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, ~~2019~~2020



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

For the transition period from to

Commission File Number: 1-13461

Group 1 Automotive, Inc.

(Exact name of registrant as specified in its charter)



Delaware		76-0506313
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
800 Gessner,	Suite 500	77024
Houston,	TX	(Zip code)
(Address of principal executive offices)

(713) 647-5700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Ticker symbol(s)	Name of exchange on which registered
Common stock, par value $0.01 per share	GPI	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 þ 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 þ 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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	þ	¨	Accelerated filer

Non-accelerated filer	¨	☐	Smaller reporting company

		☐	Emerging growth company

If an emerging growth company, indicate by check mark if that 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 þ

As of October ~~28, 2019,~~30, 2020, the registrant had ~~18,619,112~~18,314,207 shares of common stock outstanding.

TABLE OF CONTENTS




GLOSSARY OF DEFINITIONS		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	34
	Cautionary Statement about Forward-Looking Statements	3224
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3427
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6359
Item 4.	Controls and Procedures	6460

PART II. OTHER INFORMATION		61
Item 1.	Legal Proceedings	6461
Item 1A.	Risk Factors	6461
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6461
Item 5.	Other Information	62
Item 6.	Exhibits	6562
SIGNATURE		6764

GLOSSARY OF DEFINITIONS

The following are abbreviations and definitions of terms used within this report:



Terms		Definitions
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Brexit		Withdrawal of the U.K. from the European Union
BRL		Brazilian Real (R$)
COVID-19 pandemic		Coronavirus disease first emerging in December 2019 and resulting in the ongoing global pandemic in 2020
EPS		Earnings per share
F&I		Finance, insurance and other
FASB		Financial Accounting Standards Board
FMCC		Ford Motor Credit Company
GBP		British Pound Sterling (£)
LIBOR		London Interbank Offered Rate
OEM		Original equipment manufacturer
PRU		Per retail unit
ROU		Right-of-use
RSA		Restricted stock award
SEC		Securities and Exchange Commission
SG&A		Selling, general and administrative
USD		United States Dollar
U.K.		United Kingdom
U.S.		United States of America
U.S. GAAP		Accounting principles generally accepted in the U.S.
WHO		World Health Organization
WACC		Weighted average cost of capital

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share data)


	September 30, 2019			December 31, 2018
	(Unaudited)						September 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	41.0		$	15.9		$	66.2		$	23.8
Contracts-in-transit and vehicle receivables, net	256.2			265.7			218.9			253.8
Accounts and notes receivable, net	222.2			194.0
Accounts and notes receivables, net							193.5			225.1
Inventories, net	1,792.7			1,844.1			1,375.7			1,901.7
Prepaid expenses and other current assets	74.4			82.7
Prepaid expenses							39.8			96.4
Other current assets							22.6			15.5
TOTAL CURRENT ASSETS	2,386.5			2,402.4			1,916.6			2,516.3
Property and equipment, net of accumulated depreciation of $380.5 and $347.3, respectively	1,484.8			1,347.8
Property and equipment, net of accumulated depreciation of $441.9 and $400.2, respectively							1,592.0			1,547.1
Operating lease assets	204.7			—			209.9			220.1
Goodwill	979.0			963.9			993.5			1,008.3
Intangible franchise rights	252.9			259.6			241.3			253.5
Other assets	21.1			27.4
Other long-term assets							30.0			24.8
TOTAL ASSETS	$	5,329.0		$	5,001.1		$	4,983.4		$	5,570.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0 and $33.6, respectively	$	1,199.8		$	1,258.9
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 and $0.1, respectively	410.5			417.8
Floorplan notes payable — credit facility and other, net of offset account of $108.2 and $106.8, respectively							$	771.3		$	1,144.4
Floorplan notes payable — manufacturer affiliates, net of offset account of $18.5 and $4.1, respectively							314.8			459.9
Current maturities of long-term debt	66.0			93.0			65.8			59.1
Current operating lease liabilities	23.9			—			21.5			24.6
Accounts payable	483.3			419.4			408.3			527.5
Accrued expenses and other current liabilities	213.8			197.6			230.4			206.7
TOTAL CURRENT LIABILITIES	2,397.3			2,386.7			1,812.1			2,422.3
Long-term debt, net of current maturities	1,308.0			1,281.4
Operating lease liabilities, net of current portion	195.5			—
Long-term debt							1,307.8			1,432.1
Long-term operating lease liabilities							207.1			210.7
Deferred income taxes	131.4			134.7			135.4			145.7
Other liabilities	110.5			102.6
Commitments and Contingencies (Note 10)
Long-term interest rate swap liabilities							49.4			4.4
Other long-term liabilities							114.8			99.2
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,504,131 and 25,494,328 shares issued, respectively	0.3			0.3
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,439,746 and 25,486,711 shares issued, respectively							0.3			0.3
Additional paid-in capital	291.9			292.8			304.0			295.3
Retained earnings	1,499.8			1,394.8			1,723.3			1,542.4
Accumulated other comprehensive income (loss)	(169.5		)	(137.8		)	(206.3		)	(147.0		)
Treasury stock, at cost; 6,885,019 and 7,171,661 shares, respectively	(436.2		)	(454.4		)
Treasury stock, at cost; 7,122,366 and 6,858,503 shares, respectively							(464.3		)	(435.3		)
TOTAL STOCKHOLDERS’ EQUITY	1,186.3			1,095.7			1,356.9			1,255.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,329.0		$	5,001.1		$	4,983.4		$	5,570.2

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
REVENUES:
New vehicle retail sales	$	1,652.2	$	1,539.5	$	4,632.2	$	4,608.7	$	1,580.7	$	1,652.3	$	3,985.5	$	4,632.2
Used vehicle retail sales	869.7		792.4		2,527.8		2,394.8		867.2		869.7		2,287.4		2,527.8
Used vehicle wholesale sales	85.3		86.6		273.4		283.4		86.7		85.2		221.9		273.4
Parts and service sales	383.5		354.5		1,130.8		1,062.1		375.6		383.5		1,028.2		1,130.8
Finance, insurance and other, net	127.6		116.1		368.2		343.5		129.5		127.5		338.7		368.2
Total revenues	3,118.3		2,889.1		8,932.4		8,692.5		3,039.6		3,118.3		7,861.7		8,932.4
COST OF SALES:
New vehicle retail sales	1,577.0		1,461.9		4,415.7		4,379.1		1,481.5		1,577.0		3,759.7		4,415.7
Used vehicle retail sales	815.5		742.3		2,372.5		2,250.0		796.1		815.5		2,127.9		2,372.5
Used vehicle wholesale sales	84.9		86.9		272.7		281.8		80.7		84.9		212.9		272.7
Parts and service sales	175.3		162.9		520.1		488.6		169.4		175.4		473.9		520.1
Total cost of sales	2,652.7		2,454.0		7,581.0		7,399.5		2,527.7		2,652.7		6,574.4		7,581.0
GROSS PROFIT:	465.6		435.1		1,351.4		1,293.0
GROSS PROFIT									512.0		465.6		1,287.2		1,351.4
Selling, general and administrative expenses	354.0		316.8		1,020.4		949.2		305.8		353.9		870.9		1,020.3
Depreciation and amortization expense	18.0		16.9		53.0		50.0		19.1		18.2		56.5		53.0
Asset impairments	10.3		23.2		10.8		27.4		0		10.3		23.8		10.8
INCOME (LOSS) FROM OPERATIONS	83.3		78.2		267.2		266.4		187.1		83.3		336.0		267.2
INTEREST EXPENSE:
Floorplan interest expense	15.4		14.7		47.0		43.3		8.1		15.3		31.1		47.0
Other interest expense, net	18.9		19.1		55.8		57.4		14.6		18.9		49.0		55.8
(Gain) loss on extinguishment of debt									3.3		0		13.7		0
INCOME (LOSS) BEFORE INCOME TAXES	49.0		44.4		164.4		165.7		161.0		49.0		242.2		164.4
(Benefit) provision for income taxes	11.0		9.6		38.5		38.6		34.6		10.9		55.8		38.5
NET INCOME (LOSS)	$	38.0	$	34.8	$	125.9	$	127.1	$	126.4	$	38.0	$	186.4	$	125.9
BASIC EARNINGS (LOSS) PER SHARE	$	2.04	$	1.74	$	6.78	$	6.18	$	6.86	$	2.04	$	10.11	$	6.78
Weighted average common shares outstanding	18.0		19.3		17.9		19.9		17.8		18.0		17.8		17.9
DILUTED EARNINGS (LOSS) PER SHARE	$	2.04	$	1.74	$	6.77	$	6.18	$	6.83	$	2.04	$	10.08	$	6.77
Weighted average dilutive common shares outstanding	18.0		19.3		17.9		19.9		17.8		18.0		17.8		17.9

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In millions)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
NET INCOME (LOSS)	$	38.0		$	34.8		$	125.9		$	127.1		$	126.4		$	38.0		$	186.4		$	125.9
Other comprehensive income (loss):
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment	(11.6		)	(5.9		)	(12.0		)	(22.2		)	6.0			(11.6		)	(24.4		)	(12.0		)
Net unrealized gain (loss) on interest rate risk management activities, net of tax:
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $1.7, ($0.8), $6.0 and ($4.4), respectively	(5.6		)	2.7			(19.2		)	14.0
Reclassification adjustment for realized (gain) loss on interest rate swap termination included in SG&A, net of tax benefit (provision) of $0.0, $-, $0.0 and ($0.2), respectively	0.1			—			0.1			(0.7		)
Reclassification adjustment for (gain) loss included in interest expense, net of tax benefit (provision) of $0.0, $0.3, ($0.2) and $1.1, respectively	0.1			0.8			(0.6		)	3.4
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $0.6, $1.7, $12.6 and $6.0, respectively													(1.8		)	(5.6		)	(40.4		)	(19.2		)
Reclassification adjustment for realized (gain) loss on interest rate swap termination included in SG&A, net of tax benefit (provision) of $— for all periods presented													0.1			0.1			0.1			0.1
Reclassification adjustment for (gain) loss included in interest expense, net of tax benefit (provision) of $0.8, $—, $1.7 and ($0.2), respectively													2.7			0.1			5.4			(0.6		)
Unrealized gain (loss) on interest rate risk management activities, net of tax	(5.4		)	3.5			(19.7		)	16.7			1.0			(5.4		)	(35.0		)	(19.7		)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	(17.0		)	(2.4		)	(31.7		)	(5.5		)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX													7.0			(17.0		)	(59.3		)	(31.7		)
COMPREHENSIVE INCOME (LOSS)	$	21.0		$	32.4		$	94.2		$	121.6		$	133.4		$	21.0		$	127.0		$	94.2

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except share data)

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, June 30, 2019 25,510,280
$ 0.3
$ 288.2
$ 1,467.0
$ (152.5 ) $ (438.8 ) $ 1,164.2
Net income (loss) —
—
—
38.0
—
—
38.0
Other comprehensive income (loss), net of taxes —
—
—
—
(17.0 ) —
(17.0 )
Net issuance of treasury shares to employee stock compensation plans (6,149 ) —
(0.7 ) —
—
2.6
1.9
Stock-based compensation —
—
4.4
—
—
—
4.4
Dividends paid, net of estimated forfeitures relative to participating securities ($0.28 per share) —
—
—
(5.2 ) —
—
(5.2 )
BALANCE, September 30, 2019 25,504,131
$ 0.3
$ 291.9
$ 1,499.8
$ (169.5 ) $ (436.2 ) $ 1,186.3



	Common Stock			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares	Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, JUNE 30, 2020	25,439,581	$	0.3	$	300.0		$	1,596.9	$	(213.3	)	$	(467.9	)	$	1,215.9
Net income (loss)	—	—		—			126.4		—			—			126.4
Other comprehensive income (loss), net of taxes	—	—		—			—		7.0			—			7.0
Net issuance of treasury shares to stock compensation plans	165	—		(1.4		)	—		—			3.6			2.2
Stock-based compensation	—	—		5.3			—		—			—			5.3
BALANCE, SEPTEMBER 30, 2020	25,439,746	$	0.3	$	304.0		$	1,723.3	$	(206.3	)	$	(464.3	)	$	1,356.9

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, December 31, 2018 25,494,328
$ 0.3
$ 292.8
$ 1,394.8
$ (137.8 ) $ (454.4 ) $ 1,095.7
Net income (loss) —
—
—
125.9
—
—
125.9
Other comprehensive income (loss), net of taxes —
—
—
—
(31.7 ) —
(31.7 )
Net issuance of treasury shares to employee stock compensation plans 9,803
—
(15.3 ) —
—
18.2
2.9
Stock-based compensation —
—
14.4
—
—
—
14.4
Dividends paid, net of estimated forfeitures relative to participating securities ($0.80 per share) —
—
—
(14.8 ) —
—
(14.8 )
ASC 842 cumulative adjustment —
—
—
(6.1 ) —
—
(6.1 )
BALANCE, September 30, 2019 25,504,131
$ 0.3
$ 291.9
$ 1,499.8
$ (169.5 ) $ (436.2 ) $ 1,186.3



	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, DECEMBER 31, 2019	25,486,711		$	0.3	$	295.3		$	1,542.4		$	(147.0	)	$	(435.3	)	$	1,255.7
Net income (loss)	—		—		—			186.4			—			—			186.4
Other comprehensive income (loss), net of taxes	—		—		—			—			(59.3		)	—			(59.3		)
Purchases of treasury stock	—		—		—			—			—			(48.9		)	(48.9		)
Net issuance of treasury shares to stock compensation plans	(46,964	)	—		(18.4		)	—			—			20.0			1.6
Stock-based compensation	—		—		27.0			—			—			—			27.0
Dividends declared ($0.30 per share)	—		—		—			(5.5		)	—			—			(5.5		)
BALANCE, SEPTEMBER 30, 2020	25,439,746		$	0.3	$	304.0		$	1,723.3		$	(206.3	)	$	(464.3	)	$	1,356.9

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except share data)



	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, JUNE 30, 2019	25,510,280		$	0.3	$	288.2		$	1,467.0		$	(152.5	)	$	(438.8	)	$	1,164.1
Net income (loss)	—		—		—			38.0			—			—			38.0
Other comprehensive income (loss), net of taxes	—		—		—			—			(17.0		)	—			(17.0		)
Net issuance of treasury shares to stock compensation plans	(6,149	)	—		(0.7		)	—			—			2.6			1.9
Stock-based compensation	—		—		4.5			—			—			—			4.5
Dividends declared ($0.28 per share)	—		—		—			(5.2		)	—			—			(5.2		)
BALANCE, SEPTEMBER 30, 2019	25,504,131		$	0.3	$	292.0		$	1,499.8		$	(169.5	)	$	(436.2	)	$	1,186.3

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, June 30, 2018 25,511,536
$ 0.3
$ 288.5
$ 1,339.2
$ (126.4 ) $ (328.9 ) $ 1,172.7
Net income (loss) —
—
—
34.8
—
—
34.8
Other comprehensive income (loss), net of taxes —
—
—
—
(2.3 ) —
(2.3 )
Tax effects reclassified from accumulated other comprehensive income (loss) —
—
—
0.1
(0.1 ) —
—
Purchases of treasury stock —
—
—
—
—
(57.3 ) (57.3 )
Net issuance of treasury shares to employee stock compensation plans (17,100 ) —
(2.2 ) —
—
3.6
1.4
Stock-based compensation —
—
4.3
—
—
—
4.3
Dividends paid, net of estimated forfeitures relative to participating securities ($0.26 per share) —
—
—
(5.2 ) —
—
(5.2 )
BALANCE, September 30, 2018 25,494,436
$ 0.3
$ 290.6
$ 1,368.9
$ (128.8 ) $ (382.6 ) $ 1,148.4

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, December 31, 2017 25,515,374
$ 0.3
$ 291.4
$ 1,246.3
$ (123.2 ) $ (290.5 ) $ 1,124.3
Net income (loss) —
—
—
127.1
—
—
127.1
Other comprehensive income (loss), net of taxes —
—
—
—
(5.5 ) —
(5.5 )
Tax effects reclassified from accumulated other comprehensive income (loss) —
—
—
0.1
(0.1 ) —
—
Purchases of treasury stock —
—
—
—
—
(108.6 ) (108.6 )
Net issuance of treasury shares to employee stock compensation plans (20,938 ) —
(15.0 ) —
—
16.5
1.5
Stock-based compensation —
—
14.2
—
—
—
14.2
Dividends paid, net of estimated forfeitures relative to participating securities ($0.78 per share) —
—
—
(16.0 ) —
—
(16.0 )
ASC 606 cumulative adjustment —
—
—
11.4
—
—
11.4
BALANCE, September 30, 2018 25,494,436
$ 0.3
$ 290.6
$ 1,368.9
$ (128.8 ) $ (382.6 ) $ 1,148.4



	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares	Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, DECEMBER 31, 2018	25,494,328	$	0.3	$	292.8		$	1,394.8		$	(137.8	)	$	(454.4	)	$	1,095.7
Net income (loss)	—	—		—			125.9			—			—			125.9
Other comprehensive income (loss), net of taxes	—	—		—			—			(31.7		)	—			(31.7		)
Net issuance of treasury shares to stock compensation plans	9,803	—		(15.3		)	—			—			18.1			2.9
Stock-based compensation	—	—		14.5			—			—			—			14.5
Dividends declared ($0.80 per share)	—	—		—			(14.8		)	—			—			(14.8		)
ASC 842 cumulative adjustment	—	—		—			(6.1		)	—			—			(6.1		)
BALANCE, SEPTEMBER 30, 2019	25,504,131	$	0.3	$	292.0		$	1,499.8		$	(169.5	)	$	(436.2	)	$	1,186.3

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	125.9		$	127.1		$	186.4		$	125.9
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	53.0			50.0			56.5			53.0
Change in operating lease assets	21.2			—			18.1			21.2
Deferred income taxes	3.6			4.1			(2.8		)	3.6
Asset impairments	10.8			27.4			23.8			10.8
Stock-based compensation	14.4			14.2			27.0			14.5
Amortization of debt discount and issue costs	3.1			2.5			2.6			3.1
(Gain) loss on disposition of assets	(5.9		)	(27.0		)	0			(5.9		)
(Gain) loss on extinguishment of debt							13.7			0
Other	0.7			0.6			1.9			0.7
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Changes in assets and liabilities, net of acquisitions and dispositions:
Accounts payable and accrued expenses	99.1			35.5			(58.8		)	99.0
Accounts and notes receivable	(31.6		)	28.4
Accounts and notes receivables							25.2			(31.7		)
Inventories	41.7			33.7			499.6			41.7
Contracts-in-transit and vehicle receivables	8.1			70.2			33.0			8.1
Prepaid expenses and other assets	(10.5		)	(22.4		)	41.1			(10.6		)
Floorplan notes payable - manufacturer affiliates	(1.1		)	13.9
Floorplan notes payable — manufacturer affiliates							(137.9		)	(1.1		)
Deferred revenues	(0.4		)	(0.8		)	(0.4		)	(0.4		)
Operating lease liabilities	(21.3		)	—			(16.3		)	(21.3		)
Net cash provided by (used in) operating activities	310.8			357.4			712.7			310.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash received	(97.0		)	(135.3		)	(1.3		)	(97.0		)
Proceeds from disposition of franchises, property and equipment	43.1			107.7			1.3			43.1
Purchases of property and equipment, including real estate	(139.5		)	(118.3		)
Purchases of property and equipment							(78.8		)	(139.6		)
Other	(0.1		)	0.4			0			(0.1		)
Net cash provided by (used in) investing activities	(193.5		)	(145.5		)	(78.8		)	(193.5		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	5,311.2			5,106.8
Repayments on credit facility - floorplan line and other	(5,364.3		)	(5,185.2		)
Borrowings on credit facility - acquisition line	230.5			98.6
Repayments on credit facility - acquisition line	(211.4		)	(91.4		)
Debt issue costs	(3.2		)	—
Borrowings on credit facility — floorplan line and other							7,590.5			5,311.2
Repayments on credit facility — floorplan line and other							(7,960.7		)	(5,364.3		)
Borrowings on credit facility — acquisition line							284.0			230.5
Repayments on credit facility — acquisition line							(296.5		)	(211.4		)
Debt issuance costs							(9.0		)	(3.2		)
Borrowings of senior notes							550.0			0
Repayments of senior notes							(857.9		)	0
Borrowings on other debt	130.8			123.3			252.9			205.6
Principal payments on other debt	(133.7		)	(105.6		)
Borrowings on debt related to real estate, net of debt issue costs	74.8			54.7
Principal payments on debt related to real estate	(112.8		)	(83.2		)
Employee stock purchase plan purchases, net of employee tax withholdings	2.8			1.5
Proceeds from termination of mortgage swap	—			0.9
Repayments on other debt							(90.8		)	(246.5		)
Proceeds from employee stock purchase plan							7.0			6.5
Payments of tax withholding for stock-based awards							(5.5		)	(3.6		)
Repurchases of common stock, amounts based on settlement date	—			(108.6		)	(48.9		)	0
Dividends paid	(14.8		)	(16.0		)	(5.5		)	(14.8		)
Net cash provided by (used in) financing activities	(90.1		)	(204.2		)	(590.4		)	(90.1		)
Effect of exchange rate changes on cash	(1.3		)	(2.9		)	(5.4		)	(1.3		)
Net increase (decrease) in cash, cash equivalents and restricted cash	25.9			4.8			38.1			25.9
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	18.7			29.6			28.1			18.7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	44.6		$	34.4		$	66.2		$	44.6

~~The~~See accompanying ~~notes are an integral part of these condensed consolidated financial statements.~~Notes to Condensed Consolidated Financial Statements (Unaudited)

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. INTERIM FINANCIAL INFORMATION

Business

Group 1 Automotive, Inc., a Delaware corporation, ~~(“Group 1” and together with its subsidiaries, the “Company”)~~ is a leading operator in the automotive retailing industry with business activities in 15 states in the ~~United States of America (“~~U.S.”), 33 towns in the ~~United Kingdom (“~~U.K.”) and 3 states in Brazil. Group 1 Automotive, Inc. and its subsidiaries are collectively referred to as the “Company” in these Notes to Condensed Consolidated Financial Statements. The Company, through its ~~three~~ regions, sells new and used ~~vehicles,~~cars and light trucks; arranges related vehicle ~~financing,~~financing; sells service and insurance ~~contracts,~~contracts; provides automotive maintenance and repair ~~services~~services; and sells vehicle parts.

As of September 30, ~~2019,~~2020, the Company’s ~~U.S.~~ retail network consisted of ~~117~~119 dealerships ~~within~~in the ~~following states: Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina~~U.S., 50 dealerships in the U.K. and ~~Texas.~~17 dealerships in Brazil. The U.S. and Brazil are led by the President, of U.S. and Brazilian Operations, ~~reports~~and the U.K. is led by an Operations Director, each reporting directly to the ~~Company’s~~Company's Chief Executive ~~Officer~~Officer. The President, U.S. and isBrazilian Operations, and the U.K. Operations Director are responsible for the overall performance of ~~the U.S. region,~~their respective regions, as well as for overseeing the market directors and dealership general managers. In addition, as of September 30, 2019, the Company had 2 international regions: (i) the U.K., which consisted of 49 dealerships and (ii) Brazil, which consisted of 17 dealerships. The operations of the Company’s international regions are structured similarly to the U.S. region.field level management.

