent 25% of our sales. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, or other issue affecting one or more of these manufacturers
Five manufacturers account for 25% of sales, exposing LAD to disruption, bankruptcy, or legal liabilities involving those manufacturers.
- NewRisks Related to Our Business
and other negative impacts that have a material adverse effect on our business, results of operations, financial condition, and cash flows
U.K. manufacturers’ agency models may reduce reported revenue and change expenses, inventory ownership, and dealership economics.
- NewRisks Related to Our Business
forced to take actions that we otherwise would not take, or not take actions that we otherwise might take, in order to comply with these agreements
Credit-facility conditions or unfavorable debt refinancing could restrict borrowing or increase financing costs.
- NewTechnology and Cybersecurity Risks
Technological advances could affect our sales and business
Driverless vehicles, lower ownership, cyberattacks, vendor breaches, and information-system outages could reduce sales or disrupt operations.
Dropped
- DroppedRisks Related to Our Business
Increasing competition among automotive retailers reduces our profit margins on vehicle sales and related businesses. Further, the use of the Internet, e-commerce, and digital technology in the car purchasing process could materially adversely affect us
- DroppedRisks Related to Our Business
Changes to the automotive industry and consumer views on car ownership could materially adversely affect our business, results of operations, financial condition, and cash flows
Internet, e-commerce, and digital purchasing competition could reduce vehicle and related-business margins.
- DroppedRisks Related to Our Business
materially adversely impacted by a manufacturer’s or distributor’s inability to supply our stores with an adequate supply of vehicles
Reworded
- 100% rewrittenRisks Related to Our Business
Our F&I business and other related businesses, which have higher margins than sales of new and used vehicles, are subject to strong competition from various financial institutions and others
Replaces Internet-based margin pressure with Tesla, Rivian, and Chinese and Indian electric-vehicle entrants competing for mature U.S. demand.
- 92% rewrittenRisks Related to Our Business
Changes to manufacturer distribution models may disrupt the way we do business and impact our revenues and profitability
Adds passed legislation and Scout’s 2025 Colorado dealer license through October 2026 as a direct-to-consumer catalyst.
- 89% rewrittenRisks Related to Our Business
Changes to the retail delivery model and increased e-commerce and omnichannel competition could materially adversely affect our business, results of operations, financial condition, and cash flows
Expands online and mobile shopping to repair services, adds vehicle subscriptions and other delivery models, and removes named competitors.
Was: Changes to the retail delivery model and increased e-commerce and omnichannel competition could adversely affect our business, results of operations, financial condition and cash flows
- 66% rewrittenRisks Related to Our Business
Natural disasters, adverse weather conditions, and public health emergencies can disrupt our business
Adds public-health emergencies, including pandemics, and their impact on stores dependent on in-person customer experiences.
- 42% rewrittenRisks Related to Our Business
Adverse conditions affecting one or more key manufacturers may negatively affect our business, results of operations, financial condition, and cash flows
Substantially unchanged; it retains supply disruptions, improved availability reducing gross margins, and manufacturer quality issues.
- 39% rewrittenRegulatory Risks
Changes to laws or regulatory frameworks applicable to automotive consumer financing transactions could negatively affect our results of operations
Replaces the U.K. commission-disclosure appeal with broader U.S. scrutiny and lenders limiting fee income from automotive finance activities.
- 27% rewrittenRegulatory Risks
Our operations are subject to extensive governmental laws and regulations. If we are found to be in violation of or subject to liabilities under any of these laws, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer
Adds consumer-financing regulation to the listed laws, while otherwise retaining broad compliance and technical-error exposure.
- 24% rewrittenRisks Related to Our Business
A decline of affordable and available vehicle financing may adversely affect our vehicle sales
No substantive change; customers’ financing dependence, finance sources, capital markets, and underwriting changes remain the focus.
