Lithia Motors Profile
Lithia Motors, Inc. (Lithia) operates as a global automotive retailer.
The company is providing an array of products and services throughout the vehicle ownership lifecycle. Convenient and hassle-free experiences are offered through the company’s comprehensive network of physical locations, e-commerce platforms, captive finance solutions and other synergistic adjacencies.
The company operates various locations representing 47 brands across the United States, the United Kingdom, and Canada.
Lithia and Driveway (LAD) offers a wide array of products and services fulfilling the entire vehicle ownership lifecycle including new and used vehicles, finance and insurance products and automotive repair and maintenance. The company strives for diversification in its 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. The company’s diversification, along with the company’s operating structure, provides a resilient and nimble business model.
Business Strategy
The company’s Driveway and GreenCars brands compliment its in-store experiences and provide convenient, simple, and transparent platforms that serve as the company’s e-commerce home solutions. Diversifying the company’s business with Driveway Finance Corporation (DFC), its captive auto finance division, allows the company to provide financing solutions for customers and diversify its business model with an adjacent product.
The company’s long-term strategy to create value for its customers and shareholders includes the following elements: driving operational excellence, innovation and diversification; and growth through acquisition and network optimization.
Marketing
The company’s national, regional, and local brands connect with consumers through advertising tailored to the individual brand and market. Utilizing data and omnichannel communications, the company strives to create deeper and richer offerings to build lifelong loyalty throughout the vehicle ownership life cycle.
With a vast selection represented by the largest U.S. new and preowned vehicle inventory for sale online, the company employs search engine optimization, search engine marketing, online display, retargeting, social advertising, traditional media, and direct marketing to reach consumers.
Most consumers begin their shopping, buying, or selling activity on the company’s store websites, Driveway, and GreenCars. With the importance of keeping consumer communications relevant, based on where they are in the shopping process or lifecycle of ownership, the company has built a proprietary customer lifecycle communication platform. In an industry where the competition often relies on third parties to manage their customer data, the company manages its data internally. This goes beyond automotive needs, allowing the company to leverage its customer insights across many revenue streams.
These online channels provide customers with simple, transparent ways to manage their vehicle ownership, including search new-and-used inventories, view current pricing, apply incentives and offers, calculate payments for purchase or lease, apply for financing, buy online, sell their vehicle, offering the consumer to schedule service appointments both in store or at home, schedule vehicle pick-up and delivery, and provide the company feedback about their experience.
Driveway, the company’s online experience, puts customers in control of every aspect of their car ownership. They can browse a vast nationwide inventory of new, used, and certified pre-owned vehicles (CPO), then get a vehicle shipped straight to their driveway or pick it up from one of Lithia’s 300+ stores. In 2023, approximately 31.5 million unique users visited Driveway.com.
With the industry transitioning to more sustainable practices and alternative-fuel vehicles, the company is excited that GreenCars, the company’s online education resource for sustainable mobility, had approximately 5.9 million unique visitors in 2023 at GreenCars.com. GreenCars is a leading source of knowledge designed to promote the acceleration of electric vehicle (EV) adoption by educating the consumer on such topics as (1) fuel-efficient offerings from model comparisons, (2) personalized incentives, and (3) local rebates to charging network. GreenCars even connects consumers with the largest new-and-preowned inventory for when they are ready to purchase their sustainable vehicle.
Franchise Agreements
Each of the company’s stores operates under a separate franchise agreement with the manufacturer of the new vehicle brand it sells.
Competition
The company competes primarily with other automotive retailers, both publicly- and privately-held and other used-only automotive retailers such as CarMax, Carvana, and Cazoo.
Regulation
The Consumer Financial Protection Bureau has supervisory authority over large non-bank auto finance companies, including DFC.
Most of the company’s stores use above ground storage tanks, and, to a lesser extent, underground storage tanks, primarily for petroleum-based products. Storage tanks are subject to periodic testing, containment, upgrading and removal under the Resource Conservation and Recovery Act and its state law counterparts.
In addition, water quality protection programs under the federal Water Pollution Control Act (commonly known as the Clean Water Act), the Safe Drinking Water Act and comparable state and local programs govern certain discharges from the company’s operations.
Seasonality
The company generally experiences higher volume of luxury vehicles, which have higher average selling prices and gross profit per vehicle, during the fourth quarter (year ended December 2023).
History
Lithia Motors, Inc. was founded in 1946. The company was incorporated in Oregon in 1968.