The Company’s operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., wethe Company generally ~~experience~~experiences higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. ~~As a result, our U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters.~~ In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income. ~~Due~~

COVID-19 Pandemic

On March 11, 2020, the WHO declared COVID-19 a pandemic, and subsequently, various countries declared the COVID-19 pandemic a national emergency. The global spread of the COVID-19 pandemic continues to ~~seasonality~~adversely impact the Company’s markets in the U.S., U.K. and Brazil. Government mandated restrictions to contain and combat the virus, such as stay-at-home orders on individuals and operating restrictions on businesses, impacted the Company’s dealerships beginning in mid-March 2020. However, these measures began easing in the second quarter and most of the Company’s markets have since shown signs of recovery. Despite signs of market recovery, the potential impact from the COVID-19 pandemic is difficult to predict, especially as cases rise in certain markets and governments consider re-instituting lockdown measures and other ~~factors,~~restrictions. On October 31, 2020, the U.K. government announced a national lockdown of non-essential businesses, which includes the Company’s dealership vehicle showrooms, beginning November 5, 2020 through December 2, 2020, at which time the government will determine whether the lockdown restrictions are extended. The Company’s dealership service operations will remain open, however this mandate will adversely impact the Company’s U.K. vehicle sales in the fourth quarter. The extent to which the impact may negatively affect the Company’s business, financial condition and results of operations will depend on future developments and new information that may emerge regarding the severity and duration of the COVID-19 pandemic. If the U.K. lockdown is extended for a significant period of time, or if additional lockdowns, other travel and business restrictions or additional restrictions are imposed in the Company’s other markets, the adverse impact on the Company’s business, results of operations and cash flows could be material. The associated risks are further described in Part II, “Item 1A. Risk Factors” of this Form 10-Q and the potential impacts could also exacerbate the risks identified in the risk factors listed in Part I, “Item 1A. Risk Factors” from the Company’s annual report on Form 10-K for the ~~interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year.~~year ended December 31, 2019.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. ~~generally accepted accounting principles (“U.S. GAAP”)~~GAAP for interim financial information and in accordance with the rules and regulations of the ~~Securities and Exchange Commission (“SEC”).~~SEC. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Results for interim periods are not necessarily indicative of the results that can be expected for a full year and therefore should be read in conjunction with the Company’s audited Financial Statements and notes thereto included within the Company’s most recent Annual Report on Form 10-K. ~~Certain reclassifications~~

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc., and its subsidiaries, all of which are wholly owned. The results of operations of all business combinations completed during the period are included from the effective dates of the closings of the acquisitions. All intercompany balances and transactions have been ~~made~~eliminated in consolidation.

During the three months ended June 30, 2020, the Company recorded an out-of-period adjustment of $10.6 million resulting in an increase to Selling, general and administrative expenses and Additional paid-in capital to correct stock-based compensation for awards granted in prior ~~periods~~years to retirement eligible employees not recognized timely due to the incorrect treatment of a non-substantive service condition. The impact to the three months ended June 30, 2020 was a decrease to net income of $9.7 million resulting in a decrease to diluted earnings per common share of $0.53. The effect of this adjustment on any previously reported period was not material based on a quantitative and qualitative evaluation.

Certain prior-period amounts have been reclassified to conform to current-period presentation. Specifically, the long-term liabilities associated with ~~current period presentation with~~the Company’s interest rate swaps have been reclassified from the caption Other long-term liabilities to the caption Long-term interest rate swap liabilities in the Condensed Consolidated Balance Sheets. This reclassification had no effect on any subtotal in the Condensed Consolidated Balance Sheets. Additionally, repayments and borrowings on the Company’s ~~previously reported consolidated financial position, results~~real estate related and other debt have been combined within the captions Repayments on other debt and Borrowings on other debt, respectively, in the Condensed Consolidated Statements of ~~operations or cash flows.~~ Cash Flows. Finally, proceeds from purchases under the Company’s employee stock purchase plan and the tax withholdings related to stock-based awards have been separated within the captions Proceeds from employee stock purchase plan and Payments of tax withholding for stock-based awards, respectively, in the Condensed Consolidated Statements of Cash Flows. The aforementioned reclassifications within the Condensed Consolidated Statements of Cash Flows had no effect on any subtotal in the statements.

Certain ~~disclosures are reported as zero balances, or~~amounts in the Condensed Consolidated Financial Statements and the accompanying notes may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. These Condensed Consolidated Financial Statements reflect, in the opinion of management, all normal recurring adjustments necessary to fairly state, in all material respects, the Company’s financial position and results of operations for the periods presented.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions ~~that~~ affect the reported amounts of assets and liabilities, ~~and~~ the ~~disclosure~~disclosures of contingent assets and liabilities at the balance sheet date and the ~~reported~~ amounts of revenues and expenses recognized during the reporting period. ~~Actual~~Management analyzes the Company’s estimates based on historical experience and other assumptions that are believed to be reasonable under the circumstances, however actual results could differ materially from ~~these~~such estimates. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, inventory ~~market~~valuation adjustments, reserves for future chargebacks ~~against revenue recognized from~~on finance, insurance and vehicle service contract fees, self-insured property and casualty insurance exposure, the ~~sale~~fair value of ~~finance~~assets acquired and ~~insurance products, reserves for self-insurance programs, certain assumptions related to~~liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential ~~legal or similar proceedings related to~~litigation. Additionally, while the ~~Company’s business.~~

full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date.

Recent Accounting Pronouncements

~~Accounting for Leases~~Reference Rate Reform

In ~~February 2016,~~March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects ofReference Rate Reform on Financial ~~Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,~~ Reporting~~Leases (“Topic 842”),~~ . The ASU provides optional expedients and exceptions for companies that ~~amends~~have contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The optional expedients and exceptions apply during the transition period and are intended to ease the financial reporting burdens mainly related to contract modification accounting, ~~guidance on leases.~~hedge accounting and lease accounting. The ~~standard establishes a right-of-use (“ROU”) model that requires a lessee~~transition period is effective as of March 12, 2020 and will apply through December 31, 2022. LIBOR is used as an interest rate “benchmark” in the majority of the Company’s floorplan notes payable, as well as its mortgages, other debt and lease contracts. Additionally, the Company’s derivative instruments are benchmarked to ~~record a ROU asset~~LIBOR. The Company will apply the relief described as its arrangements are modified and ~~a lease liability~~does not expect the adoption will have an impact on the ~~balance sheet for all leases with terms longer than 12 months. The Company adopted this ASU and all subsequent amendments on January~~Company’s consolidated financial statements due to the relief provided.

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GROUP 1 2019, using the optional transition method applied to leases existing at January 1, 2019, with no restatement of comparative periods. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policies under Accounting Standards Codification (“ASC”) Topic 840, ~~Leases~~ ~~(“ASC 840”).~~AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Impairments

The Company ~~elected~~evaluates its intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill, for impairment annually, or more frequently if events or circumstances indicate possible impairment. During the ~~package of practical expedients available under the transition guidance within Topic 842, which among other things, permits~~three months ended June 30, 2020, the Company recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit and franchise rights impairment charges of $11.1 million within the U.K segment and $0.1 million within the Brazil segment. Refer to ~~carry forward its historical lease classification.~~ Note 8 “Intangibles” for additional discussion of the Company’s interim impairment assessment.

The Company also ~~elected other practical expedients under~~reviews long-lived assets that are held-for-use, including the transition guidance to (i) not record leases with an initial term of 12 months or less on the balance sheet for all asset classes; (ii) not apply hindsight when determining its lease terms or assessing impairment of itsCompany’s property and equipment and ROU assets, ~~during transition; and (iii) combine and account~~ for ~~both lease and non-lease components as a single component for all asset classes, except dealership operating assets. For our dealership operating leases,~~impairment at the ~~Company elected to separate lease and non-lease components and have allocated~~lowest level of identifiable cash flows whenever there are indicators that the ~~consideration between the lease and non-lease components based on the estimated fair~~carrying value of these assets may not be recoverable. During the ~~leased component.~~

~~Upon adoption of Topic 842,~~three months ended June 30, 2020, the Company recognized ROU ~~assets~~asset impairment charges of $1.7 million relating to 7 dealerships within the U.K. segment and ~~lease liabilities based on~~$0.2 million relating to 1 dealership within the present value of its remaining minimum rental payments for existing operating leases as of the adoption date, utilizing the Company’s applicable incremental borrowing rate also as of the adoption date. Brazil segment.

The ~~adoption of Topic 842 resulted~~impairment charges were recognized within Asset impairments in the Company recognizing $222.6 million of operating ROU assets and $236.7 million of operating lease liabilities as of January 1, 2019. The difference between ROU assets and lease liabilities is primarily the result of prepaid rent, favorable lease assets and net unfavorable lease liabilities. Additionally, the Company recognized a $6.1 million cumulative-effect adjustment, net of deferred tax impact, to retained earnings as of January 1, 2019 resulting from the impairment of certain operating ROU assets upon the adoption of Topic 842. The Company’s accounting for its finance leases, previously termed as capital leases under ASC 840, remained substantially unchanged. The adoption of Topic 842 had no material impact on the Company’s Condensed Consolidated Statements of ~~Operations or Condensed Consolidated Statements of Cash Flows. For further details, see Note 11, “Leases”~~.

~~Credit Losses~~

~~In June 2016,~~Operations. NaN impairment charges were recorded during the ~~FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. The amendment in this update replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. The standard will be effective for fiscal years beginning after December 15, 2019, with early adoption permitted for periods after December 15, 2018. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements, but does not expect the impact of the amendment of this ASU to be significant.three months ended September 30, 2020.

2. ~~REVENUE~~REVENUES

The following tables present the Company’s revenues disaggregated by revenue source and geographical segments (in millions):



	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total
REVENUES:
New vehicle retail sales	$	1,172.2	$	376.6	$	31.9	$	1,580.7	$	3,076.3	$	800.1	$	109.1	$	3,985.5
Used vehicle retail sales	608.2		248.1		10.9		867.2		1,719.4		529.7		38.3		2,287.4
Used vehicle wholesale sales	44.8		39.5		2.4		86.7		122.1		90.6		9.2		221.9
Total new and used vehicle sales	1,825.2		664.2		45.2		2,534.6		4,917.8		1,420.4		156.6		6,494.8
Parts and service sales ⁽¹⁾	306.4		61.3		8.0		375.6		865.2		139.5		23.4		1,028.2
Finance, insurance and other, net ⁽²⁾	113.0		15.4		1.1		129.5		300.2		35.1		3.4		338.7
Total revenues	$	2,244.6	$	740.8	$	54.3	$	3,039.6	$	6,083.3	$	1,595.0	$	183.4	$	7,861.7

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
REVENUES:
New vehicle retail sales $ 1,291.7
$ 290.7
$ 69.8
$ 1,652.2
$ 3,512.1
$ 911.6
$ 208.5
$ 4,632.2
Used vehicle retail sales 657.6
189.3
22.8
869.7
1,877.6
586.8
63.4
2,527.8
Used vehicle wholesale sales 45.9
35.0
4.4
85.3
133.0
127.1
13.3
273.4
Total new and used vehicle sales 1,995.2
515.0
97.0
2,607.2
5,522.7
1,625.5
285.2
7,433.4
Parts and service sales ⁽¹⁾
314.9
56.6
12.0
383.5
922.2
172.5
36.1
1,130.8
Finance, insurance and other, net ⁽²⁾
112.7
13.0
1.9
127.6
319.4
43.2
5.6
368.2
Total revenues $ 2,422.8
$ 584.6
$ 110.9
$ 3,118.3
$ 6,764.3
$ 1,841.2
$ 326.9
$ 8,932.4


	Three Months Ended September 30, 2018								Nine Months Ended September 30, 2018								Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total
REVENUES:
New vehicle retail sales	$	1,196.6	$	278.0	$	64.9	$	1,539.5	$	3,433.4	$	971.1	$	204.2	$	4,608.7	$	1,291.8	$	290.7	$	69.9	$	1,652.3	$	3,512.3	$	911.5	$	208.4	$	4,632.2
Used vehicle retail sales	572.0		200.1		20.3		792.4		1,727.8		600.7		66.3		2,394.8		657.7		189.3		22.8		869.7		1,877.5		586.8		63.4		2,527.8
Used vehicle wholesale sales	40.7		41.7		4.2		86.6		137.5		134.4		11.5		283.4		45.8		35.0		4.4		85.2		132.9		127.1		13.3		273.4
Total new and used vehicle sales	1,809.3		519.8		89.4		2,418.5		5,298.7		1,706.2		282.0		7,286.9		1,995.3		515.0		97.1		2,607.3		5,522.8		1,625.5		285.1		7,433.4
Parts and service sales ⁽¹⁾	289.3		53.8		11.4		354.5		862.6		165.0		34.5		1,062.1		314.9		56.6		12.0		383.5		922.1		172.5		36.1		1,130.8
Finance, insurance and other, net ⁽²⁾	101.6		12.3		2.2		116.1		295.2		42.3		6.0		343.5		112.7		13.0		1.9		127.5		319.4		43.2		5.6		368.2
Total revenues	$	2,200.2	$	585.9	$	103.0	$	2,889.1	$	6,456.5	$	1,913.5	$	322.5	$	8,692.5	$	2,422.8	$	584.6	$	110.9	$	3,118.3	$	6,764.3	$	1,841.2	$	326.9	$	8,932.4

⁽¹⁾The Company has applied the optional exemption not to disclose ~~revenue~~revenues related to remaining performance obligations on ~~our~~its maintenance and repair services as the duration of these contracts is less than one year. Revenues from these contracts are recognized upon completion of the services, which occurs over time.

⁽²⁾Includes variable consideration recognized of ~~$2.6~~$7.6 million and ~~$6.8~~$2.6 million during the three months ended September 30, 2020 and 2019, respectively, and ~~2018~~$16.9 million and $14.8 ~~million and $12.5~~ million during the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, relating to performance obligations satisfied in previous periods on ~~our~~the Company’s retrospective commission income contracts.

See Note 7 “Receivables and Contract Assets, Net” for additional information on the Company’s contract assets associated with ~~revenue~~revenues from the arrangement of financing and sale of service and insurance ~~contracts totaled $19.9 million and $14.6 million as of September 30, 2019 and December 31, 2018, respectively, reflected in~~ ~~Prepaid expenses and other current assets~~ ~~and~~ ~~Other assets~~ ~~within the Condensed Consolidated Balance Sheets.~~contracts.

3. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets and liabilities assumed based on an estimate of fair value.

During the nine months ended September 30, 2020, the Company acquired a collision center in the U.S., which was integrated into an existing dealership.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

During the nine months ended September 30, 2019, the Company acquired 2 dealerships representing 4 franchises in the U.S. and 4 dealerships representing 5 franchises in the U.K. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $97.0 million, including the associated real estate and goodwill. The purchase prices were allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates.million. The Company also opened 1 dealership representing 1 ~~awarded~~ franchise in the U.S. and 1 dealership representing 1 ~~awarded~~ franchise in the U.K.

Dispositions

During the nine months ended September 30, ~~2018,~~2020, the Company ~~acquired 5 dealerships representing 8 franchises and added 1 franchise in the U.K., acquired 1 dealership representing 1 franchise in Brazil, and acquired 4 dealerships inclusive~~did not dispose of 4 franchises in the U.S. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $140.4 million, including the associated real estate and goodwill. Also included in the consideration paid was $5.1 million of cash received in the acquisition of the dealerships. The purchase prices were allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates.

~~Dispositions~~any businesses.

During the nine months ended September 30, 2019, the Company disposed of 4 dealerships representing 7 franchises and terminated 2 franchises in the U.S., disposed of 3 dealerships representing 4 franchises in the ~~U.K.~~U.K and disposed of 1 dealership representing 1 franchise in Brazil. The Company recorded a net pre-tax gain totaling $5.0 million related to ~~the~~ these dispositions.

The Company’s dispositions ~~which consisted~~generally consist of dealership assets and related real estate. ~~During~~Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

4. SEGMENT INFORMATION

As of September 30, 2020, the Company had 3 reportable segments: the U.S., the U.K. and Brazil. The U.S. and Brazil segments are led by the President, U.S. and Brazilian Operations, and the U.K. segment is led by an Operations Director, each reporting directly to the Company's Chief Executive Officer, who is the Chief Operating Decision Maker. The President, U.S. and Brazilian Operations, and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management. Each segment is comprised of retail automotive franchises that sell new and used cars and light trucks; arrange related vehicle financing; sell service insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. The vast majority of the Company’s corporate activities are associated with the operations of the U.S. segment and therefore the corporate financial results are included within the U.S. segment.

Reportable segment revenues and income (loss) before income taxes were as follows for the three and nine months ended September 30, 2020 and 2019 (in millions):



	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil			Total
Total revenues	$	2,244.6	$	740.8	$	54.3	$	3,039.6	$	6,083.3	$	1,595.0	$	183.4		$	7,861.7
Income (loss) before income taxes ⁽¹⁾	$	132.9	$	27.1	$	1.0	$	161.0	$	249.8	$	4.7	$	(12.4	)	$	242.2



	Three Months Ended September 30, 2019									Nine Months Ended September 30, 2019
	U.S.		U.K.			Brazil		Total		U.S.		U.K.			Brazil		Total
Total revenues	$	2,422.8	$	584.6		$	110.9	$	3,118.3	$	6,764.3	$	1,841.2		$	326.9	$	8,932.4
Income (loss) before income taxes ⁽²⁾	$	54.6	$	(7.4	)	$	1.8	$	49.0	$	164.8	$	(2.7	)	$	2.3	$	164.4

⁽¹⁾ For the three months ended September 30, 2020, income (loss) before income taxes includes a $3.3 million loss on debt extinguishment in the U.S. segment. For the nine months ended September 30, ~~2018,~~2020, income (loss) before income taxes includes the ~~Company disposed of 2 dealerships representing 3 franchises and terminated 1 franchise~~following: in the U.S. segment, $13.7 million loss on debt extinguishment and ~~disposed of 1 franchise~~$10.6 million in stock-based compensation expense related to an out-of-period adjustment; in the U.K. ~~The Company recorded a net pre-tax gain totaling $24.4~~segment, $12.8 million in asset impairments and $1.2 million in severance expense; and in the Brazil segment, $11.1 million in asset impairments and $0.9 million in severance expense.

⁽²⁾ For the three months ended September 30, 2019, income (loss) before income taxes includes the following: in the U.S. segment, $11.9 million in expenses related to ~~these dispositions, which consisted~~flood damage from Tropical Storm Imelda in Texas, $3.2 million in asset impairments and $0.8 million net loss on disposition of real estate and dealership ~~assets~~transactions; and ~~related~~in the U.K. segment, $7.0 million in asset impairment charges and $0.5 million net loss on disposition of real ~~estate.~~

~~4. EQUITY~~

~~Performance Awards~~

~~During~~estate and dealership transactions. For the nine months ended September 30, 2019, ~~under~~income (loss) before income taxes includes the ~~2014 Long-Term Incentive Plan,~~following: in the ~~Company granted 30,555 performance awards~~U.S. segment, $17.8 million in expenses related to ~~certain employees at no cost to~~flood damage from Tropical Storm Imelda and hail storm damages primarily in Texas, $4.4 million net gain on disposition of real estate and dealership transactions, $3.2 million in asset impairments and $1.8 million net loss on legal matters; in the ~~recipient. The weighted average grant date fair value~~U.K. segment, $7.0 million in asset impairments and $0.5 million net loss on disposition of ~~these awards was $67.17 per share. The performance awards do not qualify as participating securities. The performance awards contain both performance~~real estate and ~~market conditions to be evaluated over a two-year performance period~~dealership transactions; and ~~are subject to vesting over a three-year service period. Based~~in the Brazil segment, $0.5 million in asset impairments, $0.2 million net gain on ~~the performance criteria, up to 200%~~disposition of ~~the granted shares may be earned. Compensation expense for the awards with performance conditions is calculated based~~real estate and dealership transactions and $0.2 million net loss on ~~the market price~~legal matters.

Table of the Company’s common stock at the date of grant and the forecasted achievement of such performance conditions and is recognized over the requisite service period. Compensation expense for the awards with market conditions is calculated based upon the fair value of the award on the date of grant and is recognized over the requisite service period. All performance awards remained unvested as of September 30, 2019.Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

5. EARNINGS PER SHARE

The two-class method is utilized for the computation of the Company’s ~~earnings per share (“EPS”).~~EPS. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends. The Company’s ~~restricted stock awards~~RSAs are participating securities. Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below. Basic EPS is computed by dividing net income available to basic common shares by the weighted average number of basic common shares outstanding during the period. Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.

The following table sets forth the calculation of EPS for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in millions, except share and per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Weighted average basic common shares outstanding	17,961,555		19,252,948		17,889,572		19,858,643		17,776,888		17,961,555		17,770,619		17,889,572
Dilutive effect of stock awards and employee stock purchases, net of assumed repurchase of treasury stock	17,145		8,122		17,978		8,876
Dilutive effect of stock-based awards and employee stock purchases									58,661		17,145		47,919		17,978
Weighted average dilutive common shares	17,978,700		19,261,070		17,907,550		19,867,519		17,835,549		17,978,700		17,818,538		17,907,550
Basic:
Net income (loss)	$	38.0	$	34.8	$	125.9	$	127.1	$	126.4	$	38.0	$	186.4	$	125.9
Less: Earnings (loss) allocated to participating securities	1.4		1.2		4.7		4.3		4.6		1.4		6.7		4.7
Net income (loss) available to basic common shares	$	36.6	$	33.6	$	121.2	$	122.8	$	121.9	$	36.7	$	179.7	$	121.2
Basic earnings (loss) per common share	$	2.04	$	1.74	$	6.78	$	6.18	$	6.86	$	2.04	$	10.11	$	6.78
Diluted:
Net income (loss)	$	38.0	$	34.8	$	125.9	$	127.1	$	126.4	$	38.0	$	186.4	$	125.9
Less: Earnings (loss) allocated to participating securities	1.4		1.2		4.7		4.3		4.5		1.4		6.7		4.7
Net income (loss) available to diluted common shares	$	36.6	$	33.6	$	121.2	$	122.8	$	121.9	$	36.7	$	179.7	$	121.2
Diluted earnings (loss) per common share	$	2.04	$	1.74	$	6.77	$	6.18	$	6.83	$	2.04	$	10.08	$	6.77

6. ~~CASH FLOW INFORMATION~~

The Company utilizes various credit facilities to finance the purchase of its new and used vehicle inventory. With respect to all new vehicle floorplan borrowings, the manufacturers of the vehicles draft the Company’s credit facilities directly with no cash flow to or from the Company. With respect to borrowings for used vehicle financing in the U.S., the Company finances up to 85% of the value of the used vehicle inventory and the funds flow directly between the Company and the lender. In the U.K. and Brazil, the Company chooses which used vehicles to finance and the borrowings flow directly to the Company from the lender.

The Company categorizes the cash flows associated with borrowings and repayments on these various credit facilities as Operating or Financing Activities in its Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, lenders affiliated with the vehicle manufacturers (excluding the cash flows from or to manufacturer affiliated lenders participating in the Company’s syndicated lending group under the Revolving Credit Facility, as defined in Note 7, “Floorplan Notes Payable”) are presented within Cash Flows from Operating Activities in the Company’s Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, the syndicated lending group under the Revolving Credit Facility (including the cash flows from or to manufacturer affiliated lenders participating in the facility), as well as borrowings from, and repayments to, the Company’s other credit facilities, are presented within Cash Flows from Financing Activities.

~~Cash, Cash Equivalents and Restricted Cash~~

The total amounts presented on the Company’s Condensed Consolidated Statements of Cash Flows include cash, cash equivalents and restricted cash. Restricted cash includes certain unsecured investment obligations with manufacturer-affiliated finance companies, which bear interest at a variable rate and are redeemable on demand by the Company. The following table reconciles cash and cash equivalents reported in the Company’s Condensed Consolidated Balances Sheets to the total amounts reported in the Company’s Condensed Consolidated Statements of Cash Flows (in millions):

September 30, 2019 December 31, 2018
Cash and cash equivalents $ 41.0
$ 15.9
Restricted cash, included in Other assets
3.6
2.8
Total cash, cash equivalents and restricted cash $ 44.6
$ 18.7

~~Non-cash Investing and Financing Activities~~

The Company accrued for purchases of property and equipment, including real estate of $5.6 million and $6.1 million at September 30, 2019 and 2018, respectively. Additionally, the Company obtained ROU in exchange for lease obligations during the nine months ended September 30, 2019. See Note 11, “Leases”, for supplemental information on lease liabilities.

~~Interest and Income Taxes Paid~~

Cash paid for interest, including the monthly settlement of the Company’s interest rate derivatives, was $83.1 million and $84.4 million for the nine months ended September 30, 2019 and 2018, respectively. Cash paid for taxes, net of refunds, was $34.8 million and $31.0 million for the nine months ended September 30, 2019 and 2018, respectively.