- 22% rewrittenRisks Related to Our Business
The growth and success of our DFC business is dependent upon obtaining sufficient capital to grow our finance receivable portfolio
All 28 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business
- 01Natural disasters, adverse weather conditions, and public health emergencies can disrupt our business66% rewritten
- 02Intense competition among automotive retailers and new brands may reduce our vehicle sales and profit margins on vehicle sales and related businessesNew
- 03Our F&I business and other related businesses, which have higher margins than sales of new and used vehicles, are subject to strong competition from various financial institutions and others100% rewritten
- 04Changes to the retail delivery model and increased e-commerce and omnichannel competition could materially adversely affect our business, results of operations, financial condition, and cash flows89% rewritten
- 05We compete in a dynamic industry, and we may invest significant resources to pursue strategies, develop new offerings, and enter into adjacent businesses that do not prove effective or profitable
- 06A decline of affordable and available vehicle financing may adversely affect our vehicle sales24% rewritten
- 07Concerns over the impacts of climate change have led and may continue to lead to governmental initiatives aimed at mitigating those impacts. Consumers may also change their behavior as a result of these concerns, as well as having a preference for vehicles that require less fuel in response to increases in fuel pricesNew
- 08uncertain and may include reduced after-sales revenues, as well as changes in the level of sales of certain F&I products such as extended warranty programs and lifetime lube, oil, and filter contractsNew
- 09Adverse conditions affecting one or more key manufacturers may negatively affect our business, results of operations, financial condition, and cash flows42% rewritten
- 10New vehicles from five manufacturers, Honda, Toyota, Ford, BMW, and Stellantis, represent 25% of our sales. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, or other issue affecting one or more of these manufacturersNew
- 11If manufacturers or distributors discontinue or change sales incentives, warranties, and other promotional programs, our business, results of operations, financial condition, and cash flows may be materially adversely affected
- 12The ability of our stores to make new vehicle sales depends in large part upon the franchise agreements with manufacturers and, therefore, any disruption or change in our relationships could impact our business
- 13Changes to manufacturer distribution models may disrupt the way we do business and impact our revenues and profitability92% rewritten
- 14and other negative impacts that have a material adverse effect on our business, results of operations, financial condition, and cash flowsNew
- 15forced to take actions that we otherwise would not take, or not take actions that we otherwise might take, in order to comply with these agreementsNew
- 16We may experience greater credit losses in DFC’s finance receivable portfolio than anticipated, which will create losses for us
- 17The growth and success of our DFC business is dependent upon obtaining sufficient capital to grow our finance receivable portfolio22% rewritten
Technology and Cybersecurity Risks
- 18Technological advances could affect our sales and businessNew
Regulatory Risks
- 19Our dealerships and our new vehicle sales model may not be protected if U.S. or Canadian state or provincial dealer laws are repealed or weakened, a manufacturer becomes bankrupt, or there is a shift to other sales models
- 20Changes to laws or regulatory frameworks applicable to automotive consumer financing transactions could negatively affect our results of operations39% rewritten
- 21Import product restrictions, currency valuations, tariffs, U.S. and foreign trade policies and risks may impair our ability to sell vehicles or parts profitably
- 22Our operations are subject to extensive governmental laws and regulations. If we are found to be in violation of or subject to liabilities under any of these laws, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer27% rewritten
- 23Our ability to increase revenues and profitability through acquisitions depends on our ability to acquire and successfully integrate new vehicle franchises
- 24Risks associated with our international operations may negatively affect our business, results of operations and, financial condition
- 25The loss of key personnel or the failure to attract additional qualified management personnel could adversely affect our operations and growth
Risks Related to Investing in Our Common Stock
- 26Oregon law and our Restated Articles of Incorporation may impede or discourage a takeover, which could impair the market price of our common stock
- 27We may not be able to satisfy our debt obligations upon the occurrence of a change in control under our debt instruments
- 28Our issuance of preferred stock could adversely affect holders of common stock
Other Lithia Motors 10-Ks
- FY2024 10-K risk factors24 risks
Lithia Motors faces intense competition from online and traditional retailers, high reliance on manufacturer franchise agreements, and risks from automotive financing and regulatory changes.
Filed Feb 24, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.