~~7. FLOORPLAN NOTES PAYABLE~~

~~The Company’s floorplan notes payable consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
Revolving credit facility - floorplan notes payable $ 1,189.8
$ 1,251.4
Revolving credit facility - floorplan notes payable offset account (25.0 ) (33.6 )
Revolving credit facility - floorplan notes payable, net 1,164.8
1,217.8
Other non-manufacturer facilities 35.0
41.1
Floorplan notes payable - credit facility and other, net $ 1,199.8
$ 1,258.9

FMCC facility $ 166.9
$ 160.8
FMCC facility offset account (0.2 ) (0.1 )
FMCC facility, net 166.7
160.7
Other manufacturer affiliate facilities 243.8
257.1
Floorplan notes payable - manufacturer affiliates, net $ 410.5
$ 417.8

~~Floorplan Notes Payable - Credit Facility~~

~~Revolving Credit Facility~~

In the U.S., the Company has a $1.8 billion revolving syndicated credit arrangement that matures on June 27, 2024 (“Revolving Credit Facility”). The Revolving Credit Facility consists of two tranches: (i) a $1.75 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“Floorplan Line”), which had a net outstanding balance of $1.2 billion as of September 30, 2019 reported in ~~Floorplan notes payable - credit facility and other, net~~;~~and (ii) a~~$360.0 million maximum capacity and $50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified as long-term debt in ~~Long-termdebt, net of current maturities -~~ see Note 8, “Debt”, for additional discussion. The capacity under these two tranches can be re-designated within the overall $1.8 billion commitment, subject to the aforementioned limits. The weighted average interest rate on the Floorplan Line was 3.1% as of September 30, 2019, excluding the impact of the Company’s interest rate derivative instruments.

On June 27, 2019, the Company amended the Revolving Credit Facility to extend the maturity date to June 27, 2024 and reduce the number of participating financial institutions to 23. Additionally, following the amendment, the Floorplan Line bears interest at rates equal to the London Interbank Offered Rate (“LIBOR”) plus 110 basis points for new vehicle inventory and the LIBOR plus 140 basis points for used vehicle inventory. The Acquisition Line bears interest at LIBOR or a LIBOR equivalent plus 100 to 200 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in U.S. dollars, Euros or British pound sterling. The Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.

~~In conjunction with the Revolving Credit Facility, the Company has $4.9 million of related unamortized debt issuance costs as of September 30, 2019, which are included in~~ ~~Prepaid expenses and other current assets~~ ~~and~~ ~~Other assets~~ ~~in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.~~

~~Floorplan Notes Payable - Manufacturer Affiliates~~

~~Ford Motor Credit Company Facility~~

The Company has a $300.0 million floorplan arrangement with Ford Motor Credit Company for financing of new Ford vehicles in the U.S. (“FMCC Facility”). This facility bears interest at a rate of Prime plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 6.5% before considering the applicable incentives as of September 30, 2019.

~~Other Manufacturer Facilities~~

The Company has other credit facilities in the U.S., U.K. and Brazil with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of September 30, 2019, borrowings outstanding under these facilities totaled $243.8 million, comprised of $112.6 million in the U.S. with annual interest rates ranging from 3.8% to 6.5%, $116.8 million in the U.K. with annual interest rates ranging from 1.3% to 4.3%, and $14.4 million in Brazil with annual interest rates ranging from 11.1% to 14.7%.

~~8. DEBT~~

~~Long-term debt consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
5.00% Senior Notes due June 1, 2022 (aggregate principal of $550.0) ⁽¹⁾
$ 546.1
$ 545.0
5.25% Senior Notes due December 15, 2023 (aggregate principal of $300.0) ⁽¹⁾
297.9
297.5
Acquisition Line 49.2
31.8
Real estate related 382.9
420.8
Finance leases ⁽²⁾
66.1
48.6
Other 34.2
33.6
Total debt 1,376.4
1,377.3
Less: unamortized debt issuance costs (2.4 ) (2.9 )
Less: current maturities of long-term debt and short-term financing (66.0 ) (93.0 )
Long-term debt, net of current maturities $ 1,308.0
$ 1,281.4

⁽¹⁾~~See Note 9, “Financial Instruments and Fair Value Measurements”, for further discussion of the fair value.~~

⁽²⁾ Balances as of December 31, 2018 were unchanged under the optional transition method applied as part of the implementation of Topic 842. See Note 1, “Interim Financial Information” and Note 11, “Leases” for further information.

~~Acquisition Line~~

~~The proceeds of the Acquisition Line are used for working capital, general corporate and acquisition purposes.~~As of September 30, 2019, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as described in Note 7, “Floorplan Notes Payable”), totaled $49.2 million. The interest rate on this facility was 1.95% as of September 30, 2019, representing the applicable rate for borrowings in British pound sterling.

~~Real Estate Related~~

The Company has mortgage loans in the U.S., U.K. and Brazil that are paid in monthly installments. As of September 30, 2019, borrowings outstanding under these facilities totaled $382.9 million, net of debt issuance costs, comprised of $315.1 million in the U.S. maturing between October 2019 and November 2032, $65.8 million in the U.K. maturing between August 2023 and September 2034 and $2.0 million in Brazil maturing in April 2025. The U.S. loans bear interest at fixed rates between 3.25% and 4.69% and at variable indexed rates plus a spread between 1.45% and 2.10% per annum. The U.K. and Brazil loans bear interest at variable indexed rates.

9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the most advantageous market in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:


•	Level 1 — Quoted prices for identical assets or liabilities in active markets.


•	Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or ~~liabilities~~liabilities.

The Company’s financial instruments consist of cash and cash equivalents, contracts-in-transit and vehicle receivables, accounts and notes receivable, investments in debt and equity securities, accounts payable, credit facilities, long-term debt and interest rate derivative instruments. Other than the Company’s fixed rate long-term debt, the carrying amount of all significant financial instruments approximates fair value due to either the length of maturity, the existence of variable interest rates that approximate prevailing market rates or as a result of mark to market accounting.

Cash and Cash Equivalents, Contracts-In-Transit and Vehicle Receivables, Accounts and Notes ~~Receivable,~~Receivables, Accounts Payable, Variable Rate Long-Term Debt and ~~Credit Facilities~~Floorplan Notes Payable

The fair values of these financial instruments approximate their carrying values due to the short-term nature of ~~these~~the instruments and/or the existence of variable interest rates.

~~Fixed Rate Long-Term Debt~~

The Company’s fixed rate long-term debt primarily consists of amounts outstanding under its senior unsecured notes and mortgage facilities. The Company estimates the fair value of its senior unsecured notes using quoted prices for the identical liability (Level 1) and estimates the fair value of its mortgage facilities using a present value technique based on current market interest rates for similar type of financial instruments (Level 2).

~~The carrying value and fair value of the Company’s fixed rate long-term debt were as follows at the dates indicated (in millions):~~

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

September 30, 2019 December 31, 2018

Carrying Value⁽¹⁾
Fair Value
Carrying Value⁽¹⁾
Fair Value
5.00% Senior Notes $ 546.1
$ 558.6
$ 545.0
$ 521.6
5.25% Senior Notes 297.9
309.1
297.5
286.5
Real estate related 44.8
45.2
79.7
76.2
Total $ 888.8
$ 912.9
$ 922.2
$ 884.3

~~(1)Carrying value excludes unamortized debt issuance costs~~

~~Investments~~Demand Notes

The Company ~~maintains investment balances~~periodically invests in demand notes with ~~certain financial institutions in Brazil~~a manufacturer-affiliated finance company that ~~provide credit facilities for the financing of new, used and rental vehicle inventories. The investment balances~~ bear interest at a variable rate determined by the manufacturer and represent unsecured, unsubordinated and unguaranteed debt obligations of the manufacturer. The instruments are redeemable on demand by the Company ~~in the future under certain conditions. The investment balances totaled $3.6 million~~ and ~~$2.8 million as of September 30, 2019 and December 31, 2018, respectively, which~~therefore the Company has classified these instruments as ~~restricted~~ Cash and cash ~~within~~ ~~Other assets~~equivalents in ~~its~~the accompanying Condensed Consolidated Balance Sheets. As of September 30, 2020, the carrying value of these instruments was $30.2 million. The Company determined that the valuation measurement inputs of these instruments include inputs other than quoted market prices, that are observable or that can be corroborated by observable data by ~~correlation~~correlation. Accordingly, the Company has classified these instruments within Level 2 of the hierarchy framework.

Fixed Rate Long-Term Debt

The Company’s fixed rate long-term debt primarily consists of amounts outstanding under its senior unsecured notes and certain mortgage facilities. See Note 9 “Debt” for further discussion of the Company’s long-term debt arrangements. On August 17, 2020, the Company issued $550.0 million in aggregate principal of 4.00% Senior Notes due August 2028 (“4.00% Senior Notes”). Refer to Note 9 “Debt” for further discussion of the issuance. The Company estimates the fair value of its 4.00% Senior Notes using quoted prices for the identical liability (Level 1) and estimates the fair value of its fixed-rate mortgage facilities using a present value technique based on current market interest rates for similar types of financial instruments (Level 2). ~~See~~

The carrying value and fair value of the Company’s 4.00% Senior Notes and fixed rate mortgages were as follows (in millions):



	September 30, 2020				December 31, 2019
	Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value
4.00% Senior Notes	$	550.0	$	539.6	$	0	$	0
Real estate related	88.1		80.4		40.7		41.1
Total	$	638.1	$	620.0	$	40.7	$	41.1

⁽¹⁾Carrying value excludes unamortized debt issuance costs.

On April 2, 2020, the Company fully redeemed $300.0 million in aggregate principal amount of its outstanding 5.25% Senior Notes due June 2023. Refer to Note ~~6, “Cash Flow Information”~~9 “Debt” for further ~~details regarding~~discussion of the ~~Company’s investment balances.~~redemption.

On September 2, 2020, the Company fully redeemed $550.0 million in aggregate principal amount of its outstanding 5.00% Senior Notes due June 2022. Refer to Note 9 “Debt” for further discussion of the redemption.

Derivative ~~financial instruments~~Financial Instruments

The Company holds ~~derivative financial instruments consisting of~~ interest rate swaps ~~which~~to hedge against variability of interest payments indexed to LIBOR. The interest rate swaps are designated as cash flow ~~hedges. The~~hedges and the related gains or losses ~~on these interest rate swaps~~ are deferred in stockholders’ equity as a component of ~~accumulated~~Accumulated other comprehensive income (loss). The deferred gains or losses are recognized in income in the period in which the related items being hedged are recognized in expense. Monthly contractual settlements of the positions are recognized as Floorplan interest expense or Other interest expense, net, in the Company’s Condensed Consolidated Statements of Operations. The Company had 0 gains or losses related to ineffectiveness recognized in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2019 or 2018.~~2020 and 2019.

As of September 30, ~~2019,~~2020, the Company held 2539 interest rate swaps in effect with a total notional value of ~~$896.9~~$929.4 million that fixed its underlying one-month LIBOR at a weighted average rate of ~~2.3%~~1.69%. For the three months ended September 30, 2019 and 2018, the Company’s interest rate swaps in effect increased interest expense by $0.1 million and by $1.1 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company’s interest rate swaps in effect decreased interest expense by $0.7 million and increased interest expense by $4.5 million, respectively.

The Company also held 812 additional interest rate swaps with forward start dates beginning December 2020 that had an aggregate notional value of $700.0 million and a weighted average interest rate of 1.47% as of September 30, 2020. The maturity dates of the Company’s interest rate swaps range between December 2020 and ~~January 2022 and expiration dates between January 2024 and~~ December ~~2030.~~ 2031.

The ~~aggregate notional value of these 8 forward-starting~~Company’s interest rate swaps ~~was $450.0 million~~are measured at fair value utilizing the option-pricing Black-Scholes present value technique. This technique utilizes a one-month LIBOR forward yield curve matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and ~~the weighted average interest rate was 1.7%.~~contract maturity. The ~~combination~~fair value of the interest rate swaps ~~currently~~also considers the credit risk of the Company for instruments in ~~effect~~a liability position or the counterparty for instruments in an asset position. The credit risk is calculated using the spread between the one-month LIBOR yield curve and the ~~forward-starting~~relevant interest rate ~~swaps is structured such that~~according to rating agencies. The inputs to the ~~notional~~fair value ~~in effect at any given time through December 2030 does not exceed $896.9 million, which is less than the Company’s expectation for variable-rate debt outstanding during such period.~~measurements reflect Level 2 inputs.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Assets and liabilities associated with the Company’s interest rate swaps ~~within Level 2 of the hierarchy framework,~~ as reflected in the ~~accompanying balance sheets~~Condensed Consolidated Balance Sheets were as follows (in millions):

September 30, 2019 December 31, 2018
Assets from interest rate risk management activities:
Prepaid expenses and other current assets $ —
$ 0.4
Other assets 0.3
13.1
Total $ 0.3
$ 13.5
Liabilities from interest rate risk management activities:
Accrued expenses and other current liabilities $ 0.5
$ 0.1
Other liabilities 13.9
1.7
Total $ 14.4
$ 1.8



	September 30, 2020		December 31, 2019
Assets:
Other long-term assets	$	0	$	1.9
Total assets	$	0	$	1.9
Liabilities:
Accrued expenses and other current liabilities	$	1.8	$	2.8
Long-term interest rate swap liabilities	49.4		4.4
Total liabilities	$	51.2	$	7.2

Included in Accumulated other comprehensive income (loss) as of September 30, 2019 and 2018, were unrealized gains, net of income taxes, totaling $10.8 million and $15.9 million, respectively, related to the Company’s interest rate swaps.

The following tables present the impact of the Company’s interest rate swaps (in millions):


	Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)						Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)
	Nine Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	2019			2018			2020			2019
Interest rate swaps	$	(19.2	)	$	14.0		$	(40.4	)	$	(19.2	)

	Amount of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations						Amount of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations
Location of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Floorplan interest expense, net	$	0.4		$	(4.0	)
Floorplan interest expense							$	(5.3	)	$	0.4
Other interest expense, net	$	0.3		$	(0.5	)	$	(1.8	)	$	0.3

The net amount of loss expected to be reclassified out of Accumulated other comprehensive income (loss) into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is ~~$0.5~~$1.8 million.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

7. RECEIVABLES AND CONTRACT ASSETS, NET

The Company’s financial assets measured at amortized cost and the associated allowance for doubtful accounts consisted of the following (in millions):



	September 30, 2020		December 31, 2019
Contracts-in-transit and vehicle receivables, net:
Contracts-in-transit	$	142.5	$	169.9
Vehicle receivables	76.7		84.3
Total contracts-in-transit and vehicle receivables	219.2		254.1
Less: allowance for doubtful accounts ⁽¹⁾	0.3		0.3
Total contracts-in-transit and vehicle receivables, net	$	218.9	$	253.8

Accounts and notes receivables, net:
Manufacturer receivables	$	108.5	$	123.9
Parts and service receivables	51.9		57.0
F&I receivables	24.9		28.3
Other	11.8		18.7
Total accounts and notes receivables	197.1		227.9
Less: allowance for doubtful accounts ⁽¹⁾	3.6		2.8
Total accounts and notes receivables, net	$	193.5	$	225.1

Within Other current assets and Other long-term assets:
Total contract assets, net ^{(1), (2)}	$	29.7	$	21.6

⁽¹⁾ The allowance for doubtful accounts as of September 30, 2020 is calculated under the current expected credit loss (“CECL”) model described below, which was introduced under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), that became effective for the Company on January 1, 2020. The adoption of ASC 326 did not materially change the calculation of the allowance for doubtful accounts.

⁽²⁾ No allowance for doubtful accounts was recorded for Contract assets, net as of September 30, 2020 or December 31, 2019. No past due balances existed as of either date, and there were no expected credit losses as of September 30, 2020.

The CECL model applies to financial assets measured at amortized cost, as shown in the table above, and requires the Company to reflect expected credit losses over the remaining contractual term of the asset. As the large majority of the Company’s receivables settle within 30 days, the forecast period under the CECL model is a relatively short horizon. The Company uses an aging method to estimate allowances for doubtful accounts under the CECL model as the Company has determined that the aging method adequately reflects expected credit losses, as corroborated by historical loss-rates. However, the Company will apply adjustments for asset-specific factors and current economic conditions as needed at each reporting date.

The Company recorded an adjustment of approximately $0.4 million for expected credit losses as of September 30, 2020 as a result of adverse economic conditions arising from the COVID-19 pandemic impacting certain customers in the U.S. and U.K. The adjustment primarily impacted receivables that were not past due and thus were not subject to estimated credit losses under the aging method.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

8. INTANGIBLES

The Company evaluates its intangible assets, consisting entirely of goodwill and indefinite-lived franchise rights, for impairment annually, or more frequently if events or circumstances indicate possible impairment.

As described in Note 1 “Interim Financial Information,” since emerging in December 2019, the COVID-19 pandemic has spread globally, including to all of the Company’s markets in the U.S., U.K. and Brazil. While the U.S. and U.K. began to show signs of recovery in the second quarter of 2020, the Company’s showrooms in Brazil did not fully reopen until May 2020 and then operated at reduced hours. Despite operations resuming in Brazil, the impact of the virus continued to worsen in the second quarter and had not yet reached its peak in some of the Company’s Brazilian markets in the second quarter. The slower than expected recovery from the COVID-19 pandemic in Brazil during the second quarter of 2020 constituted a triggering event indicating that goodwill may be impaired. Therefore the Company performed a quantitative goodwill impairment test for the Brazil reporting unit as of June 30, 2020 and as a result, the Company recorded a goodwill impairment charge of $10.7 million within the Brazil reporting unit. NaN impairment charges were recorded to goodwill during the three months ended September 30, 2020.

The following is a roll-forward of the Company’s goodwill accounts by reporting unit (in millions):



	Goodwill
	U.S.		U.K.			Brazil			Total
Balance, December 31, 2019 ⁽¹⁾	$	902.3	$	92.1		$	13.9		$	1,008.3
Additions and adjustments	1.3		0			0			1.3
Disposals	0		0			0			0
Impairments	0		0			(10.7		)	(10.7		)
Currency translation	0		(2.2		)	(3.1		)	(5.3		)
Balance, September 30, 2020	$	903.6	$	89.9		$	0		$	993.5

⁽¹⁾Net of accumulated impairments of $97.8 million, comprised of $40.6 million in the U.S. reporting unit and $57.2 million in the Brazil reporting unit.

The impact of the COVID-19 pandemic on the economy and unemployment during the second quarter of 2020 adversely impacted the Company’s operating results in the U.S., U.K. and Brazil, as well as the Company’s long-term outlook projections compared to the projections in first quarter of 2020. As a result, it was concluded that it was more-likely-than-not that the intangible franchise rights of some dealerships were impaired, requiring a quantitative test as of June 30, 2020. As a result of the quantitative impairment test, the Company determined that the fair value of the franchise rights on 6 U.K. dealerships and 1 Brazil dealership were below their respective carrying values. This resulted in franchise rights impairment charges of $11.1 million in the U.K. segment and $0.1 million in the Brazil segment. There was 0 remaining intangible franchise rights balance in the Brazil segment following the impairment charges recorded in the second quarter of 2020. NaN impairment charges were recorded to intangible franchise rights during the three months ended September 30, 2020, reflecting the improving business results in the U.S. and U.K. regions.

In estimating the fair value required for the goodwill and intangible franchise rights impairment tests, the Company used a discounted cash flow model, or income approach, specifically the excess earnings method. Significant inputs to the model included changes in revenue growth rates, future gross margins, future SG&A expenses, terminal growth rates and the WACC, which were unobservable inputs, or Level 3 in the fair value hierarchy. The impairment charges were recognized within Asset impairments in the Company's Condensed Consolidated Statements of Operations.

Despite the Company’s improved results in the third quarter of 2020, COVID-19 cases in certain markets in the U.S., and more pervasively throughout the U.K., have continued to rise in the fourth quarter of 2020. On October 31, 2020, the U.K. government announced a national lockdown of non-essential businesses, which includes the Company’s dealership vehicle showrooms, beginning November 5, 2020 through December 2, 2020, at which time the government will determine whether the lockdown restrictions are extended. The Company’s dealership service operations will remain open, however this mandate will adversely impact the Company’s U.K. vehicle sales in the fourth quarter. Due to the temporary nature of the U.K. lockdown in the fourth quarter, no impairment indicators of goodwill or intangible franchise rights were identified subsequent to September 30, 2020 through the date of issuance of this Form 10-Q. However if the COVID-19 pandemic and any lockdowns or other restrictions to contain the pandemic continue long-term, the Company may be required to record additional impairment charges in the future.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

9. DEBT

Long-term debt consisted of the following (in millions):



	September 30, 2020			December 31, 2019
4.00% Senior Notes due August 15, 2028	$	550.0		$	0
5.00% Senior Notes redeemed September 2, 2020	0			550.0
5.25% Senior Notes redeemed April 2, 2020	0			300.0
Acquisition Line	57.9			72.5
Other Debt:
Real estate related	628.1			453.3
Finance leases	123.1			83.0
Other	25.7			42.8
Total other debt	776.9			579.1
Total debt	1,384.9			1,501.7
Less: unamortized discount	0			(5.6		)
Less: unamortized debt issuance costs	(11.2		)	(4.8		)
Less: current maturities	(65.8		)	(59.1		)
Total long-term debt	$	1,307.8		$	1,432.1

Acquisition Line

The proceeds of the Acquisition Line are used for working capital, general corporate and acquisition purposes.As of September 30, 2020, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as described in Note 10, “Floorplan Notes Payable”), totaled $57.9 million. The average interest rate on this facility was 1.30% during the three months ended September 30, 2020.

Real Estate Related

The Company has mortgage loans in the U.S., U.K. and Brazil that are paid in monthly installments. As of September 30, 2020, borrowings outstanding under these facilities totaled $628.1 million, gross of debt issuance costs, comprised of $526.6 million in the U.S., $90.2 million in the U.K. and $11.3 million in Brazil.

4.00% Senior Notes Issuance

On August 17, 2020, the Company issued the following notes, at par:



Description	Principal Amount (in millions)	Maturity Date	Effective Interest Rate ⁽¹⁾	Interest Payment Dates
4.00% Senior Notes	$550.0	August 15, 2028	4.21%	February 15^th, August 15^th

⁽¹⁾The effective interest rate is after the impact of associated debt issuance costs

The Company, at its option, may redeem some or all of the notes at the redemption prices (expressed as percentages of principal amount of the notes) set forth below, plus accrued and unpaid interest.



Redemption Period		Redemption Price
August 15, 2023		102.000%
August 15, 2024		101.333%
August 15, 2025		100.667%
August 15, 2026 and thereafter		100.000%

The 4.00% Senior Notes are unsecured obligations and rank equal in right of payment to all of the Company’s existing and future senior unsecured debt and senior in right of payment to all of the Company’s future subordinated debt. The 4.00% Senior Notes are guaranteed by substantially all of the Company’s U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of the Company’s U.S. subsidiary guarantor’s existing and future senior unsecured debt.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The Company may be required to purchase the 4.00% Senior Notes if it sells certain assets or triggers the change in control provisions defined in the senior notes indenture. The 4.00% Senior Notes contain customary restrictions on the Company, including the ability to pay dividends, incur additional indebtedness, create liens, sell or otherwise dispose of assets and repurchase shares of outstanding common stock. Such restrictions are similar to those contained in the Company's 5.25% and 5.00% Senior Notes that were redeemed in the current year, as described further below.

5.00% Senior Notes Redemption

On September 2, 2020, the Company fully redeemed $550.0 million in aggregate principal amount of its outstanding 5.00% Senior Notes due June 2022, at par value. The Company recognized a loss on extinguishment of $3.3 million which included write offs of unamortized discount in the amount of $2.6 million and unamortized debt issuance costs in the amount of $0.7 million. Additionally, the Company paid accrued interest of $6.9 million up to the date of redemption.

5.25% Senior Notes Redemption

On April 2, 2020, the Company fully redeemed $300.0 million in aggregate principal amount of its outstanding 5.25% Senior Notes due June 2023, at a premium of 102.625%. The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million. The Company recognized a loss on extinguishment of $10.4 million which included write offs of unamortized discount in the amount of $1.9 million and unamortized debt issuance costs in the amount of $0.6 million. Additionally, the Company paid accrued interest of $4.6 million up to the date of redemption.

10. FLOORPLAN NOTES PAYABLE

The Company’s floorplan notes payable consisted of the following (in millions):



	September 30, 2020			December 31, 2019
Revolving credit facility — floorplan notes payable	$	840.4		$	1,206.0
Revolving credit facility — floorplan notes payable offset account	(108.2		)	(106.8		)
Revolving credit facility — floorplan notes payable, net	732.2			1,099.1
Other non-manufacturer facilities	39.0			45.3
Floorplan notes payable — credit facility and other, net	$	771.3		$	1,144.4

FMCC facility	$	133.2		$	208.5
FMCC facility offset account	(18.5		)	(4.1		)
FMCC facility, net	114.7			204.5
Other manufacturer affiliate facilities	200.1			255.4
Floorplan notes payable — manufacturer affiliates, net	$	314.8		$	459.9

Floorplan Notes Payable - Credit Facility

Revolving Credit Facility

In the U.S., the Company has a $1.75 billion revolving syndicated credit arrangement with 22 participating financial institutions that matures on June 27, 2024 (“Revolving Credit Facility”). The Revolving Credit Facility consists of two tranches: (i) a $1.70 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable - credit facility and other, net;and (ii) a$349.0 million maximum capacity and $50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-termdebt - see Note 9 “Debt” for additional discussion. The capacity under these two tranches can be re-designated within the overall $1.75 billion commitment, subject to the aforementioned limits. The Acquisition Line includes a $100 million sub-limit for letters of credit. As of September 30, 2020 and December 31, 2019, the Company had $17.8 million and $23.6 million, respectively, in outstanding letters of credit.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The Floorplan Line bears interest at rates equal to LIBOR plus 110 basis points for new vehicle inventory and LIBOR plus 140 basis points for used vehicle inventory. The weighted average interest rate on the Floorplan Line was 1.22% as of September 30, 2020, excluding the impact of the Company’s interest rate derivative instruments. The Acquisition Line bears interest at LIBOR or a LIBOR equivalent plus 100 to 200 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in U.S. dollars, Euros or British pound sterling. The Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.

In conjunction with the Revolving Credit Facility, the Company has $3.9 million of related unamortized debt issuance costs as of September 30, 2020, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

Offset Accounts

Offset accounts consist of immediately available cash used to pay down the Floorplan Line and FMCC Facility, and therefore offset the respective outstanding balances in the Company’s Condensed Consolidated Balance Sheets. The offset accounts are the Company’s primary options for the short-term investment of excess cash.

Floorplan Notes Payable - Manufacturer Affiliates

FMCC Facility

The Company has a $300.0 million floorplan arrangement with FMCC for financing of new Ford vehicles in the U.S. This facility bears interest at the higher of the actual U.S. Prime rate or a Prime floor of 4.00%, plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 5.50% before considering the applicable incentives as of September 30, 2020.

Other Manufacturer Facilities

The Company has other credit facilities in the U.S., U.K. and Brazil with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of September 30, 2020, borrowings outstanding under these facilities totaled $200.1 million, comprised of $91.5 million in the U.S., with annual interest rates ranging from less than 1% to approximately 6%, $102.2 million in the U.K., with annual interest rates ranging from approximately 1% to 4%, and $6.4 million in Brazil, with annual interest rates ranging from approximately 2% to 10%.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

11. CASH FLOW INFORMATION

Cash, Cash Equivalents and Restricted Cash

The cash flows presented within the Company’s Condensed Consolidated Statements of Cash Flows reflect cash and cash equivalents of $66.2 million as of September 30, 2020, and cash and cash equivalents of $23.8 million and restricted cash of $4.3 million included in Other long-term assets as of December 31, 2019.

Non-cash Activities

The accrual for capital expenditures decreased $1.0 million and $3.6 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table presents ROU assets obtained in exchange for lease obligations (in millions):



	Nine Months Ended September 30,
	2020		2019
ROU assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	3.4	$	18.2
Operating leases, modifications and remeasurements	$	10.0	$	(9.5	)
Finance leases, initial recognition	$	13.8	$	14.0
Finance leases, modifications and remeasurements	$	31.8	$	8.2

Interest and Income Taxes Paid

Cash paid for interest, including the monthly settlement of the Company’s interest rate derivatives, was $77.7 million and $83.1 million for the nine months ended September 30, 2020 and 2019, respectively. Cash paid for income taxes, net of refunds, was $26.2 million and $34.8 million for the nine months ended September 30, 2020 and 2019, respectively.

12. COMMITMENTS AND CONTINGENCIES

From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, ~~as well as~~ claims involving the manufacturers of automobiles, contractual disputes and other matters arising in the ordinary course of business. The Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s business. In the normal course of business, the Company is required to respond to customer, employee and other third-party complaints. In addition, the manufacturers of the vehicles that the Company sells and services have audit rights allowing them to review the validity of amounts claimed for incentive, rebate or warranty-related items and charge the Company back for amounts determined to be invalid payments under the manufacturers’ programs, subject to the Company’s right to appeal any such decision.

Legal Proceedings

As of September 30, ~~2019,~~2020, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows, including class action lawsuits. However, the results of current or future matters cannot be predicted with certainty and an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

Other Matters

~~The~~From time to time, the Company ~~sold a number of~~sells its dealerships to third ~~parties~~parties. In those instances where the Company did not own the real estate and was a tenant, it assigned the lease to the purchaser but remained liable as a ~~condition to certain of those dispositions, remains liable~~guarantor for the remaining lease payments ~~of such dealerships~~ in the event of non-payment by the purchaser. Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were ~~$39.9~~$29.7 million as of September 30, ~~2019.~~

~~11. LEASES~~

~~The Company leases real estate, office equipment, dealership operating assets under long-term lease agreements and subleases~~2020. In certain ~~real estate to third parties. For leases effective on or after January 1, 2019,~~instances, the Company ~~determines if an arrangement is a lease at inception and recognizes ROU assets and lease liabilities at commencement date based on~~obtains collateral support for the present value of lease payments over the lease term. For such leases, the aggregate present value of the Company’s lease payments may include options to purchase the leased property or lease terms with options to renew or terminate the lease, when it is reasonably certainrental obligations that the Company ~~will exercise such an option. The exercise~~remains obligated for upon sale of ~~lease renewals, terminations, or purchase options~~a dealership to a lessee. Total associated letters of credit issued on behalf of the lessee where the Company is ~~generally at~~ the Company’s discretion. The Company’s leases may also include rental payments adjusted periodically for inflation. Payments based on a change in an index or rates are not considered in the determination of lease payments for purposes of measuring the related lease liability. The Company discounts lease payments using its incremental borrowing rate based on information availablebeneficiary was $5.7 million as of the measurement date. Subsequent to the recognition of its ROU assets and lease liabilities, the Company recognizes lease expense related to its operating lease payments on a straight-line basis over the lease term. None of the Company’s lease agreements contain material residual value guarantees or material restrictive covenants.

~~The Company performs interim reviews of its ROU assets for impairment when evidence exists that the carrying value of an asset may not be recoverable. During the three months ended~~ September 30, ~~2019, the Company recognized a ROU asset impairment charge of $1.4 million relating to 2 operating leases within the U.K. segment. The impairment charge was recognized within~~ ~~Asset impairments~~ ~~in the Company's Condensed Consolidated Statements of Operations.~~2020.

~~Additional information regarding the Company’s operating and finance leases is as follows (in millions, except for lease term and discount rate information):~~

Leases Balance Sheet Classification September 30, 2019
Assets:
Operating Operating lease assets $ 204.7
Finance Property and equipment, net 59.0
Total $ 263.7
Liabilities:
Current:
Operating Current operating lease liabilities $ 23.9
Finance Current maturities of long-term debt 6.4
Noncurrent:
Operating Operating lease liabilities, net of current portion 195.5
Finance Long-term debt, net of current maturities 59.7
Total $ 285.5

Lease Expense Income Statement Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating Selling, general and administrative expenses $ 10.0
$ 31.1
Operating Asset impairments 1.4
1.4
Variable Selling, general and administrative expenses 0.6
1.6
Sublease income Selling, general and administrative expenses (0.4 ) (1.0 )
Finance:
Amortization of lease assets Depreciation and amortization expense 1.7
4.1
Interest on lease liabilities Other interest expense, net 1.5
3.5
Net lease expense $ 14.8
$ 40.7

September 30, 2019
Maturities of Lease Liabilities Operating Leases Finance Leases
2019 (excluding the nine months ended September 30, 2019) $ 6.8
$ 4.6
2020 38.5
8.5
2021 36.7
8.5
2022 32.4
8.4
2023 29.4
7.2
Thereafter 170.0
65.6
Total lease payments 313.8

102.8
Less: Interest (94.4 ) (36.7 )
Present value of lease liabilities $ 219.4

$ 66.1



~~Weighted-Average Lease Term and Discount Rate~~	~~September 30, 2019~~
~~Weighted-average remaining lease terms:~~
~~Operating~~	~~11.5~~
~~Financing~~	~~14.6~~
~~Weighted-average discount rates:~~
~~Operating~~	~~5.9~~	%
~~Financing~~	~~7.8~~	%

Other Information Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
  Operating cash flows from operating leases $ 31.1
  Operating cash flows from finance leases $ 3.5
  Financing cash flows from finance leases $ 2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition $ 18.2
Operating leases, modifications and remeasurements $ (9.5 )
Finance leases, initial recognition $ 14.0
Finance leases, modifications and remeasurements $ 8.2

~~12. INTANGIBLES~~ Table of Contents

~~The following is a roll-forward of the company’s goodwill accounts by reportable segment (in millions):~~GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Goodwill
U.S. U.K. Brazil Total
Balance, December 31, 2018 ⁽¹⁾
$ 861.6
$ 87.6
$ 14.7
$ 963.9
Additions through acquisitions 19.3
1.3
—
20.6
Disposals and purchase price allocation adjustments (1.3 ) —
(0.3 ) (1.6 )
Currency translation —
(3.0 ) (0.9 ) (3.9 )
Balance, September 30, 2019 ⁽¹⁾
$ 879.6
$ 85.9
$ 13.5
$ 979.0

⁽¹⁾~~Net of accumulated impairments of $97.8 million. There were 0 impairments to goodwill during the nine months ended September 30, 2019.~~

The Company evaluates its intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill assets, for impairment annually, or more frequently if events or circumstances indicate possible impairment. The Company performs interim reviews of its intangible assets when evidence exists that the carrying value may not be recoverable. The ongoing uncertainty related to the ultimate resolution of the Referendum of the United Kingdom’s Membership of the European Union

(“E.U.”) advising for the exit of the U.K. from the E.U. (referred to as “Brexit”), continues to generate much uncertainty in the U.K., as well as in global markets. During the three months ended September 30, 2019, as a result of increased uncertainty in the U.K. regarding the outcome and timing of Brexit and the related impact on our U.K. new vehicle business and certain U.S. dealerships identified in our quarterly review, the Company identified circumstances indicating possible impairment of its franchise rights, requiring a quantitative assessment as of August 31, 2019. In estimating fair value, the Company used a direct value method discounted cash flow model, or income approach, specifically the excess earnings method. Significant inputs to the model included an estimated weighted average cost of capital and estimated residual values at the end of the forecasted period, which were unobservable inputs, or level 3 in the fair value hierarchy. Based on the results of the Company's assessment, the Company determined that the fair value of the franchise rights on 7 of its U.K. dealerships and 1 of its U.S. dealerships were below its respective carrying values. This resulted in franchise rights impairment charges of $5.6 million in the U.K segment and $3.0 million in the U.S. segment. The impairment charges were recognized within ~~Asset impairments~~ ~~in the Company's Condensed Consolidated Statements of Operations. There were no events or circumstances indicating possible impairments of goodwill.~~

During the three months ended September 30, 2019, the Company recorded $3.1 million in additional indefinite-lived intangible franchise rights and $19.3 million in additional goodwill associated with acquisitions in the U.S. and $1.3 million in additional goodwill associated with acquisitions in the U.K. See Note 3, “Acquisitions and Dispositions”, for additional discussion.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in the balances of each component of ~~accumulated~~Accumulated other comprehensive income (loss) ~~for the nine months ended September 30, 2019 and 2018~~ were as follows (in millions):


	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2020
	Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total			Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total
Balance, December 31, 2018	$	(146.7	)	$	8.9		$	(137.8	)
Balance, December 31, 2019										$	(142.9	)	$	(4.1	)	$	(147.0	)
Other comprehensive income (loss) before reclassifications:
Pre-tax	(12.0		)	(25.2		)	(37.2		)	(24.4		)	(51.3		)	(75.6		)
Tax effect	—			6.0			6.0			0			10.9			10.9
Amounts reclassified from accumulated other comprehensive income (loss):
Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)	—			(0.4		)	(0.4		)	0			5.3			5.3
Other interest expense, net (pre-tax)	—			(0.4		)	(0.4		)	0			1.7			1.7
Realized (gain) loss on interest rate swap termination (pre-tax)	—			0.1			0.1			0			0.1			0.1
Provision (benefit) for income taxes	—			0.2			0.2			0			(1.7		)	(1.7		)
Net current period other comprehensive income (loss)	(12.0		)	(19.7		)	(31.7		)	(24.4		)	(35.0		)	(59.3		)
Balance, September 30, 2019	$	(158.7	)	$	(10.8	)	$	(169.5	)
Balance, September 30, 2020										$	(167.2	)	$	(39.1	)	$	(206.3	)

Nine Months Ended September 30, 2018
Accumulated income (loss) on foreign currency translation Accumulated income (loss) on interest rate swaps Total
Balance, December 31, 2017 $ (122.5 ) $ (0.7 ) $ (123.2 )
Other comprehensive income (loss) before reclassifications:
Pre-tax (22.2 ) 18.4
(3.8 )
Tax effect —
(4.4 ) (4.4 )
Amounts reclassified from accumulated other comprehensive income (loss) to:
Floorplan interest expense (pre-tax) —
4.0
4.0
Other interest expense (pre-tax) —
0.5
0.5
Realized (gain) loss on interest rate swap termination (pre-tax) —
(0.9 ) (0.9 )
Provision (benefit) for income taxes —
(0.9 ) (0.9 )
Net current period other comprehensive income (loss) (22.2 ) 16.7
(5.5 )
Tax effects reclassified from accumulated other comprehensive income (loss) —
(0.1 ) (0.1 )
Balance, September 30, 2018 $ (144.7 ) $ 15.9

$ (128.8 )

~~14. SEGMENT INFORMATION~~

As of September 30, 2019, the Company had 3 reportable segments: the U.S., the U.K. and Brazil. The reportable segments are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by its chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer. Each of the reportable segments is comprised of retail automotive franchises which sell new and used cars, light duty trucks, arrange related vehicle financing, sell service and insurance contracts, provide automotive maintenance and repair services and sell vehicle parts. The vast majority of the Company’s corporate activities are associated with the operations of the U.S. reportable segment and, therefore, the corporate financial results are included within the U.S. reportable segment.

~~Reportable segment revenues and income (loss) before income taxes were as follows for the three and nine months ended September 30, 2019 and 2018 (in millions):~~

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
Total revenues $ 2,422.8
$ 584.6
$ 110.9
$ 3,118.3
$ 6,764.3
$ 1,841.2
$ 326.9
$ 8,932.4
Income (loss) before income taxes ⁽¹⁾
$ 54.6
$ (7.4 ) $ 1.8
$ 49.0
$ 164.8
$ (2.7 ) $ 2.3
$ 164.4

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
Total revenues $ 2,200.2
$ 585.9
$ 103.0
$ 2,889.1
$ 6,456.5
$ 1,913.5
$ 322.5
$ 8,692.5
Income (loss) before income taxes ⁽²⁾
$ 43.4
$ 2.7
$ (1.7 ) $ 44.4
$ 152.9
$ 14.4
$ (1.6 ) $ 165.7



	Nine Months Ended September 30, 2019
	Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total
Balance, December 31, 2018	$	(146.7	)	$	8.9		$	(137.8	)
Other comprehensive income (loss) before reclassifications:
Pre-tax	(12.0		)	(25.2		)	(37.1		)
Tax effect	0			6.0			6.0
Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)	0			(0.4		)	(0.4		)
Other interest expense (pre-tax)	0			(0.4		)	(0.4		)
Realized (gain) loss on interest rate swap termination (pre-tax)	0			0.1			0.1
Provision (benefit) for income taxes	0			0.2			0.2
Net current period other comprehensive income (loss)	(12.0		)	(19.7		)	(31.7		)
Balance, September 30, 2019	$	(158.7	)	$	(10.8	)	$	(169.5	)

⁽¹⁾ ~~Income (loss) before income taxes for the three months ended September 30, 2019 includes~~ ~~$11.9 million~~ in expense related to flood damage from Tropical Storm Imelda in Texas and $3.3 million in asset impairment charges in the U.S. segment and $7.0 million in asset impairment charges in the U.K. segment. Income (loss) before taxes for the nine months ended September 30, 2019 includes $17.8 million in expense related to flood damage from Tropical Storm Imelda and hail storm damages in Texas and $3.3 million in asset impairment charges in the U.S. segment, $7.0 million in asset impairment charges in the U.K. segment and $0.5 million in asset impairment charges in the Brazil segment.

⁽²⁾ Income (loss) before income taxes for the three months ended September 30, 2018 includes $23.2 million in asset impairment charges in the U.S. segment. Income (loss) before taxes for the nine months ended September 30, 2018 includes $5.8 million of expense related to hail storm damages and $27.4 million in asset impairment charges in the U.S. segment.

~~15. RECEIVABLES, NET~~

~~The Company’s Accounts and notes receivable consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
Amounts due from manufacturers $ 111.8
$ 105.1
Parts and service receivables 57.0
52.0
Finance and insurance receivables 24.9
26.4
Other 31.0
13.7
Total accounts and notes receivable 224.7
197.2
Less: allowance for doubtful accounts 2.5
3.2
Accounts and notes receivable, net $ 222.2
$ 194.0

The Contracts-in-transit and vehicle receivables, net balance within the Company’s Condensed Consolidated Balance Sheets was offset by an allowance of $0.3 million and $0.3 million as of September 30, 2019 and December 31, 2018, respectively.

~~16. CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~

The following tables include condensed consolidating financial information as of September 30, 2019 and December 31, 2018 and for the three and nine months ended September 30, 2019 and 2018, respectively, for Group 1 Automotive, Inc. (as issuer of the 5.00% Notes) and its guarantor and non-guarantor subsidiaries (representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, statement of operations and cash flows items that are not necessarily indicative of the financial position, results of operations, or cash flows of these entities had they operated on a stand-alone basis. In accordance with Rule 3-10 of Regulation S-X, condensed consolidated financial statements of non-guarantors are not required. The Company has no assets or operations independent of its subsidiaries. Obligations under the 5.00% Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by the Company’s current 100%-owned domestic subsidiaries and certain of the Company’s future domestic subsidiaries, with the exception of the Company’s “minor” subsidiaries (as defined by Rule 3-10 of Regulation S-X). There are no significant restrictions on the ability of the Company or subsidiary guarantors for the Company to obtain funds from its subsidiary guarantors by dividend or loan. None of the subsidiary guarantors’ assets represent restricted assets pursuant to SEC Rule 4-08(e)(3) of Regulation S-X.

~~CONDENSED CONSOLIDATED BALANCE SHEET~~

~~As of September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ —
$ 4.0
$ 37.0
$ —
$ 41.0
Contracts-in-transit and vehicle receivables, net —
185.9
70.3
—
256.2
Accounts and notes receivable, net 0.1
173.8
48.3
—
222.2
Intercompany accounts receivable 49.2
10.3
—
(59.5 ) —
Inventories, net —
1,466.9
325.8
—
1,792.7
Prepaid expenses and other current assets 0.6
20.6
53.2
—
74.4
TOTAL CURRENT ASSETS 49.9
1,861.5
534.6
(59.5 ) 2,386.5
Property and equipment, net of accumulated depreciation of $380.5 —
1,233.2
251.6
—
1,484.8
Operating lease assets —
118.5

86.2

—
204.7
Goodwill —
879.7
99.3
—
979.0
Intangible franchise rights —
224.5
28.4
—
252.9
Investment in subsidiaries 3,282.7
—
—
(3,282.7 ) —
Other assets —
11.9
9.2
—
21.1
TOTAL ASSETS $ 3,332.6
$ 4,329.3
$ 1,009.3
$ (3,342.2 ) $ 5,329.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0 $ —
$ 1,164.7
$ 35.1
$ —
$ 1,199.8
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 —
279.3
131.2
—
410.5
Current maturities of long-term debt —
38.0
28.0
—
66.0
Current operating lease liabilities —
17.2
6.7
—
23.9
Accounts payable —
211.6
271.7
—
483.3
Intercompany accounts payable 1,253.5
—
75.9
(1,329.4 ) —
Accrued expenses and other current liabilities —
182.0
31.8
—
213.8
TOTAL CURRENT LIABILITIES 1,253.5
1,892.8
580.4
(1,329.4 ) 2,397.3
Long-term debt, net of current maturities 891.4
306.7
109.9
—
1,308.0
Operating lease liabilities, net of current portion —
109.1
86.4
—
195.5
Deferred income taxes and other liabilities 1.4
236.4
4.1
—
241.9
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity 1,186.3
3,054.2
228.5
(3,282.7 ) 1,186.3
Intercompany note receivable —
(1,269.9 ) —
1,269.9
—
TOTAL STOCKHOLDERS’ EQUITY 1,186.3
1,784.3
228.5
(2,012.8 ) 1,186.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,332.6
$ 4,329.3
$ 1,009.3
$ (3,342.2 ) $ 5,329.0

~~CONDENSED CONSOLIDATED BALANCE SHEET~~

~~As of December 31, 2018~~

~~(In millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ —
$ 4.6
$ 11.3
$ —
$ 15.9
Contracts-in-transit and vehicle receivables, net —
232.1
33.6
—
265.7
Accounts and notes receivable, net —
153.9
40.1
—
194.0
Intercompany accounts receivable 31.9
21.6
—
(53.5 ) —
Inventories, net —
1,468.5
375.6
—
1,844.1
Prepaid expenses and other current assets 1.0
32.1
49.6
—
82.7
TOTAL CURRENT ASSETS 32.9
1,912.8
510.2
(53.5 ) 2,402.4
Property and equipment, net of accumulated depreciation of $347.3 —
1,124.5
223.3
—
1,347.8
Goodwill —
861.6
102.3
—
963.9
Intangible franchise rights —
224.4
35.2
—
259.6
Investment in subsidiaries 3,100.9
—
—
(3,100.9 ) —
Other assets —
16.2
11.2
—
27.4
TOTAL ASSETS $ 3,133.8
$ 4,139.5
$ 882.2
$ (3,154.4 ) $ 5,001.1

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $33.6 $ —
$ 1,217.8
$ 41.1
$ —
$ 1,258.9
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.1 —
276.7
141.1
—
417.8
Current maturities of long-term debt —
73.9
19.1
—
93.0
Accounts payable —
201.0
218.4
—
419.4
Intercompany accounts payable 1,165.0
—
53.4
(1,218.4 ) —
Accrued expenses and other current liabilities —
165.0
32.6
—
197.6
TOTAL CURRENT LIABILITIES 1,165.0
1,934.4
505.7
(1,218.4 ) 2,386.7
Long-term debt, net of current maturities 872.3
294.3
114.8
—
1,281.4
Deferred income taxes and other liabilities 0.8
224.7
11.8
—
237.3
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity 1,095.7
2,851.0
249.9
(3,100.9 ) 1,095.7
Intercompany note receivable —
(1,164.9 ) —
1,164.9
—
TOTAL STOCKHOLDERS’ EQUITY 1,095.7
1,686.1
249.9
(1,936.0 ) 1,095.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,133.8
$ 4,139.5
$ 882.2
$ (3,154.4 ) $ 5,001.1

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Three Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 2,422.8
$ 695.5
$ —
$ 3,118.3
Cost of sales —
2,035.9
616.8
—
2,652.7
Gross profit —
386.9
78.7
—
465.6
Selling, general and administrative expenses 0.4
283.7
69.9
—
354.0
Depreciation and amortization expense —
13.8
4.2
—
18.0
Asset impairments —
3.3
7.0
—
10.3
Income (loss) from operations (0.4 ) 86.1
(2.4 ) —
83.3
Interest expense:
Floorplan interest expense —
13.3
2.1
—
15.4
Other interest expense, net —
16.6
2.3
—
18.9
Income (loss) before income taxes and equity in earnings of subsidiaries (0.4 ) 56.2
(6.8 ) —
49.0
(Benefit) provision for income taxes (0.1 ) 12.8
(1.7 ) —
11.0
Equity in earnings of subsidiaries 38.4
—
—
(38.4 ) —
Net income (loss) $ 38.1
$ 43.4
$ (5.1 ) $ (38.4 ) $ 38.0
Comprehensive income (loss) (17.0 ) (5.4 ) (11.6 ) 17.0
(17.0 )
Comprehensive income (loss) attributable to parent $ 21.1
$ 38.0
$ (16.7 ) $ (21.4 ) $ 21.0

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Nine Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 6,764.3
$ 2,168.1
$ —
$ 8,932.4
Cost of sales —
5,653.8
1,927.2
—
7,581.0
Gross profit —
1,110.5
240.9
—
1,351.4
Selling, general and administrative expenses 3.4
801.3
215.7
—
1,020.4
Depreciation and amortization expense —
41.3
11.7
—
53.0
Asset impairments —
3.2
7.6
—
10.8
Income (loss) from operations (3.4 ) 264.7
5.9
—
267.2
Interest expense:
Floorplan interest expense —
41.3
5.7
—
47.0
Other interest expense, net —
50.4
5.4
—
55.8
Income (loss) before income taxes and equity in earnings of subsidiaries (3.4 ) 173.0
(5.2 ) —
164.4
(Benefit) provision for income taxes (0.8 ) 41.0
(1.7 ) —
38.5
Equity in earnings of subsidiaries 128.5
—
—
(128.5 ) —
Net income (loss) $ 125.9
$ 132.0
$ (3.5 ) $ (128.5 ) $ 125.9
Comprehensive income (loss) (31.7 ) (19.8 ) (12.0 ) 31.8
(31.7 )
Comprehensive income (loss) attributable to parent $ 94.2
$ 112.2
$ (15.5 ) $ (96.7 ) $ 94.2

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Three Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 2,200.3
$ 688.8
$ —
$ 2,889.1
Cost of sales —
1,847.8
606.2
—
2,454.0
Gross profit —
352.5
82.6
—
435.1
Selling, general and administrative expenses 0.3
240.2
76.3
—
316.8
Depreciation and amortization expense —
13.5
3.4
—
16.9
Asset impairments —
23.2
—
—
23.2
Income (loss) from operations (0.3 ) 75.6
2.9
—
78.2
Interest expense:
Floorplan interest expense —
12.9
1.8
—
14.7
Other interest (income) expense, net —
17.2
1.9
—
19.1
Income (loss) before income taxes and equity in earnings of subsidiaries (0.3 ) 45.5
(0.8 ) —
44.4
(Benefit) provision for income taxes (0.1 ) 9.2
0.5
—
9.6
Equity in earnings of subsidiaries 35.0
—
—
(35.0 ) —
Net income (loss) $ 34.8
$ 36.3
$ (1.3 ) $ (35.0 ) $ 34.8
Comprehensive income (loss) —
3.5
(5.9 ) —
(2.4 )
Comprehensive income (loss) attributable to parent $ 34.8
$ 39.8
$ (7.2 ) $ (35.0 ) $ 32.4

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Nine Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 6,456.7
$ 2,235.8
$ —
$ 8,692.5
Cost of sales —
5,417.9
1,981.6
—
7,399.5
Gross profit —
1,038.8
254.2
—
1,293.0
Selling, general and administrative expenses 2.7
721.3
225.2
—
949.2
Depreciation and amortization expense —
39.4
10.6
—
50.0
Asset impairments —
27.4
—
—
27.4
Income (loss) from operations (2.7 ) 250.7
18.4
—
266.4
Interest expense:
Floorplan interest expense —
38.0
5.3
—
43.3
Other interest expense, net —
51.6
5.8
—
57.4
Income (loss) before income taxes and equity in earnings of subsidiaries (2.7 ) 161.1
7.3
—
165.7
(Benefit) provision for income taxes (0.6 ) 36.5
2.8
—
38.6
Equity in earnings of subsidiaries 129.1
—
—
(129.1 ) —
Net income (loss) $ 127.1
$ 124.6
$ 4.5
$ (129.1 ) $ 127.1
Comprehensive income (loss) —
16.7
(22.2 ) —
(5.5 )
Comprehensive income (loss) attributable to parent $ 127.1
$ 141.3
$ (17.7 ) $ (129.1 ) $ 121.6

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~Nine Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 125.9
$ 123.8
$ 61.1
$ 310.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received —
(67.7 ) (29.3 ) (97.0 )
Proceeds from disposition of franchises, property and equipment —
37.2
5.9
43.1
Purchases of property and equipment, including real estate —
(114.0 ) (25.5 ) (139.5 )
Other (0.1 ) —
—
(0.1 )
Net cash provided by (used in) investing activities (0.1 ) (144.5 ) (48.9 ) (193.5 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other —
5,274.6
36.6
5,311.2
Repayments on credit facility - floorplan line and other —
(5,322.6 ) (41.7 ) (5,364.3 )
Borrowings on credit facility - acquisition line 230.5
—
—
230.5
Repayments on credit facility - acquisition line (211.4 ) —
—
(211.4 )
Debt issue costs —
(3.2 ) —
(3.2 )
Borrowings on other debt —
36.6
94.2
130.8
Principal payments on other debt —
(42.2 ) (91.5 ) (133.7 )
Borrowings on debt related to real estate, net of debt issue costs —
74.8
—
74.8
Principal payments on debt related to real estate —
(106.5 ) (6.3 ) (112.8 )
Employee stock purchase plan purchases, net of employee tax withholdings 2.8
—
—
2.8
Dividends paid (14.8 ) —
—
(14.8 )
Borrowings (repayments) with subsidiaries 86.7
(111.4 ) 24.7
—
Investment in subsidiaries (219.6 ) 220.0
(0.4 ) —
Net cash provided by (used in) financing activities (125.8 ) 20.1
15.6
(90.1 )
Effect of exchange rate changes on cash —
—
(1.3 ) (1.3 )
Net increase (decrease) in cash, cash equivalents and restricted cash —
(0.6 ) 26.5
25.9
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period —
4.6
14.1
18.7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ —
$ 4.0
$ 40.6
$ 44.6

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~Nine Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 127.1
$ 192.9
$ 37.4
$ 357.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received —
(91.9 ) (43.5 ) (135.3 )
Proceeds from disposition of franchises, property and equipment —
101.4
6.3
107.7
Purchases of property and equipment, including real estate —
(79.5 ) (38.7 ) (118.3 )
Other 0.4
—
—
0.4
Net cash provided by (used in) investing activities 0.4
(70.0 ) (75.8 ) (145.5 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other —
5,036.1
70.7
5,106.8
Repayments on credit facility - floorplan line and other —
(5,124.9 ) (60.4 ) (5,185.2 )
Borrowings on credit facility - acquisition line 98.6
—
—
98.6
Repayments on credit facility - acquisition line (91.4 ) —
—
(91.4 )
Borrowings on other debt —
70.7
52.6
123.3
Principal payments on other debt (24.7 ) (36.2 ) (44.6 ) (105.6 )
Borrowings on debt related to real estate, net of debt issue costs —
42.7
12.1
54.7
Principal payments on debt related to real estate —
(71.8 ) (11.5 ) (83.2 )
Employee stock purchase plan purchases, net of employee tax withholdings 1.5
—
—
1.5
Repurchases of common stock, amounts based on settlement date (108.6 ) —
—
(108.6 )
Proceeds from termination of mortgage swap —
0.9
—
0.9
Dividends paid (16.0 ) —
—
(16.0 )
Borrowings (repayments) with subsidiaries 208.7
(219.2 ) 10.5
—
Investment in subsidiaries (195.4 ) 177.6
17.8
—
Net cash provided by (used in) financing activities (127.4 ) (124.0 ) 47.2
(204.2 )
Effect of exchange rate changes on cash —
—
(2.9 ) (2.9 )
Net increase (decrease) in cash, cash equivalents and restricted cash —
(1.0 ) 5.8
4.8
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period —
10.1
19.5
29.6
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ —
$ 9.1
$ 25.3
$ 34.4

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements may appear throughout this report including, but not limited to, the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures About Market Risk.” This information includes statements regarding our strategy, plans, goals or current expectations with respect to, among other things:

•our future operating performance;

•our ability to maintain or improve our margins;

•our ability to accomplish and sustain SG&A expense decreases;

•operating cash flows and availability of capital;

•the completion of future acquisitions and divestitures;

•the future revenues of acquired dealerships;

•future stock repurchases, refinancing of debt and dividends;

•future capital expenditures;

•changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;

•business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume and pricing, customer demand, interest rates and changes in industry-wide inventory levels;

•manufacturer quality issues, including the recall of vehicles and any related negative impact on vehicle sales and brand reputation;

•availability of financing for inventory, working capital, real estate and capital expenditures; ~~and~~

•changes in regulatory practices, tariffs and taxes, including Brexit;

•the ~~Referendum~~impacts of any potential global recession;

•our ability to meet our financial covenants in our debt obligations and to maintain sufficient liquidity to operate; and

•the impacts of the ~~United Kingdom’s (“U.K.”) Membership of the European Union (“E.U.”) advising for the exit of the U.K. from the E.U. (referred to as “Brexit”).~~COVID-19 pandemic on our business.

Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions ~~as they relate to our company and management,~~ are intended to identify forward-looking ~~statements, which are generally not historical in nature.~~statements. These forward-looking statements are based on our expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ from those in the forward-looking statements include:

•adverse developments in the global economy as well as the public health crisis related to the COVID-19 pandemic and the resulting impact on the demand for ~~a number~~new and used vehicles and related parts and services;

•uncertainty regarding the length of ~~reasons, include:~~time it will take for the U.S. and the rest of the world to slow the spread of the COVID-19 pandemic, the actions to be taken by governments to contain and combat the pandemic and the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand for our vehicles, parts and services;

•future deterioration in the economic environment, including consumer confidence, consumer preferences, interest rates, the prices of oil and gasoline, the level of manufacturer incentives, the implementation of international and domestic trade tariffs and the availability of consumer credit may affect the demand for new and used vehicles, replacement parts, maintenance and repair services, and ~~finance and insurance~~F&I products;

•adverse domestic and international developments such as war, terrorism, political conflicts, social protests or other hostilities may adversely affect the demand for our products and services;

• uncertainty of the potential impact of Brexit on the overall U.K. economy and, more specifically, the potential adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business ~~operations.~~operations;

•the existing and future regulatory environment, including legislation related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, climate control ~~changes~~ legislation, changes to U.S. federal, U.S. state, U.K. or Brazil tax regulations and unexpected litigation or adverse legislation, including changes in U.S. state franchise laws, may impose additional costs on us or otherwise adversely affect us;

•a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, Hyundai, Volkswagen and ~~Volkswagen,~~Jaguar-Land Rover, because of financial distress, bankruptcy, natural disasters or pandemics, such as the COVID-19 pandemic, that disrupt production, or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;

•restructuring by one or more of our principal manufacturers, up to and including bankruptcy, may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;

•requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or require increases in the level of capital expenditures related to our dealership facilities;

•our existing and/or new dealership operations may not perform at our or manufacturer expected levels or achieve expected improvements;

•our failure to achieve expected future cost savings or future costs may be higher than we expect;

•manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;

•available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares, or pay dividends;

•our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;

•our ability to facilitate credit for consumers;

•foreign exchange controls and currency fluctuations;

•new accounting standards could materially impact our reported ~~earnings per share;~~EPS;

•our ability to acquire new dealerships and successfully integrate those dealerships into our business;

•the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;

•natural disasters, adverse weather events and other catastrophic events;

•a cybersecurity event of our systems or a third party partners’ systems, including a breach of personally identifiable information about our customers or employees or a ~~shut down~~shutdown of our operating systems;

•our foreign operations and sales in the U.K. and Brazil, which pose additional risks;

•the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;

•loss of our key personnel;

•~~competition in our industry may impact our operations or our ability to complete additional acquisitions;~~

•~~insurance costs could increase significantly and all of~~ our losses may not be fully covered by ~~insurance;~~ insurance or may only be fully covered with a significant increase to our insurance costs;

•our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect; and

•advancements in vehicle technology and changes in vehicle ownership models/consumer preferences.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~“2018~~“2019 Form 10-K”), and this Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk.”

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of our forward-looking statements after the date they are made, except to the extent required by law.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Actual results of Group 1 Automotive, Inc. may differ materially from those discussed in the forward-looking statements because of various factors. See “Cautionary Statement about Forward-Looking Statements.” Unless the context requires otherwise, references to “we,” ~~“us,” “our,” “the Company”~~“us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc. and its subsidiaries.

Overview

We are a leading operator in the automotive retail industry. Through our dealerships, we sell new and used cars and light ~~duty trucks,~~trucks; arrange related vehicle ~~financing,~~financing; sell service and other insurance ~~contracts,~~contracts; provide automotive maintenance and repair ~~services~~services; and sell vehicle parts. Our operations are inaligned into three ~~geographic regions:~~regions, which comprise our reportable segments: (1) U.S., (2) U.K. and (3) Brazil. The U.S. and Brazil segments are led by the ~~United States (“~~President, U.S.~~”),~~ and Brazilian Operations, and the U.K. ~~and Brazil. Our President of U.S.~~segment is led by an Operations ~~reports~~Director, each reporting directly to our Chief Executive ~~Officer~~Officer. The President, U.S. and isBrazilian Operations, and the U.K. Operations Director are responsible for the overall performance of ~~the U.S. region, including dealership operations~~their respective regions, as well as for overseeing field level management. The ~~operations of the Company’s international regions are structured similar to the~~ U.S. ~~region. As such, our three reportable segments are the U.S., which~~segment includes the activities of our corporate ~~office, the U.K. and Brazil.~~office.

As of September 30, ~~2019, we owned and operated 238 franchises, representing 31 brands~~2020, our retail network consisted of ~~automobiles, at 183 dealership locations and 49 collision centers worldwide. We owned 151 franchises at 117~~119 dealerships ~~and 30 collision centers~~ in the U.S., ~~65 franchises at 49~~50 dealerships ~~and 12 collision centers~~ in the U.K. and ~~22 franchises at~~ 17 dealerships ~~and seven collision centers~~ in Brazil. Our operations are primarily located in major metropolitan areas in ~~Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina and Texas~~15 states in the U.S., in 33 towns ofin the U.K. and ~~in key metropolitan markets in the~~three states ~~of São Paulo, Paraná and Santa Catarina~~ in Brazil.

~~Outlook~~Long-Term Strategy

~~The Company’s operating results~~Our business strategy primarily focuses on the performance of our existing dealerships to achieve growth, capture market share and maximize the investment return to our stockholders. We are ~~generally subject~~also focused on enhancing our dealership portfolio through strategic acquisitions and dispositions. We constantly evaluate opportunities to ~~seasonal variations, as well as changes in~~improve the ~~economic environment. In~~overall profitability of our dealerships. Our long-term strategic areas of emphasis include:

Digital Initiatives to Enhance the U.S., we generally experience higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. As a result, our U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters. In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income. Customer Experience

~~U.S.~~

~~We continued to~~Our digital initiatives focus on ~~opportunities~~ensuring that we can do business with our customers where and when they want to ~~counter the decline in industry new vehicle sales volumes and enhance our operating results by: (a) maintaining and growing our~~do business. Our online new and used vehicle ~~gross profit per unit sold; (b) expanding~~retail platform, AcceleRide®, which was deployed to all of our U.S. dealerships in 2019, allows a customer to complete a vehicle transaction entirely online or start the sales process online and complete the transaction at one of our dealerships. In addition, our parts and service digital efforts focus on our online customer scheduling appointment system. We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool. These digital platforms were instrumental in allowing us to connect with and service our customers during the restricted social distancing environment as a result of the COVID-19 pandemic. During the third quarter of 2020, AcceleRide® sales were up 73.1% from a year ago.

Used Vehicle Retail Growth

•

Gross profit from the sale of used vehicles depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices. Our new vehicle operations generally provide our used vehicle operations with a large supply of high-quality trade-ins and off-lease vehicles, which are our best source of used vehicle inventory. Our dealerships also purchase used vehicle inventory directly from customers and supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.


•	Our data-driven pricing strategies ensure that our used vehicles are priced at market to generate more traffic to our websites. We review our market pricing on a regular basis and work to limit discounting from our advertised prices.

We will continue efforts to expand our “Val-U-Line®” sales program, a strategic used vehicle ~~sales by maximizing~~initiative that targets a growing customer niche and enables us to retail lower cost, higher mileage units that would otherwise have been sent to auction. The Val-U-Line® initiative is expected to increase used retail ~~sales opportunities~~volume by leveraging our scale, internal on-line buying center, internal auction capability and ~~limiting wholesale activity; (c) continuing to focus~~transportation infrastructure.

Parts and Service Growth

We remain focused on sustained growth in our higher margin parts and service ~~(or aftersales)~~operations which continue to hinge on the retention and hiring of skilled service technicians and advisors. Our four-day work week implemented in 2019 has allowed us to extend our hours of operations and increase service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities. We seek to increase the retention of our customers through more convenient service hours, training of our service advisors, selling service contracts with vehicles sales and customer relationship management software that allows us to provide target marketing to our customers. The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it difficult for independent repair shops to retain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share.

Cost Management

We continue our efforts to fully leverage our scale and cost structure. As our business ~~by implementing~~evolves, we will manage our costs carefully and look for additional opportunities to improve our processes and disseminate best practices. We believe that our management structure supports rapid decision making and facilitates an efficient and effective roll-out of new processes. Additionally, see “COVID-19 Pandemic” section below for specific cost-cutting measures in response to the COVID-19 pandemic.

Employee Training and Retention

A key to the execution of our business strategy is the leverage of what we believe to be one of our key strengths - the talent of our people. We are focused on the retention and training of our talented dealership employees. We believe that we have developed a distinguished management team with substantial industry expertise. With our management structure and level of executive talent, we plan to continue empowering the operators of our dealerships to make appropriate decisions to grow their respective dealership operations and to control fixed and variable costs. We believe this approach allows us to provide the best possible service to our customers, as well as attract and retain talented employees.

Strategic Acquisitions and Dispositions

We will continue to focus on opportunities to enhance our current dealership portfolio through strategic ~~selling methods~~acquisitions and improving ~~operational efficiencies; (d) investing~~or disposing of underperforming dealerships. We believe that substantial opportunities for growth through acquisitions remain in our industry in the U.S., the U.K. and Brazil. Further, we intend to continue to critically evaluate our return on invested capital ~~where necessary~~in our current dealership portfolio for disposition opportunities.

COVID-19 Pandemic

Since emerging in December 2019, the COVID-19 pandemic has spread globally, including to ~~support~~all of our ~~anticipated growth, particularly~~markets in the U.S., U.K. and Brazil, significantly impacting our operating results starting in March 2020. There have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 across the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Beginning in mid-March 2020, these measures significantly reduced operating capacity of all of our dealerships in the U.S., the U.K. and Brazil. The primary COVID-19 impacts on our global business and our response to date include:

U.S.

Virtually all of our U.S. dealerships are located in markets that operated in some form of restricted social distancing environments in accordance with applicable state and local orders during most of March 2020 and April 2020. As the market shutdowns began, March 2020 U.S. sales dropped sharply from February 2020, with new and used retail unit sales dropping approximately 50% and service repair orders also declining by approximately 50% for the last two weeks of March 2020 compared to the last two weeks of March 2019 and the first two weeks of April 2020 compared to the first two weeks of April 2019. In early May 2020, as restricted social distancing environment policies began to be partially lifted, our used vehicle business returned to near normal levels and our new vehicle sales pace started improving. Our new vehicle sales pace has improved during the third quarter, however the recovery of new vehicle unit sales was limited as a result of low inventory levels due to reduced OEM production rates. Thus far, we have been able to offset the volume declines with higher gross margins in new and used vehicles and higher F&I per retail unit. As a result, our margin improvement outweighed our volume declines. Beginning in mid-April 2020, we saw continued improvement in our parts and service ~~business; (e) further leveraging our revenue~~business as well and ~~gross profit growth through~~we are near prior year levels at the ~~continued implementation of cost efficiencies; (f) implementing focused strategies to improve employee retention and recruitment in both our vehicle sales and aftersales sectors~~end of the ~~business;~~third quarter. Our online selling platform AcceleRide® and ~~(g) growing~~ our online ~~digital effort~~service scheduling platforms continue to show increased utilization rates as we remain in ~~new~~a restricted social distancing environment and ~~used vehicle sales and aftersales.~~such higher utilization rates are expected to continue after the pandemic.

U.K.

~~The ongoing uncertainty related~~U.K. vehicle sales levels were well above prior year levels in most of our brands through February 2020. March, which is a plate change month, is one of the largest selling months of the year with many vehicles delivered from orders placed in January 2020 and February 2020. Due to the ~~ultimate resolution~~closure of ~~Brexit continues~~our facilities and various business restrictions put in place as a result of a shut-down order from the government, we were not able to ~~generate much uncertainty~~deliver approximately 35% of our vehicles at the end of March 2020 that we had contracted to sell prior to the shut-down restrictions. We closed all of our U.K. dealerships from late March 2020 through May 18, 2020 for service, with the exception of emergency vehicle repairs. Our vehicle showrooms were closed for more than two months and did not reopen until June 1, 2020. Operations in the U.K. significantly improved in June 2020 and continued to improve throughout the third quarter. As vehicle sales and service operations reopened, our revenues and margins in all departments increased versus prior year levels. As a result, the U.K. operations made a significant contribution to our quarterly financial results for the third quarter of 2020. While new vehicle volumes have rebounded, our new vehicle inventory is still well below normal levels due to reduced OEM production rates. On October 31, 2020, the U.K. government announced a national lockdown of non-essential businesses, which includes our dealership vehicle showrooms, beginning November 5, 2020 through December 2, 2020, at which time the government will determine whether the lockdown restrictions will be extended. Our dealership service operations will remain open, however this mandate will adversely impact our U.K. vehicle sales in the fourth quarter. See Part II, “Item 1A. Risk Factors” of this Form 10-Q for further discussion of the potential risks if the lockdown is extended.

Brazil

Effective March 20, 2020, all of our dealerships were required to close. Despite restrictions being lifted and businesses reopening in Brazil during the second quarter, the recovery has been limited as the impacts of COVID-19 are still impacting operations significantly.

Cost-Cutting Actions

In all regions we have taken aggressive actions to reduce costs and preserve liquidity, with approximately 8,000 employees furloughed or terminated in early April 2020. As sales have improved in the U.S. and U.K., we have been able to return some of the furloughed employees to a point where our U.S. and U.K. headcounts are approximately 75% of our pre-COVID levels. Along with this, we modified our employee productivity targets in our U.S. and U.K. operations. In addition, other measures were implemented significantly reducing costs in all three regions including reductions of as much as 50% in management compensation, 100% of Board of Directors’ cash compensation, over 75% reduction in advertising expense and cuts across all other cost categories. Additionally, as announced in April 2020, we suspended our dividend and canceled our share repurchase program, as well as implemented capital expenditure deferrals. By the end of the third quarter as market conditions improved, we restored many of these cost reductions and on October 6, 2020 announced a $200 million share repurchase program. As discussed in ~~global markets.~~ “Liquidity and Capital Resources,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with debt covenants.

The ~~U. K.’s negotiations~~demand outlook remains uncertain and the long-term impact of the COVID-19 pandemic is difficult to predict, especially with the E.U. of the withdrawal terms have been extended to January 31, 2020. While it is anticipated that additional negotiations will occur, if no formal withdrawal agreement can ultimately be reached betweenrecently announced lockdown in the U.K. and the E.U., then it is expected that the U.K.’s membership in the E.U. would terminate without any clear trading agreements between the two governing bodies. Such negotiations have been extremely difficult to date. Brexit has, and could continue to adversely affect U.K., European and worldwide economic and market conditions and could contribute to instabilityrising cases in some ~~global financial and foreign exchange markets, including continued volatility in the value~~ of ~~the British pound sterling. More specifically, it could lead to increased U.K. retail prices for new vehicles as the majority of vehicles~~our markets. However, we sell in the U.K. are imported from other countries in Europe and may be subject to additional tariffs, potential shortages in new vehicle inventory availability as breakdowns in the supply chain of automotive retailers and manufacturers due to custom checks could delay delivery of vehicles or parts and other negative effects, which are difficult to predict. As a result of the uncertainty of the potential impact of Brexit, the overall U.K. economy and, more specifically, the adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business operations. Similar to our priorities in the U.S., we are focused on opportunities in the U.K. to enhance our operating results by: (i) integrating recent acquisitions and further leveraging our revenue and gross profit growth through the continued implementation of cost efficiencies; (ii) expanding used vehicle sales by maximizing used retail sales opportunities and limiting wholesale activity; (iii) continuing to focus on our higher margin parts and service business, implementing strategic selling methods and improving operational efficiencies; and (iv) investing capital where necessary to support our anticipated growth, particularly in our parts and service business.

~~Brazil~~

We expect macro-economic conditions in Brazil, as well as retail automotive industry sales, to continue to improve. We remain focused on optimizing our brand portfolio, continuing implementation of cost efficiencies, growing our used vehicle and ~~parts~~service operations in the fourth quarter to return to near prior year levels. Reduced new vehicle inventory levels in the U.S. and ~~service business~~U.K. will likely persist in the fourth quarter and ~~leveraging our structure with dealership acquisitions. Longer term,~~will limit the recovery in new vehicle unit sales in the fourth quarter. However, we expect ~~sustained~~to continue the trend set in the third quarter of offsetting much or all of the decline in volume with improvements in ~~industry sales volumes~~gross margin. We will remain vigilant and are ~~utilizing a strategy~~prepared to adjust our cost structure to adapt to the market conditions. While some of ~~aligning with growing brands.~~the cost reductions taken in the first and second quarters were reinstated in the third quarter as market conditions improved, we expect to be more cost efficient going forward compared to pre-pandemic levels. Any potential impact of the COVID-19 pandemic will depend on future developments and new information that may emerge regarding the severity and duration of the pandemic and the actions taken by authorities to contain it or address its impact, all of which are beyond our control.

Critical Accounting Policies and Accounting Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. ~~generally accepted accounting principles (“U.S. GAAP”)~~GAAP requires management to make certain estimates and assumptions. ~~We disclosed certain~~For additional discussion of our critical accounting policies and accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2018~~most recent Annual Report on Form ~~10-K and no significant changes have occurred since that time.~~10-K.

Results of Operations

The ~~“Same Store”~~“same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us. For example, for a dealership acquired on August 15, 2020, the results from this dealership will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results. If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us. Same ~~Store~~store results ~~also include the activities~~provide a measurement of our ~~corporate headquarters.~~

ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allows management to manage and monitor the performance of the business and is also useful to investors. We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than ~~U.S. dollars~~USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period ~~performance, and to~~performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain ~~disclosures are reported as zero balances, or~~amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.

The following tables summarize our operating results on a reported basis and on a ~~Same Store basis for the three and nine months ended September 30, 2019, as compared to 2018.~~

same store basis:

Reported Operating Data - Consolidated

(In millions, except unit ~~and per unit amounts)~~data)

Three Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 1,652.2
$ 1,539.5
$ 112.7
7.3 % $ (16.9 ) 8.4 %
Used vehicle retail sales 869.7
792.4
77.3
9.8 % (10.9 ) 11.1 %
Used vehicle wholesale sales 85.3
86.6
(1.3 ) (1.5 )% (1.9 ) 0.7 %
Total used 955.0
879.0
76.0
8.6 % (12.8 ) 10.1 %
Parts and service sales 383.5
354.5
29.0
8.2 % (3.2 ) 9.1 %
Finance, insurance and other, net 127.6
116.1
11.5
9.9 % (0.7 ) 10.5 %
Total revenues $ 3,118.3
$ 2,889.1
$ 229.2
7.9 % $ (33.6 ) 9.1 %
Gross profit:
New vehicle retail sales $ 75.2
$ 77.6
$ (2.4 ) (3.1 )% $ (0.9 ) (1.9 )%
Used vehicle retail sales 54.2
50.1
4.1
8.2 % (0.5 ) 9.2 %
Used vehicle wholesale sales 0.4
(0.3 ) 0.7
233.3 % 0.1
197.5 %
Total used 54.6
49.8
4.8
9.6 % (0.4 ) 10.5 %
Parts and service sales 208.2
191.6
16.6
8.7 % (1.7 ) 9.6 %
Finance, insurance and other, net 127.6
116.1
11.5
9.9 % (0.7 ) 10.5 %
Total gross profit $ 465.6
$ 435.1
$ 30.5
7.0 % $ (3.7 ) 7.9 %
Gross margin:
New vehicle retail sales 4.6 % 5.0 % (0.4 )%
Used vehicle retail sales 6.2 % 6.3 % (0.1 )%
Used vehicle wholesale sales 0.5 % (0.3 )% 0.8 %
Total used 5.7 % 5.7 % — %
Parts and service sales 54.3 % 54.0 % 0.3 %
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 14.9 % 15.1 % (0.2 )%
Units sold:
Retail new vehicles sold 44,632
43,584
1,048
2.4 %
Retail used vehicles sold 41,297
37,676
3,621
9.6 %
Wholesale used vehicles sold 12,889
12,902
(13 ) (0.1 )%
Total used 54,186
50,578
3,608
7.1 %
Average sales price per unit sold:
New vehicle retail $ 37,018
$ 35,323
$ 1,695
4.8 % $ (380 ) 5.9 %
Used vehicle retail $ 21,060
$ 21,032
$ 28
0.1 % $ (265 ) 1.4 %
Gross profit per unit sold:
New vehicle retail sales $ 1,685
$ 1,780
$ (95 ) (5.3 )% $ (20 ) (4.2 )%
Used vehicle retail sales $ 1,312
$ 1,330
$ (18 ) (1.4 )% $ (13 ) (0.4 )%
Used vehicle wholesale sales $ 31
$ (23 ) $ 54
234.8 % $ 6
197.6 %
Total used $ 1,008
$ 985
$ 23
2.3 % $ (8 ) 3.1 %
Finance, insurance and other, net (per retail unit) $ 1,485
$ 1,429
$ 56
3.9 % $ (8 ) 4.5 %
Other:
Selling, general and administrative (“SG&A”) expenses $ 354.0
$ 316.8
$ 37.2
11.7 % $ (3.2 ) 12.7 %
SG&A as % gross profit 76.0 % 72.8 % 3.2 %
Floorplan expense:
Floorplan interest expense $ 15.4
$ 14.7
$ 0.7
4.8 % $ —
4.8 %
Less: floorplan assistance ⁽¹⁾
13.3
12.0
1.3
10.8 % —
10.8 %
Net floorplan expense $ 2.1
$ 2.7
$ (0.6 ) (22.2 )% $ —
(22.2 )%



	Three Months Ended September 30,
	2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	1,580.7		$	1,652.3		$	(71.7	)	(4.3	)%	$	4.6		(4.6	)%
Used vehicle retail sales	867.2			869.7			(2.5		)	(0.3	)%	7.3			(1.1	)%
Used vehicle wholesale sales	86.7			85.2			1.5			1.7	%	0.8			0.7	%
Total used	953.9			955.0			(1.1		)	(0.1	)%	8.1			(1.0	)%
Parts and service sales	375.6			383.5			(7.9		)	(2.1	)%	(0.1		)	(2.0	)%
F&I, net	129.5			127.5			2.0			1.5	%	0.3			1.3	%
Total revenues	$	3,039.6		$	3,118.3		$	(78.7	)	(2.5	)%	$	12.9		(2.9	)%
Gross profit:
New vehicle retail sales	$	99.2		$	75.4		$	23.8		31.6	%	$	(0.2	)	31.9	%
Used vehicle retail sales	71.1			54.3			16.8			31.0	%	0.5			30.2	%
Used vehicle wholesale sales	5.9			0.3			5.6			1,745.3	%	—			1,743.5	%
Total used	77.0			54.6			22.5			41.2	%	0.5			40.3	%
Parts and service sales	206.2			208.1			(1.9		)	(0.9	)%	0.3			(1.1	)%
F&I, net	129.5			127.5			2.0			1.5	%	0.3			1.3	%
Total gross profit	$	512.0		$	465.6		$	46.3		10.0	%	$	0.8		9.8	%
Gross margin:
New vehicle retail sales	6.3		%	4.6		%	1.7		%
Used vehicle retail sales	8.2		%	6.2		%	2.0		%
Used vehicle wholesale sales	6.9		%	0.4		%	6.5		%
Total used	8.1		%	5.7		%	2.4		%
Parts and service sales	54.9		%	54.3		%	0.6		%
F&I, net	100.0		%	100.0		%	—		%
Total gross margin	16.8		%	14.9		%	1.9		%
Units sold:
Retail new vehicles sold	39,869			44,632			(4,763		)	(10.7	)%
Retail used vehicles sold	38,347			41,297			(2,950		)	(7.1	)%
Wholesale used vehicles sold	11,581			12,889			(1,308		)	(10.1	)%
Total used	49,928			54,186			(4,258		)	(7.9	)%
Average sales price per unit sold:
New vehicle retail	$	39,647		$	37,022		$	2,625		7.1	%	$	115		6.8	%
Used vehicle retail	$	22,614		$	21,060		$	1,554		7.4	%	$	190		6.5	%
Gross profit per unit sold:
New vehicle retail sales	$	2,489		$	1,689		$	800		47.4	%	$	(5	)	47.6	%
Used vehicle retail sales	$	1,854		$	1,314		$	540		41.1	%	$	12		40.2	%
Used vehicle wholesale sales	$	513		$	25		$	488		1,953.7	%	$	1		1,951.7	%
Total used	$	1,543		$	1,007		$	536		53.2	%	$	9		52.3	%
F&I PRU	$	1,655		$	1,484		$	171		11.5	%	$	4		11.3	%
Other:
SG&A expenses	$	305.8		$	353.9		$	(48.1	)	(13.6	)%	$	—		(13.6	)%
SG&A as % gross profit	59.7		%	76.0		%	(16.3		)%
Floorplan expense:
Floorplan interest expense	$	8.1		$	15.3		$	(7.2	)	(47.1	)%	$	0.1		(47.5	)%
Less: floorplan assistance ⁽¹⁾	12.7			13.3			(0.6		)	(4.8	)%	—			(4.8	)%
Net floorplan expense	$	(4.6	)	$	2.0		$	(6.6	)	(326.0	)%	$	0.1		(328.6	)%

⁽¹⁾ Floorplan assistance is included within New vehicle retail sales Gross profit above and New vehicle retail sales Cost of sales in ~~the Company’s~~our Condensed Consolidated Statements of Operations.

Same Store Operating Data - Consolidated

(In millions, except unit ~~and per unit amounts)~~data)


		Three Months Ended September 30,																Three Months Ended September 30,
		2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:	Revenues:
New vehicle retail sales	New vehicle retail sales	$	1,601.4		$	1,502.6		$	98.8		6.6	%	$	(16.0	)	7.6	%	$	1,549.8		$	1,644.4		$	(94.6	)	(5.8	)%	$	4.1		(6.0	)%
Used vehicle retail sales	Used vehicle retail sales	838.6			770.4			68.2			8.9	%	(10.1		)	10.2	%	843.8			864.0			(20.3		)	(2.3	)%	6.9			(3.1	)%
Used vehicle wholesale sales	Used vehicle wholesale sales	82.8			83.1			(0.3		)	(0.4	)%	(1.9		)	1.9	%	84.5			84.2			0.3			0.4	%	0.8			(0.5	)%
Total used	Total used	921.4			853.5			67.9			8.0	%	(12.0		)	9.4	%	928.3			948.2			(19.9		)	(2.1	)%	7.7			(2.9	)%
Parts and service sales	Parts and service sales	371.3			342.8			28.5			8.3	%	(2.8		)	9.1	%	367.3			377.0			(9.7		)	(2.6	)%	(0.3		)	(2.5	)%
Finance, insurance and other, net		124.0			113.5			10.5			9.3	%	(0.6		)	9.9	%
F&I, net																		127.8			127.0			0.8			0.6	%	0.3			0.4	%
Total revenues	Total revenues	$	3,018.1		$	2,812.4		$	205.7		7.3	%	$	(31.4	)	8.4	%	$	2,973.2		$	3,096.7		$	(123.5	)	(4.0	)%	$	11.8		(4.4	)%
Gross profit:	Gross profit:
New vehicle retail sales	New vehicle retail sales	$	71.9		$	76.3		$	(4.4	)	(5.8	)%	$	(0.9	)	(4.7	)%	$	96.9		$	74.9		$	22.0		29.4	%	$	(0.2	)	29.7	%
Used vehicle retail sales	Used vehicle retail sales	52.5			48.7			3.8			7.8	%	(0.2		)	8.7	%	69.3			54.0			15.3			28.3	%	0.4			27.5	%
Used vehicle wholesale sales	Used vehicle wholesale sales	0.4			(0.2		)	0.6			300.0	%	(0.1		)	300.0	%	5.8			0.3			5.5			1,635.0	%	—			1,634.2	%
Total used	Total used	52.9			48.5			4.4			9.1	%	(0.3		)	9.9	%	75.1			54.3			20.8			38.3	%	0.4			37.5	%
Parts and service sales	Parts and service sales	201.3			186.2			15.1			8.1	%	(1.7		)	8.9	%	201.0			205.1			(4.0		)	(2.0	)%	0.2			(2.1	)%
Finance, insurance and other, net		124.0			113.5			10.5			9.3	%	(0.6		)	9.9	%
F&I, net																		127.8			127.0			0.8			0.6	%	0.3			0.4	%
Total gross profit	Total gross profit	$	450.1		$	424.5		$	25.6		6.0	%	$	(3.5	)	6.8	%	$	500.8		$	461.3		$	39.5		8.6	%	$	0.7		8.4	%
Gross margin:	Gross margin:
New vehicle retail sales	New vehicle retail sales	4.5		%	5.1		%	(0.6		)%								6.3		%	4.6		%	1.7		%
Used vehicle retail sales	Used vehicle retail sales	6.3		%	6.3		%	—		%								8.2		%	6.2		%	2.0		%
Used vehicle wholesale sales	Used vehicle wholesale sales	0.5		%	(0.2		)%	0.7		%								6.9		%	0.4		%	6.5		%
Total used	Total used	5.7		%	5.7		%	—		%								8.1		%	5.7		%	2.4		%
Parts and service sales	Parts and service sales	54.2		%	54.3		%	(0.1		)%								54.7		%	54.4		%	0.3		%
Finance, insurance and other, net		100.0		%	100.0		%	—		%
F&I, net																		100.0		%	100.0		%	—		%
Total gross margin	Total gross margin	14.9		%	15.1		%	(0.2		)%								16.8		%	14.9		%	1.9		%
Units sold:	Units sold:
Retail new vehicles sold	Retail new vehicles sold	42,964			42,130			834			2.0	%						39,152			44,389			(5,237		)	(11.8	)%
Retail used vehicles sold	Retail used vehicles sold	39,730			36,534			3,196			8.7	%						37,486			40,990			(3,504		)	(8.5	)%
Wholesale used vehicles sold	Wholesale used vehicles sold	12,420			12,435			(15		)	(0.1	)%						11,312			12,751			(1,439		)	(11.3	)%
Total used	Total used	52,150			48,969			3,181			6.5	%						48,798			53,741			(4,943		)	(9.2	)%
Average sales price per unit sold:	Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	37,273		$	35,666		$	1,607		4.5	%	$	(369	)	5.5	%	$	39,584		$	37,046		$	2,538		6.9	%	$	104		6.6	%
Used vehicle retail	Used vehicle retail	$	21,107		$	21,087		$	20		0.1	%	$	(257	)	1.3	%	$	22,509		$	21,079		$	1,430		6.8	%	$	185		5.9	%
Gross profit per unit sold:	Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	1,673		$	1,811		$	(138	)	(7.6	)%	$	(19	)	(6.6	)%	$	2,475		$	1,687		$	788		46.7	%	$	(5	)	47.0	%
Used vehicle retail sales	Used vehicle retail sales	$	1,321		$	1,333		$	(12	)	(0.9	)%	$	(12	)	—	%	$	1,848		$	1,317		$	531		40.3	%	$	12		39.4	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	32		$	(16	)	$	48		300.0	%	$	2		254.4	%	$	516		$	26		$	490		1,855.7	%	$	—		1,854.8	%
Total used	Total used	$	1,014		$	990		$	24		2.4	%	$	(8	)	3.2	%	$	1,539		$	1,011		$	528		52.3	%	$	9		51.4	%
Finance, insurance and other, net (per retail unit)		$	1,500		$	1,443		$	57		4.0	%	$	(8	)	4.5	%
F&I PRU																		$	1,668		$	1,488		$	180		12.1	%	$	3		11.9	%
Other:	Other:
SG&A expenses	SG&A expenses	$	340.0		$	308.2		$	31.8		10.3	%	$	(3.0	)	11.3	%	$	298.9		$	348.6		$	(49.7	)	(14.3	)%	$	(0.1	)	(14.2	)%
SG&A as % gross profit	SG&A as % gross profit	75.5		%	72.6		%	2.9		%								59.7		%	75.6		%	(15.9		)%

Reported Operating Data - Consolidated

(In millions, except unit ~~and per unit amounts)~~data)

Nine Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 4,632.2
$ 4,608.7
$ 23.5
0.5 % $ (74.5 ) 2.1 %
Used vehicle retail sales 2,527.8
2,394.8
133.0
5.6 % (40.7 ) 7.3 %
Used vehicle wholesale sales 273.4
283.4
(10.0 ) (3.5 )% (8.4 ) (0.6 )%
Total used 2,801.2
2,678.2
123.0
4.6 % (49.1 ) 6.4 %
Parts and service sales 1,130.8
1,062.1
68.7
6.5 % (13.3 ) 7.7 %
Finance, insurance and other, net 368.2
343.5
24.7
7.2 % (3.0 ) 8.1 %
Total revenues $ 8,932.4
$ 8,692.5
$ 239.9
2.8 % $ (139.9 ) 4.4 %
Gross profit:
New vehicle retail sales $ 216.5
$ 229.6
$ (13.1 ) (5.7 )% $ (3.2 ) (4.3 )%
Used vehicle retail sales 155.3
144.8
10.5
7.3 % (1.9 ) 8.6 %
Used vehicle wholesale sales 0.7
1.6
(0.9 ) (56.3 )% —
(56.3 )%
Total used 156.0
146.4
9.6
6.6 % (1.9 ) 7.9 %
Parts and service sales 610.7
573.5
37.2
6.5 % (7.0 ) 7.7 %
Finance, insurance and other, net 368.2
343.5
24.7
7.2 % (3.0 ) 8.1 %
Total gross profit $ 1,351.4
$ 1,293.0
$ 58.4
4.5 % $ (15.1 ) 5.7 %
Gross margin:
New vehicle retail sales 4.7 % 5.0 % (0.3 )%
Used vehicle retail sales 6.1 % 6.0 % 0.1 %
Used vehicle wholesale sales 0.3 % 0.6 % (0.3 )%
Total used 5.6 % 5.5 % 0.1 %
Parts and service sales 54.0 % 54.0 % — %
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 15.1 % 14.9 % 0.2 %
Units sold:
Retail new vehicles sold 125,599
128,245
(2,646 ) (2.1 )%
Retail used vehicles sold 119,878
111,900
7,978
7.1 %
Wholesale used vehicles sold 38,962
41,798
(2,836 ) (6.8 )%
Total used 158,840
153,698
5,142
3.3 %
Average sales price per unit sold:
New vehicle retail $ 36,881
$ 35,937
$ 944
2.6 % $ (593 ) 4.3 %
Used vehicle retail $ 21,086
$ 21,401
$ (315 ) (1.5 )% $ (340 ) 0.1 %
Gross profit per unit sold:
New vehicle retail sales $ 1,724
$ 1,790
$ (66 ) (3.7 )% $ (25 ) (2.3 )%
Used vehicle retail sales $ 1,295
$ 1,294
$ 1
0.1 % $ (17 ) 1.4 %
Used vehicle wholesale sales $ 18
$ 38
$ (20 ) (52.6 )% $ 1
(55.6 )%
Total used $ 982
$ 953
$ 29
3.0 % $ (13 ) 4.4 %
Finance, insurance and other, net (per retail unit) $ 1,500
$ 1,430
$ 70
4.9 % $ (12 ) 5.7 %
Other:
SG&A expenses $ 1,020.4
$ 949.2
$ 71.2
7.5 % $ (13.0 ) 8.9 %
SG&A as % gross profit 75.5 % 73.4 % 2.1 %

Floorplan expense:
Floorplan interest expense $ 47.0
$ 43.3
$ 3.7
8.5 % $ (0.3 ) 9.2 %
Less: floorplan assistance ⁽¹⁾
35.6
34.5
1.1
3.2 % 0.1
3.2 %
Net floorplan expense $ 11.4
$ 8.8
$ 2.6
29.5 % $ (0.4 ) 32.9 %



	Nine Months Ended September 30,
	2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	3,985.5		$	4,632.2		$	(646.7	)	(14.0	)%	$	(28.3	)	(13.4	)%
Used vehicle retail sales	2,287.4			2,527.8			(240.4		)	(9.5	)%	(6.5		)	(9.3	)%
Used vehicle wholesale sales	221.9			273.4			(51.5		)	(18.8	)%	(2.2		)	(18.0	)%
Total used	2,509.3			2,801.2			(291.9		)	(10.4	)%	(8.7		)	(10.1	)%
Parts and service sales	1,028.2			1,130.8			(102.6		)	(9.1	)%	(5.8		)	(8.6	)%
F&I, net	338.7			368.2			(29.5		)	(8.0	)%	(0.9		)	(7.8	)%
Total revenues	$	7,861.7		$	8,932.4		$	(1,070.7	)	(12.0	)%	$	(43.7	)	(11.5	)%
Gross profit:
New vehicle retail sales	$	225.8		$	216.5		$	9.3		4.3	%	$	(2.2	)	5.3	%
Used vehicle retail sales	159.5			155.4			4.2			2.7	%	(0.4		)	3.0	%
Used vehicle wholesale sales	9.0			0.7			8.3			1,220.0	%	(0.1		)	1,238.3	%
Total used	168.5			156.0			12.5			8.0	%	(0.6		)	8.3	%
Parts and service sales	554.2			610.7			(56.4		)	(9.2	)%	(2.5		)	(8.8	)%
F&I, net	338.7			368.2			(29.5		)	(8.0	)%	(0.9		)	(7.8	)%
Total gross profit	$	1,287.2		$	1,351.4		$	(64.1	)	(4.7	)%	$	(6.0	)	(4.3	)%
Gross margin:
New vehicle retail sales	5.7		%	4.7		%	1.0		%
Used vehicle retail sales	7.0		%	6.1		%	0.8		%
Used vehicle wholesale sales	4.0		%	0.2		%	3.8		%
Total used	6.7		%	5.6		%	1.1		%
Parts and service sales	53.9		%	54.0		%	(0.1		)%
F&I, net	100.0		%	100.0		%	—		%
Total gross margin	16.4		%	15.1		%	1.2		%
Units sold:
Retail new vehicles sold	101,701			125,599			(23,898		)	(19.0	)%
Retail used vehicles sold	105,665			119,878			(14,213		)	(11.9	)%
Wholesale used vehicles sold	30,970			38,962			(7,992		)	(20.5	)%
Total used	136,635			158,840			(22,205		)	(14.0	)%
Average sales price per unit sold:
New vehicle retail	$	39,189		$	36,881		$	2,308		6.3	%	$	(278	)	7.0	%
Used vehicle retail	$	21,648		$	21,087		$	562		2.7	%	$	(61	)	3.0	%
Gross profit per unit sold:
New vehicle retail sales	$	2,220		$	1,724		$	497		28.8	%	$	(21	)	30.1	%
Used vehicle retail sales	$	1,510		$	1,296		$	214		16.5	%	$	(4	)	16.8	%
Used vehicle wholesale sales	$	290		$	17		$	272		1,560.6	%	$	(4	)	1,583.7	%
Total used	$	1,233		$	982		$	251		25.5	%	$	(4	)	26.0	%
F&I PRU	$	1,633		$	1,500		$	133		8.9	%	$	(4	)	9.2	%
Other:
SG&A expenses	$	870.9		$	1,020.3		$	(149.4	)	(14.6	)%	$	(6.0	)	(14.1	)%
SG&A as % gross profit	67.7		%	75.5		%	(7.8		)%
Floorplan expense:
Floorplan interest expense	$	31.1		$	47.0		$	(15.9	)	(33.8	)%	$	(0.1	)	(33.6	)%
Less: floorplan assistance ⁽¹⁾	33.0			35.6			(2.6		)	(7.2	)%	—			(7.2	)%
Net floorplan expense	$	(1.9	)	$	11.4		$	(13.3	)	(117.1	)%	$	(0.1	)	(116.2	)%

Same Store Operating Data - Consolidated

(In millions, except unit ~~and per unit amounts)~~data)


		Nine Months Ended September 30,																	Nine Months Ended September 30,
		2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change			2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:	Revenues:																	Revenues:
New vehicle retail sales	New vehicle retail sales	$	4,476.8		$	4,474.7		$	2.1		—	%	$	(69.8	)	1.6	%	New vehicle retail sales	$	3,882.7		$	4,587.8		$	(705.1	)	(15.4	)%	$	(27.7	)	(14.8	)%
Used vehicle retail sales	Used vehicle retail sales	2,434.8			2,330.0			104.8			4.5	%	(38.5		)	6.1	%	Used vehicle retail sales	2,216.8			2,495.1			(278.2		)	(11.2	)%	(6.4		)	(10.9	)%
Used vehicle wholesale sales	Used vehicle wholesale sales	263.5			274.3			(10.8		)	(3.9	)%	(8.2		)	(0.9	)%	Used vehicle wholesale sales	214.4			265.0			(50.6		)	(19.1	)%	(2.2		)	(18.3	)%
Total used	Total used	2,698.3			2,604.3			94.0			3.6	%	(46.7		)	5.4	%	Total used	2,431.2			2,760.1			(328.8		)	(11.9	)%	(8.6		)	(11.6	)%
Parts and service sales	Parts and service sales	1,099.5			1,023.2			76.3			7.5	%	(12.2		)	8.7	%	Parts and service sales	1,000.2			1,109.3			(109.1		)	(9.8	)%	(5.9		)	(9.3	)%
Finance, insurance and other, net		357.4			335.6			21.8			6.5	%	(2.9		)	7.3	%
F&I, net																		F&I, net	333.5			365.4			(31.9		)	(8.7	)%	(0.8		)	(8.5	)%
Total revenues	Total revenues	$	8,632.0		$	8,437.8		$	194.2		2.3	%	$	(131.6	)	3.9	%	Total revenues	$	7,647.6		$	8,822.6		$	(1,175.0	)	(13.3	)%	$	(43.0	)	(12.8	)%
Gross profit:	Gross profit:																	Gross profit:
New vehicle retail sales	New vehicle retail sales	$	208.5		$	223.8		$	(15.3	)	(6.8	)%	$	(2.9	)	(5.5	)%	New vehicle retail sales	$	218.0		$	214.7		$	3.3		1.5	%	$	(2.1	)	2.5	%
Used vehicle retail sales	Used vehicle retail sales	150.3			141.1			9.2			6.5	%	(1.8		)	7.8	%	Used vehicle retail sales	154.8			154.2			0.7			0.4	%	(0.4		)	0.7	%
Used vehicle wholesale sales	Used vehicle wholesale sales	1.0			2.0			(1.0		)	(50.0	)%	—			(50.0	)%	Used vehicle wholesale sales	8.9			0.9			8.0			883.8	%	(0.1		)	897.4	%
Total used	Total used	151.3			143.1			8.2			5.7	%	(1.8		)	7.0	%	Total used	163.7			155.1			8.6			5.6	%	(0.6		)	5.9	%
Parts and service sales	Parts and service sales	592.2			555.0			37.2			6.7	%	(6.5		)	7.9	%	Parts and service sales	538.4			600.3			(61.9		)	(10.3	)%	(2.5		)	(9.9	)%
Finance, insurance and other, net		357.4			335.6			21.8			6.5	%	(2.9		)	7.3	%
F&I, net																		F&I, net	333.5			365.4			(31.9		)	(8.7	)%	(0.8		)	(8.5	)%
Total gross profit	Total gross profit	$	1,309.4		$	1,257.5		$	51.9		4.1	%	$	(14.1	)	5.2	%	Total gross profit	$	1,253.6		$	1,335.5		$	(81.9	)	(6.1	)%	$	(6.0	)	(5.7	)%
Gross margin:	Gross margin:																	Gross margin:
New vehicle retail sales	New vehicle retail sales	4.7		%	5.0		%	(0.3		)%								New vehicle retail sales	5.6		%	4.7		%	0.9		%
Used vehicle retail sales	Used vehicle retail sales	6.2		%	6.1		%	0.1		%								Used vehicle retail sales	7.0		%	6.2		%	0.8		%
Used vehicle wholesale sales	Used vehicle wholesale sales	0.4		%	0.7		%	(0.3		)%								Used vehicle wholesale sales	4.1		%	0.3		%	3.8		%
Total used	Total used	5.6		%	5.5		%	0.1		%								Total used	6.7		%	5.6		%	1.1		%
Parts and service sales	Parts and service sales	53.9		%	54.2		%	(0.3		)%								Parts and service sales	53.8		%	54.1		%	(0.3		)%
Finance, insurance and other, net		100.0		%	100.0		%	—		%
F&I, net																		F&I, net	100.0		%	100.0		%	—		%
Total gross margin	Total gross margin	15.2		%	14.9		%	0.3		%								Total gross margin	16.4		%	15.1		%	1.3		%
Units sold:	Units sold:																	Units sold:
Retail new vehicles sold	Retail new vehicles sold	120,596			123,896			(3,300		)	(2.7	)%						Retail new vehicles sold	99,073			123,927			(24,854		)	(20.1	)%
Retail used vehicles sold	Retail used vehicles sold	115,154			108,716			6,438			5.9	%						Retail used vehicles sold	102,802			118,142			(15,340		)	(13.0	)%
Wholesale used vehicles sold	Wholesale used vehicles sold	37,270			40,543			(3,273		)	(8.1	)%						Wholesale used vehicles sold	30,030			38,135			(8,105		)	(21.3	)%
Total used	Total used	152,424			149,259			3,165			2.1	%						Total used	132,832			156,277			(23,445		)	(15.0	)%
Average sales price per unit sold:	Average sales price per unit sold:																	Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	37,122		$	36,117		$	1,005		2.8	%	$	(580	)	4.4	%	New vehicle retail	$	39,190		$	37,020		$	2,170		5.9	%	$	(280	)	6.6	%
Used vehicle retail	Used vehicle retail	$	21,144		$	21,432		$	(288	)	(1.3	)%	$	(334	)	0.2	%	Used vehicle retail	$	21,564		$	21,119		$	445		2.1	%	$	(62	)	2.4	%
Gross profit per unit sold:	Gross profit per unit sold:																	Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	1,729		$	1,806		$	(77	)	(4.3	)%	$	(24	)	(3.0	)%	New vehicle retail sales	$	2,200		$	1,733		$	468		27.0	%	$	(22	)	28.2	%
Used vehicle retail sales	Used vehicle retail sales	$	1,305		$	1,298		$	7		0.5	%	$	(16	)	1.8	%	Used vehicle retail sales	$	1,506		$	1,305		$	201		15.4	%	$	(4	)	15.7	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	27		$	49		$	(22	)	(44.9	)%	$	(1	)	(42.8	)%	Used vehicle wholesale sales	$	296		$	24		$	272		1,149.3	%	$	(4	)	1,166.6	%
Total used	Total used	$	993		$	959		$	34		3.5	%	$	(12	)	4.8	%	Total used	$	1,232		$	992		$	240		24.2	%	$	(4	)	24.6	%
Finance, insurance and other, net (per retail unit)		$	1,516		$	1,443		$	73		5.1	%	$	(12	)	5.9	%
F&I PRU																		F&I PRU	$	1,652		$	1,510		$	143		9.4	%	$	(4	)	9.7	%
Other:	Other:																	Other:
SG&A expenses	SG&A expenses	$	987.3		$	936.0		$	51.3		5.5	%	$	(12.2	)	6.8	%	SG&A expenses	$	843.4		$	1,005.9		$	(162.5	)	(16.2	)%	$	(5.9	)	(15.6	)%
SG&A as % gross profit	SG&A as % gross profit	75.4		%	74.4		%	1.0		%								SG&A as % gross profit	67.3		%	75.3		%	(8.0		)%

Reported Operating Data - U.S.

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,											Three Months Ended September 30,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	1,291.7		$	1,196.6		$	95.1		7.9	%	$	1,172.2		$	1,291.8		$	(119.5	)	(9.3	)%
Used vehicle retail sales	657.6			572.0			85.6			15.0	%	608.2			657.7			(49.5		)	(7.5	)%
Used vehicle wholesale sales	45.9			40.7			5.2			12.8	%	44.8			45.8			(1.1		)	(2.3	)%
Total used	703.5			612.7			90.8			14.8	%	653.0			703.5			(50.6		)	(7.2	)%
Parts and service sales	314.9			289.3			25.6			8.8	%	306.4			314.9			(8.5		)	(2.7	)%
Finance, insurance and other, net	112.7			101.6			11.1			10.9	%
F&I, net												113.0			112.7			0.4			0.3	%
Total revenues	$	2,422.8		$	2,200.2		$	222.6		10.1	%	$	2,244.6		$	2,422.8		$	(178.2	)	(7.4	)%
Gross profit:
New vehicle retail sales	$	58.6		$	57.3		$	1.3		2.3	%	$	79.8		$	58.7		$	21.1		36.0	%
Used vehicle retail sales	43.5			37.2			6.3			16.9	%	52.8			43.6			9.3			21.3	%
Used vehicle wholesale sales	0.4			0.4			—			—	%	3.7			0.3			3.4			1,003.9	%
Total used	43.9			37.6			6.3			16.8	%	56.6			43.9			12.7			28.8	%
Parts and service sales	171.8			156.0			15.8			10.1	%	166.3			171.7			(5.4		)	(3.1	)%
Finance, insurance and other, net	112.7			101.6			11.1			10.9	%
F&I, net												113.0			112.7			0.4			0.3	%
Total gross profit	$	387.0		$	352.5		$	34.5		9.8	%	$	415.7		$	386.9		$	28.8		7.4	%
Gross margin:
New vehicle retail sales	4.5		%	4.8		%	(0.3		)%			6.8		%	4.5		%	2.3		%
Used vehicle retail sales	6.6		%	6.5		%	0.1		%			8.7		%	6.6		%	2.1		%
Used vehicle wholesale sales	0.9		%	1.0		%	(0.1		)%			8.3		%	0.7		%	7.6		%
Total used	6.2		%	6.1		%	0.1		%			8.7		%	6.2		%	2.4		%
Parts and service sales	54.6		%	53.9		%	0.7		%			54.3		%	54.5		%	(0.2		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.0		%	16.0		%	—		%			18.5		%	16.0		%	2.6		%
Units sold:
Retail new vehicles sold	33,041			32,058			983			3.1	%	27,980			33,041			(5,061		)	(15.3	)%
Retail used vehicles sold	31,505			28,125			3,380			12.0	%	27,694			31,505			(3,811		)	(12.1	)%
Wholesale used vehicles sold	7,565			7,118			447			6.3	%	6,195			7,565			(1,370		)	(18.1	)%
Total used	39,070			35,243			3,827			10.9	%	33,889			39,070			(5,181		)	(13.3	)%
Average sales price per unit sold:
New vehicle retail	$	39,094		$	37,326		$	1,768		4.7	%	$	41,895		$	39,096		$	2,800		7.2	%
Used vehicle retail	$	20,873		$	20,338		$	535		2.6	%	$	21,961		$	20,875		$	1,086		5.2	%
Gross profit per unit sold:
New vehicle retail sales	$	1,774		$	1,787		$	(13	)	(0.7	)%	$	2,852		$	1,775		$	1,077		60.6	%
Used vehicle retail sales	$	1,381		$	1,323		$	58		4.4	%	$	1,908		$	1,383		$	525		37.9	%
Used vehicle wholesale sales	$	53		$	56		$	(3	)	(5.4	)%	$	603		$	45		$	559		1,248.0	%
Total used	$	1,124		$	1,067		$	57		5.3	%	$	1,669		$	1,124		$	545		48.5	%
Finance, insurance and other, net (per retail unit)	$	1,746		$	1,688		$	58		3.4	%
F&I PRU												$	2,030		$	1,746		$	285		16.3	%
Other:
SG&A expenses	$	285.4		$	242.2		$	43.2		17.8	%	$	245.2		$	285.3		$	(40.0	)	(14.0	)%
SG&A as % gross profit	73.7		%	68.7		%	5.0		%			59.0		%	73.7		%	(14.7		)%

Same Store Operating Data - U.S.

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,											Three Months Ended September 30,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	1,259.8		$	1,172.4		$	87.4		7.5	%	$	1,157.7		$	1,285.3		$	(127.6	)	(9.9	)%
Used vehicle retail sales	639.0			560.1			78.9			14.1	%	595.3			653.8			(58.5		)	(8.9	)%
Used vehicle wholesale sales	45.0			39.8			5.2			13.1	%	44.2			45.3			(1.1		)	(2.3	)%
Total used	684.0			599.9			84.1			14.0	%	639.5			699.1			(59.5		)	(8.5	)%
Parts and service sales	309.2			282.1			27.1			9.6	%	302.5			312.9			(10.4		)	(3.3	)%
Finance, insurance and other, net	110.1			99.6			10.5			10.5	%
F&I, net												112.1			112.3			(0.2		)	(0.2	)%
Total revenues	$	2,363.1		$	2,154.0		$	209.1		9.7	%	$	2,211.9		$	2,409.6		$	(197.7	)	(8.2	)%
Gross profit:
New vehicle retail sales	$	56.3		$	56.4		$	(0.1	)	(0.2	)%	$	78.2		$	58.2		$	20.0		34.3	%
Used vehicle retail sales	42.5			36.5			6.0			16.4	%	51.7			43.4			8.3			19.1	%
Used vehicle wholesale sales	0.4			0.3			0.1			33.3	%	3.7			0.3			3.4			987.9	%
Total used	42.9			36.8			6.1			16.6	%	55.4			43.8			11.6			26.6	%
Parts and service sales	168.0			152.8			15.2			9.9	%	163.8			170.6			(6.8		)	(4.0	)%
Finance, insurance and other, net	110.1			99.6			10.5			10.5	%
F&I, net												112.1			112.3			(0.2		)	(0.2	)%
Total gross profit	$	377.3		$	345.6		$	31.7		9.2	%	$	409.5		$	384.8		$	24.6		6.4	%
Gross margin:
New vehicle retail sales	4.5		%	4.8		%	(0.3		)%			6.8		%	4.5		%	2.2		%
Used vehicle retail sales	6.7		%	6.5		%	0.2		%			8.7		%	6.6		%	2.0		%
Used vehicle wholesale sales	0.9		%	0.8		%	0.1		%			8.4		%	0.8		%	7.6		%
Total used	6.3		%	6.1		%	0.2		%			8.7		%	6.3		%	2.4		%
Parts and service sales	54.3		%	54.2		%	0.1		%			54.1		%	54.5		%	(0.4		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.0		%	16.0		%	—		%			18.5		%	16.0		%	2.5		%
Units sold:
Retail new vehicles sold	32,212			31,311			901			2.9	%	27,696			32,854			(5,158		)	(15.7	)%
Retail used vehicles sold	30,664			27,396			3,268			11.9	%	27,229			31,267			(4,038		)	(12.9	)%
Wholesale used vehicles sold	7,401			6,929			472			6.8	%	6,122			7,474			(1,352		)	(18.1	)%
Total used	38,065			34,325			3,740			10.9	%	33,351			38,741			(5,390		)	(13.9	)%
Average sales price per unit sold:
New vehicle retail	$	39,110		$	37,444		$	1,666		4.4	%	$	41,801		$	39,121		$	2,679		6.8	%
Used vehicle retail	$	20,839		$	20,445		$	394		1.9	%	$	21,864		$	20,911		$	953		4.6	%
Gross profit per unit sold:
New vehicle retail sales	$	1,748		$	1,801		$	(53	)	(2.9	)%	$	2,824		$	1,772		$	1,052		59.3	%
Used vehicle retail sales	$	1,386		$	1,332		$	54		4.1	%	$	1,898		$	1,388		$	510		36.7	%
Used vehicle wholesale sales	$	54		$	43		$	11		25.6	%	$	604		$	45		$	559		1,228.1	%
Total used	$	1,127		$	1,072		$	55		5.1	%	$	1,661		$	1,129		$	531		47.0	%
Finance, insurance and other, net (per retail unit)	$	1,751		$	1,697		$	54		3.2	%
F&I PRU												$	2,041		$	1,751		$	290		16.6	%
Other:
SG&A expenses	$	278.1		$	238.7		$	39.4		16.5	%	$	241.9		$	282.9		$	(41.0	)	(14.5	)%
SG&A as % gross profit	73.7		%	69.1		%	4.6		%			59.1		%	73.5		%	(14.4		)%

The following discussion of our U.S. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. During the third quarter of 2020, our U.S. dealership operations have been steadily recovering from the impact on business caused by the COVID-19 pandemic.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.S. during the three months ended September 30, ~~2019 increased $222.6~~2020 decreased $178.2 million, or ~~10.1%~~7.4%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.S. during the three months ended September 30, ~~2019 increased $209.1~~2020 decreased $197.7 million, or ~~9.7%~~8.2%, as compared to the same period in ~~2018,~~2019, driven by ~~growth~~declines in all of our revenue streams. ~~New~~The declines of 9.9% in new vehicle retail same store ~~revenue increased 7.5% as a result of a 2.9% increase~~sales, 8.9% in unit sales and a 4.4% increase in average sale price per unit. The increase in average sales price was driven by an increase in overall industry prices and the continued mix shift in sales from cars to trucks. Same store new vehicle truck sales represented 68.5% of same store new vehicle retail unit sales, as compared to 64.9% last year. Usedused vehicle retail same store ~~revenue increased 14.1%,~~sales and 2.3% in used vehicle wholesale same store sales were driven by ~~an 11.9% increase~~decreases of 15.7%, 12.9% and 18.1% in new vehicle, used vehicle retail and used vehicle wholesale unit sales, respectively. The declines in new vehicle retail, used vehicle retail and used vehicle wholesale unit sales were driven by inventory supply constraints, in part due to reduced OEM production rates, as our ~~Val-U-Line® initiative continues to gain traction. In addition, our recent~~dealerships experienced increasing demand for new and used vehicles during the quarter. Our online new and used vehicle sales ~~initiative, “AcceleRide®” ,~~platform, AcceleRide® was ~~implemented~~instrumental in ~~nearly all~~allowing us to connect with and serve our customers throughout the restricted social distancing environment due to the COVID-19 pandemic. During the third quarter of ~~our U.S. dealerships.~~2020, AcceleRide® sales were up 73.1% from a year ago. Parts and service same store ~~revenue increased 9.6% with growth across all businesses lines. The growth was~~revenues, dampened by the impact of the COVID-19 pandemic, decreased 3.3% during the third quarter as compared to the same period last year, driven by ~~an 11.1% increase~~a 23.4% decline in collision revenues and a 1.6% decline in both customer pay and warranty revenues which were partially offset by a ~~10.6% increase in warranty, an 8.3% increase in collision and a 6.6%~~4.4% increase in wholesale parts ~~revenue. Our four-day work week has been rolled out at 72 U.S. dealerships~~revenues. F&I same store revenues were relatively flat as ~~of September 30, 2019~~a 14.3% decline in same store total retail unit sales was offset by improvements in income per contract, higher penetration rates, and ~~has driven an increase~~a decline in our technician count of over 300 professionals in the last twelve months. We expect to roll out a four-day work week in our service departments at additional dealerships in the fourth quarter of 2019, resulting in coverage of approximately 85% of our parts and service revenue. The increase in technician count has significantly driven our increase in parts and service revenue. Finance, insurance and other, net (“F&I”) revenue increased 10.5% as F&I per retail unit (“PRU”) sold increased $54, or 3.2%, resulting from higher finance contract and insurance product penetration rates.overall chargeback experience.

Gross ~~profit~~Profit

Total gross profit in the U.S. during the three months ended September 30, ~~2019~~2020 increased ~~$34.5~~$28.8 million, or ~~9.8%~~7.4%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.S. during the three months ended September 30, ~~2019~~2020 increased ~~$31.7~~$24.6 million, or ~~9.2%~~6.4%, as compared to the same period in ~~2018.~~2019. The increase in same store gross profit was driven by increases in new vehicle retail, used vehicle retail, and used vehicle wholesale, partially offset by a decline in parts and service gross profit compared to the same period last year. New vehicle same store gross profit increased 34.3% driven by a 59.3% increase in new vehicle same store gross profit per unit sold, which more than offset the 15.7% decline in new units sold. The increase in new vehicle retail same store gross profit per unit sold reflects inventory supply constraints as many manufacturers put a hold on production due to the COVID-19 pandemic earlier in the year and ~~F&I gross profit.~~have not returned to normal levels. Used vehicle retail same store gross profit increased 19.1% reflecting an increase of 36.7% in used vehicle retail same store gross profit per unit sold partially offset by ~~$6.0 million, or 16.4%, as our~~a 12.9% decrease in used vehicle retail same store unit sales ~~increased by 11.9% and our recently implemented big-data driven pricing strategies drove a 4.1%~~over the same period in 2019. The increase in used vehicle retail same store gross profit ~~PRU.~~per unit sold reflects supply constraints combined with a strong demand leading to higher margins on used vehicle retail sales. Used vehicle wholesale gross profit increased as industry supply constraints drove up auction prices. Parts and service ~~and~~same store gross profit declined 4.0% driven by the decrease in revenue discussed above. F&I same store gross profit was relatively flat as discussed above. Total same store gross margin increased ~~by 9.9% and 10.5%, respectively,~~250 basis points driven by ~~the increases discussed above in the revenue section.~~higher vehicle prices as a result of supply shortages of new and used vehicle inventory.

SG&A ~~Expense~~Expenses

Our SG&A ~~expense consists~~expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses. Total SG&A ~~expense~~expenses in the U.S. during the three months ended September 30, ~~2019 increased $43.2~~2020 decreased $40.0 million, or ~~17.8%~~14.0%, as compared to the same period in ~~2018.~~2019. Total same store SG&A ~~expense~~expenses in the U.S. during the three months ended September 30, ~~2019 increased $39.4~~2020 decreased $41.0 million, or ~~16.5%~~14.5%, as compared to the same period in ~~2018.~~2019 driven by the implementation and continual execution of cost reduction strategies as a reaction to the COVID-19 pandemic. As market conditions have improved, we have strived to retain our lower operating cost structure as a result of the pandemic and we continued to benefit from these cost cutting measures in the third quarter. Total same store SG&A ~~expense~~expenses in the U.S. in the third quarter of 2019 ~~includes~~included $11.9 million in insurance deductible expense ~~related to inventory and building damage due to flooding from~~associated with Tropical Storm Imelda in Texas and ~~$0.4~~$0.5 million in costs related to dealership and real estate ~~transaction costs.~~transactions. Total same store SG&A ~~expense in 2018 includes $1.7 million of net gains on real estate transactions and a gain of $1.4 million relating to favorable resolution of legal matters. Same store SG&A expense~~ as a %percent of gross profit ~~increased 460 basis points~~decreased from 73.5% in the third quarter of 2019 to 59.1% for the same period of 2020 driven by ~~increased personnel costs as a percentage~~the expense reductions taken to offset the negative impact of gross profit, higher insurance deductible expense and a reduction in gains on real estate transactions. The increase in insurance deductible expense was attributable to $11.9 million in building and vehicle inventory deductibles related to flooding from Tropical Storm Imelda in Texas in 2019. The reduction in net gains is due to $0.4 million in net losses on real estate transactions in 2019 compared to $1.7 million in net gains on real estate transactions in 2018.

the COVID-19 pandemic.

Reported Operating Data - U.S.

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,											Nine Months Ended September 30,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	3,512.1		$	3,433.4		$	78.7		2.3	%	$	3,076.3		$	3,512.3		$	(436.0	)	(12.4	)%
Used vehicle retail sales	1,877.6			1,727.8			149.8			8.7	%	1,719.4			1,877.5			(158.1		)	(8.4	)%
Used vehicle wholesale sales	133.0			137.5			(4.5		)	(3.3	)%	122.1			132.9			(10.8		)	(8.1	)%
Total used	2,010.6			1,865.3			145.3			7.8	%	1,841.5			2,010.5			(169.0		)	(8.4	)%
Parts and service sales	922.2			862.6			59.6			6.9	%	865.2			922.1			(56.9		)	(6.2	)%
Finance, insurance and other, net	319.4			295.2			24.2			8.2	%
F&I, net												300.2			319.4			(19.2		)	(6.0	)%
Total revenues	$	6,764.3		$	6,456.5		$	307.8		4.8	%	$	6,083.3		$	6,764.3		$	(681.0	)	(10.1	)%
Gross profit:
New vehicle retail sales	$	164.3		$	166.8		$	(2.5	)	(1.5	)%	$	183.6		$	164.2		$	19.4		11.8	%
Used vehicle retail sales	125.1			109.5			15.6			14.2	%	125.7			125.2			0.6			0.4	%
Used vehicle wholesale sales	2.4			3.4			(1.0		)	(29.4	)%	6.2			2.4			3.7			154.3	%
Total used	127.5			112.9			14.6			12.9	%	131.9			127.6			4.3			3.4	%
Parts and service sales	499.4			463.9			35.5			7.7	%	465.4			499.3			(33.9		)	(6.8	)%
Finance, insurance and other, net	319.4			295.2			24.2			8.2	%
F&I, net												300.2			319.4			(19.2		)	(6.0	)%
Total gross profit	$	1,110.6		$	1,038.8		$	71.8		6.9	%	$	1,081.1		$	1,110.5		$	(29.4	)	(2.6	)%
Gross margin:
New vehicle retail sales	4.7		%	4.9		%	(0.2		)%			6.0		%	4.7		%	1.3		%
Used vehicle retail sales	6.7		%	6.3		%	0.4		%			7.3		%	6.7		%	0.6		%
Used vehicle wholesale sales	1.8		%	2.5		%	(0.7		)%			5.0		%	1.8		%	3.2		%
Total used	6.3		%	6.1		%	0.2		%			7.2		%	6.3		%	0.8		%
Parts and service sales	54.2		%	53.8		%	0.4		%			53.8		%	54.1		%	(0.4		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.4		%	16.1		%	0.3		%			17.8		%	16.4		%	1.4		%
Units sold:
Retail new vehicles sold	89,749			91,119			(1,370		)	(1.5	)%	74,412			89,749			(15,337		)	(17.1	)%
Retail used vehicles sold	91,299			83,919			7,380			8.8	%	81,494			91,299			(9,805		)	(10.7	)%
Wholesale used vehicles sold	21,543			23,793			(2,250		)	(9.5	)%	18,372			21,543			(3,171		)	(14.7	)%
Total used	112,842			107,712			5,130			4.8	%	99,866			112,842			(12,976		)	(11.5	)%
Average sales price per unit sold:
New vehicle retail	$	39,132		$	37,680		$	1,452		3.9	%	$	41,342		$	39,135		$	2,207		5.6	%
Used vehicle retail	$	20,565		$	20,589		$	(24	)	(0.1	)%	$	21,099		$	20,565		$	534		2.6	%
Gross profit per unit sold:							—
New vehicle retail sales	$	1,831		$	1,831		$	—		—	%	$	2,467		$	1,830		$	637		34.8	%
Used vehicle retail sales	$	1,370		$	1,305		$	65		5.0	%	$	1,543		$	1,371		$	172		12.5	%
Used vehicle wholesale sales	$	111		$	143		$	(32	)	(22.4	)%	$	336		$	113		$	223		198.2	%
Total used	$	1,130		$	1,048		$	82		7.8	%	$	1,321		$	1,131		$	190		16.8	%
Finance, insurance and other, net (per retail unit)	$	1,764		$	1,686		$	78		4.6	%
F&I PRU												$	1,926		$	1,764		$	162		9.2	%
Other:
SG&A expenses	$	809.6		$	729.4		$	80.2		11.0	%	$	706.0		$	809.5		$	(103.5	)	(12.8	)%
SG&A as % gross profit	72.9		%	70.2		%	2.7		%			65.3		%	72.9		%	(7.6		)%

Same Store Operating Data - U.S.

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,											Nine Months Ended September 30,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	3,430.1		$	3,348.2		$	81.9		2.4	%	$	3,026.1		$	3,494.0		$	(467.9	)	(13.4	)%
Used vehicle retail sales	1,828.5			1,687.2			141.3			8.4	%	1,680.6			1,861.4			(180.8		)	(9.7	)%
Used vehicle wholesale sales	130.2			133.7			(3.5		)	(2.6	)%	120.4			130.2			(9.8		)	(7.5	)%
Total used	1,958.7			1,820.9			137.8			7.6	%	1,801.0			1,991.6			(190.6		)	(9.6	)%
Parts and service sales	910.2			836.2			74.0			8.8	%	850.3			914.6			(64.3		)	(7.0	)%
Finance, insurance and other, net	311.9			289.0			22.9			7.9	%
F&I, net												297.5			317.6			(20.1		)	(6.3	)%
Total revenues	$	6,610.9		$	6,294.3		$	316.6		5.0	%	$	5,974.9		$	6,717.8		$	(742.9	)	(11.1	)%
Gross profit:
New vehicle retail sales	$	159.3		$	162.6		$	(3.3	)	(2.0	)%	$	178.0		$	163.2		$	14.7		9.0	%
Used vehicle retail sales	122.6			107.0			15.6			14.6	%	122.7			124.3			(1.7		)	(1.3	)%
Used vehicle wholesale sales	2.4			3.4			(1.0		)	(29.4	)%	6.1			2.5			3.7			150.6	%
Total used	125.0			110.4			14.6			13.2	%	128.8			126.8			2.0			1.6	%
Parts and service sales	491.0			451.6			39.4			8.7	%	456.7			495.5			(38.8		)	(7.8	)%
Finance, insurance and other, net	311.9			289.0			22.9			7.9	%
F&I, net												297.5			317.6			(20.1		)	(6.3	)%
Total gross profit	$	1,087.2		$	1,013.6		$	73.6		7.3	%	$	1,061.0		$	1,103.2		$	(42.1	)	(3.8	)%
Gross margin:
New vehicle retail sales	4.6		%	4.9		%	(0.3		)%			5.9		%	4.7		%	1.2		%
Used vehicle retail sales	6.7		%	6.3		%	0.4		%			7.3		%	6.7		%	0.6		%
Used vehicle wholesale sales	1.8		%	2.5		%	(0.7		)%			5.1		%	1.9		%	3.2		%
Total used	6.4		%	6.1		%	0.3		%			7.2		%	6.4		%	0.8		%
Parts and service sales	53.9		%	54.0		%	(0.1		)%			53.7		%	54.2		%	(0.5		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.4		%	16.1		%	0.3		%			17.8		%	16.4		%	1.3		%
Units sold:
Retail new vehicles sold	87,369			88,913			(1,544		)	(1.7	)%	73,433			89,170			(15,737		)	(17.6	)%
Retail used vehicles sold	88,826			81,846			6,980			8.5	%	80,055			90,190			(10,135		)	(11.2	)%
Wholesale used vehicles sold	20,940			23,158			(2,218		)	(9.6	)%	18,169			21,159			(2,990		)	(14.1	)%
Total used	109,766			105,004			4,762			4.5	%	98,224			111,349			(13,125		)	(11.8	)%
Average sales price per unit sold:
New vehicle retail	$	39,260		$	37,657		$	1,603		4.3	%	$	41,209		$	39,183		$	2,026		5.2	%
Used vehicle retail	$	20,585		$	20,614		$	(29	)	(0.1	)%	$	20,993		$	20,639		$	354		1.7	%
Gross profit per unit sold:
New vehicle retail sales	$	1,823		$	1,829		$	(6	)	(0.3	)%	$	2,424		$	1,831		$	593		32.4	%
Used vehicle retail sales	$	1,380		$	1,307		$	73		5.6	%	$	1,532		$	1,378		$	154		11.2	%
Used vehicle wholesale sales	$	115		$	147		$	(32	)	(21.8	)%	$	338		$	116		$	222		191.8	%
Total used	$	1,139		$	1,051		$	88		8.4	%	$	1,311		$	1,138		$	173		15.2	%
Finance, insurance and other, net (per retail unit)	$	1,770		$	1,692		$	78		4.6	%
F&I PRU												$	1,938		$	1,771		$	167		9.4	%
Other:
SG&A expenses	$	794.2		$	728.4		$	65.8		9.0	%	$	693.1		$	805.5		$	(112.4	)	(14.0	)%
SG&A as % gross profit	73.1		%	71.9		%	1.2		%			65.3		%	73.0		%	(7.7		)%

The following discussion of our U.S. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our U.S. dealership operations have been impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.S. during the nine months ended September 30, ~~2019 increased $307.8~~2020 decreased $681.0 million, or ~~4.8%~~10.1%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.S. during the nine months ended September 30, ~~2019 increased $316.6~~2020 decreased $742.9 million, or ~~5.0%~~11.1%, as compared to the same period in ~~2018.~~2019. The ~~increase~~decrease in U.S. same store ~~revenue~~revenues was driven by ~~growth~~declines in all of our revenue ~~streams with the exception~~streams. The declines of ~~used vehicle wholesale sales. New~~13.4% in new vehicle retail same store ~~revenue increased 2.4% as a 1.7% decrease~~sales, 9.7% in unit sales was more than offset by a 4.3% increase in average sales price per unit. The average sales price increase was driven by an increase in overall industry prices and the continued mix shift in sales from cars to trucks. Same store new vehicle truck sales represented 67.2% of total same store new vehicle retail unit sales, as compared to 64.0% in prior year. Usedused vehicle retail same store ~~revenue increased 8.4%~~sales and ~~units increased 8.5% as~~7.5% in used vehicle wholesale same store sales were driven by declines of 17.6%, 11.2% and 14.1% in new vehicle, used vehicle retail and used vehicle wholesale unit sales, respectively, reflecting reduced demand at our ~~Val-U-Line® initiative enabled~~dealerships caused by the COVID-19 pandemic and inventory supply shortages. Partially offsetting these declines, our online new and used vehicle sales platform, AcceleRide® was instrumental in allowing us to ~~move older model, higher mileage units from wholesale to retail sales.~~connect with and serve our customers throughout the restricted social distancing environment. Parts and service same store ~~revenue increased 8.8%~~revenues decreased 7.0% driven by an 18.1% decrease in collision revenues, 10.6% decrease in warranty revenues, 4.5% decrease in customer-pay revenues and a 1.8% decrease in wholesale parts revenues. F&I same store revenues decreased 6.3% driven by a ~~10.2% increase~~14.4% decrease in customer-pay revenue, a 12.5% increase in warranty, a 5.4% increase in wholesale parts and a 5.1% increase in collision revenue. The implementation of our four-day work week service schedule improved hiring and retention of our service technicians and advisors and increased capacity and efficiency in our service departments. Our four-day work week has been rolled out at 72 U.S. dealerships as of September 30, 2019 and has driven an increase in our technician count of over 300 professionals in the last twelve months. We expect to roll out additional dealerships in the fourth quarter of 2019, resulting in coverage of approximately 85% of our parts and service revenue. F&I same store ~~revenue increased 7.9% as a result of an increase in our~~ retail unit sales ~~improvements in~~as discussed above, which was partially offset by higher penetration rates and income per contract on ~~vehicle service and finance contracts, as well as higher penetration rates on~~many of our finance and ~~other~~ insurance product ~~offerings.~~offerings and a decline in our overall chargeback experience.

Gross ~~profit~~Profit

Total gross profit in the U.S. during the nine months ended September 30, ~~2019 increased $71.8~~2020 decreased $29.4 million, or ~~6.9%~~2.6%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.S. during the nine months ended September 30, ~~2019 increased $73.6~~2020 decreased $42.1 million, or ~~7.3%~~3.8%, as compared to the same period in ~~2018. The increase~~2019.The decrease in total gross profit was driven by ~~increases~~decreases in ~~parts and service, F&I~~all of our operations except for new vehicle retail and used vehicle ~~retail gross profit, partially offset by a decrease in new vehicle gross profit.~~wholesale. New vehicle retail same store gross profit ~~decreased 2.0% due to lower~~increased 9.0% driven by a 32.4% increase in new ~~vehicle unit sales as industry new vehicle sales have slowed. Used~~ vehicle retail same store gross profit ~~increased 14.6%~~per unit sold which was partially offset by a 17.6% decrease in new vehicle retail unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects supply constraints as many manufacturers had put a ~~result of~~hold on production due to the COVID-19 pandemic earlier in the year and have not returned to normal production levels. The 1.3% decrease in used vehicle retail same store gross profit was related to an ~~8.5% increase~~11.2% decline in used vehicle retail unit sales ~~and a 5.6%~~which was mostly offset by an 11.2% increase in used vehicle retail same store average gross profit ~~PRU.~~per unit sold. The ~~increased same store~~decline in used vehicle retail ~~PRU reflects our recently implemented big-data driven pricing strategies.~~same store gross profit was related to inventory supply constraints and the reduced demand during the first half of the year caused by the COVID-19 pandemic. Parts and service same store gross profit and F&I same store gross profit ~~increased 8.7%~~decreased 7.8% and ~~7.9%~~6.3%, respectively, driven by ~~the increase in revenue~~decreases described above. Total same store gross margin increased 30130 basis points primarily as ~~our~~a result of higher ~~margin businesses grew at a faster pace than our lower gross margin~~ new vehicle ~~business.~~and used vehicle retail and wholesale margins related to the supply constraints of inventory in the industry.

SG&A ~~Expense~~Expenses

Our SG&A ~~expense consists~~expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses. Total SG&A ~~expense~~expenses in the U.S. during the nine months ended September 30, ~~2019 increased $80.2~~2020 decreased $103.5 million, or ~~11.0%~~12.8%, as compared to the same period in ~~2018.~~2019. Total same store SG&A ~~expense~~expenses in the U.S. during the nine months ended September 30, ~~2019, increased $65.8~~2020, decreased $112.4 million, or ~~9.0%~~14.0%, as compared to the same period in ~~2018. Same~~2019. The U.S. dealership operations were directly impacted by reduced demand caused by the COVID-19 pandemic. In an effort to reduce costs, beginning in March, we furloughed and terminated employees and significantly reduced advertising and other SG&A expenses. As market conditions have improved, we have strived to retain our lower operating cost structure as a result of the pandemic. Total same store SG&A ~~expense~~expenses in the U.S. for the first nine months of 2019 ~~includes $17.9~~included $17.8 million ofin net costs associated with ~~hail storms~~hailstorms and flooding from Tropical Storm Imelda in Texas; ~~$0.7~~$1.8 million in non-core legal expenses; and $0.5 million in net gains on real estate and dealership transactions; and $1.8 million in non-core legal expenses. Same store SG&A expense in 2018 includes $5.8 million for costs associated with hail storms; $4.9 million in net gains on real estate transactions; and $0.6 million in non-core legal expenses. transactions.Total same store SG&A expenses in the U.S. during the first nine months of 2020 included $10.6 million in expense for an out-of-period adjustment related to stock-based compensation. Total same store SG&A as a %percent of gross profit ~~increased 120 basis points, primarily attributable~~decreased from 73.0% for the nine months ended 2019 to ~~a $12.1 million increase in insurance costs~~65.3% for the same period of 2020 driven by ~~$11.9 million in deductible expenses associated with the building and vehicle deductibles related~~cost cutting measures taken due to the ~~flooding from Tropical Storm Imelda in Texas and a $4.2 million decrease in net gains in real estate and dealership transactions.~~impact of the COVID-19 pandemic.

Reported Operating Data - U.K.

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,																Three Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:
New vehicle retail sales	$	290.7		$	278.0		$	12.7		4.6	%	$	(16.4	)	10.5	%	$	376.6		$	290.7		$	85.8		29.5	%	$	15.8	24.1	%
Used vehicle retail sales	189.3			200.1			(10.8		)	(5.4	)%	(10.8		)	—	%	248.1			189.3			58.8			31.1	%	11.2		25.2	%
Used vehicle wholesale sales	35.0			41.7			(6.7		)	(16.1	)%	(1.9		)	(11.5	)%	39.5			35.0			4.5			12.9	%	1.7		8.0	%
Total used	224.3			241.8			(17.5		)	(7.2	)%	(12.7		)	(2.0	)%	287.6			224.3			63.3			28.2	%	12.9		22.5	%
Parts and service sales	56.6			53.8			2.8			5.2	%	(3.2		)	11.1	%	61.3			56.6			4.7			8.2	%	2.7		3.4	%
Finance, insurance and other, net	13.0			12.3			0.7			5.7	%	(0.7		)	11.5	%
F&I, net																	15.4			13.0			2.4			18.2	%	0.7		13.1	%
Total revenues	$	584.6		$	585.9		$	(1.3	)	(0.2	)%	$	(33.0	)	5.4	%	$	740.8		$	584.6		$	156.2		26.7	%	$	32.1	21.2	%
Gross profit:
New vehicle retail sales	$	12.1		$	15.1		$	(3.0	)	(19.9	)%	$	(0.8	)	(14.4	)%	$	16.8		$	12.2		$	4.5		37.1	%	$	0.7	31.1	%
Used vehicle retail sales	8.9			11.6			(2.7		)	(23.3	)%	(0.5		)	(19.0	)%	17.2			8.9			8.3			93.4	%	0.8		84.2	%
Used vehicle wholesale sales	(0.3		)	(0.8		)	0.5			62.5	%	—			62.5	%	2.0			(0.3		)	2.3			713.0	%	0.1		690.0	%
Total used	8.6			10.8			(2.2		)	(20.4	)%	(0.5		)	(15.6	)%	19.2			8.6			10.7			124.3	%	0.9		113.8	%
Parts and service sales	31.3			30.5			0.8			2.6	%	(1.8		)	8.4	%	36.2			31.3			4.9			15.7	%	1.6		10.6	%
Finance, insurance and other, net	13.0			12.3			0.7			5.7	%	(0.7		)	11.5	%
F&I, net																	15.4			13.0			2.4			18.2	%	0.7		13.1	%
Total gross profit	$	65.0		$	68.7		$	(3.7	)	(5.4	)%	$	(3.8	)	0.2	%	$	87.6		$	65.1		$	22.5		34.6	%	$	3.9	28.6	%
Gross margin:
New vehicle retail sales	4.2		%	5.4		%	(1.2		)%								4.5		%	4.2		%	0.2		%
Used vehicle retail sales	4.7		%	5.8		%	(1.1		)%								6.9		%	4.7		%	2.2		%
Used vehicle wholesale sales	(0.9		)%	(1.9		)%	1.0		%								5.1		%	(0.9		)%	6.0		%
Total used	3.8		%	4.5		%	(0.7		)%								6.7		%	3.8		%	2.9		%
Parts and service sales	55.3		%	56.7		%	(1.4		)%								59.1		%	55.3		%	3.8		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	11.1		%	11.7		%	(0.6		)%								11.8		%	11.1		%	0.7		%
Units sold:
Retail new vehicles sold	9,329			9,333			(4		)	—	%						10,689			9,329			1,360			14.6	%
Retail used vehicles sold	8,573			8,482			91			1.1	%						10,101			8,573			1,528			17.8	%
Wholesale used vehicles sold	4,894			5,382			(488		)	(9.1	)%						5,104			4,894			210			4.3	%
Total used	13,467			13,864			(397		)	(2.9	)%						15,205			13,467			1,738			12.9	%
Average sales price per unit sold:
New vehicle retail	$	31,161		$	29,787		$	1,374		4.6	%	$	(1,754	)	10.5	%	$	35,230		$	31,164		$	4,066		13.0	%	$	1,479	8.3	%
Used vehicle retail	$	22,081		$	23,591		$	(1,510	)	(6.4	)%	$	(1,254	)	(1.1	)%	$	24,561		$	22,077		$	2,484		11.2	%	$	1,105	6.2	%
Gross profit per unit sold:
New vehicle retail sales	$	1,297		$	1,618		$	(321	)	(19.8	)%	$	(88	)	(14.4	)%	$	1,571		$	1,313		$	258		19.7	%	$	69	14.4	%
Used vehicle retail sales	$	1,038		$	1,368		$	(330	)	(24.1	)%	$	(58	)	(19.9	)%	$	1,706		$	1,039		$	667		64.2	%	$	81	56.4	%
Used vehicle wholesale sales	$	(61	)	$	(149	)	$	88		59.1	%	$	(5	)	56.8	%	$	394		$	(67	)	$	462		687.8	%	$	15	665.7	%
Total used	$	639		$	779		$	(140	)	(18.0	)%	$	(38	)	(13.1	)%	$	1,266		$	637		$	629		98.7	%	$	59	89.4	%
Finance, insurance and other, net (per retail unit)	$	726		$	690		$	36		5.2	%	$	(40	)	10.9	%
F&I PRU																	$	739		$	726		$	13		1.8	%	$	32	(2.6	)%
Other:
SG&A expenses	$	57.5		$	59.7		$	(2.2	)	(3.7	)%	$	(3.4	)	1.9	%	$	53.7		$	57.6		$	(3.9	)	(6.8	)%	$	2.4	(11.0	)%
SG&A as % gross profit	88.5		%	86.9		%	1.6		%								61.2		%	88.4		%	(27.2		)%

Same Store Operating Data - U.K.

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,																Three Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:
New vehicle retail sales	$	274.2		$	266.1		$	8.1		3.0	%	$	(15.4	)	8.8	%	$	360.2		$	289.3		$	70.9		24.5	%	$	15.3	19.2	%
Used vehicle retail sales	177.5			192.9			(15.4		)	(8.0	)%	(10.0		)	(2.8	)%	237.5			187.6			50.0			26.6	%	10.8		20.9	%
Used vehicle wholesale sales	33.4			39.9			(6.5		)	(16.3	)%	(1.9		)	(11.6	)%	37.9			34.5			3.4			9.8	%	1.7		4.9	%
Total used	210.9			232.8			(21.9		)	(9.4	)%	(11.9		)	(4.3	)%	275.4			222.1			53.3			24.0	%	12.5		18.4	%
Parts and service sales	50.4			49.6			0.8			1.6	%	(2.8		)	7.3	%	56.8			52.3			4.5			8.6	%	2.5		3.8	%
Finance, insurance and other, net	12.1			11.8			0.3			2.5	%	(0.7		)	8.1	%
F&I, net																	14.6			12.9			1.7			13.3	%	0.6		8.3	%
Total revenues	$	547.6		$	560.3		$	(12.7	)	(2.3	)%	$	(30.8	)	3.2	%	$	707.0		$	576.5		$	130.5		22.6	%	$	30.9	17.3	%
Gross profit:
New vehicle retail sales	$	11.3		$	14.7		$	(3.4	)	(23.1	)%	$	(0.8	)	(17.9	)%	$	16.1		$	12.2		$	3.9		32.0	%	$	0.7	26.1	%
Used vehicle retail sales	8.3			11.1			(2.8		)	(25.2	)%	(0.3		)	(22.1	)%	16.6			8.8			7.8			87.9	%	0.8		78.9	%
Used vehicle wholesale sales	(0.3		)	(0.7		)	0.4			57.1	%	—			57.1	%	1.9			(0.3		)	2.3			717.3	%	0.1		694.3	%
Total used	8.0			10.4			(2.4		)	(23.1	)%	(0.3		)	(19.7	)%	18.5			8.5			10.0			117.8	%	0.9		107.6	%
Parts and service sales	28.2			28.4			(0.2		)	(0.7	)%	(1.6		)	4.8	%	33.6			29.3			4.3			14.6	%	1.5		9.5	%
Finance, insurance and other, net	12.1			11.8			0.3			2.5	%	(0.7		)	8.1	%
F&I, net																	14.6			12.9			1.7			13.3	%	0.6		8.3	%
Total gross profit	$	59.6		$	65.3		$	(5.7	)	(8.7	)%	$	(3.4	)	(3.6	)%	$	82.8		$	62.9		$	19.9		31.6	%	$	3.7	25.7	%
Gross margin:
New vehicle retail sales	4.1		%	5.5		%	(1.4		)%								4.5		%	4.2		%	0.3		%
Used vehicle retail sales	4.7		%	5.8		%	(1.1		)%								7.0		%	4.7		%	2.3		%
Used vehicle wholesale sales	(0.9		)%	(1.8		)%	0.9		%								5.1		%	(0.9		)%	6.1		%
Total used	3.8		%	4.5		%	(0.7		)%								6.7		%	3.8		%	2.9		%
Parts and service sales	56.0		%	57.3		%	(1.3		)%								59.1		%	56.1		%	3.1		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.9		%	11.7		%	(0.8		)%								11.7		%	10.9		%	0.8		%
Units sold:
Retail new vehicles sold	8,607			8,646			(39		)	(0.5	)%						10,256			9,273			983			10.6	%
Retail used vehicles sold	7,902			8,128			(226		)	(2.8	)%						9,705			8,507			1,198			14.1	%
Wholesale used vehicles sold	4,603			5,133			(530		)	(10.3	)%						4,908			4,847			61			1.3	%
Total used	12,505			13,261			(756		)	(5.7	)%						14,613			13,354			1,259			9.4	%
Average sales price per unit sold:
New vehicle retail	$	31,858		$	30,777		$	1,081		3.5	%	$	(1,789	)	9.3	%	$	35,123		$	31,195		$	3,927		12.6	%	$	1,490	7.8	%
Used vehicle retail	$	22,463		$	23,733		$	(1,270	)	(5.4	)%	$	(1,270	)	—	%	$	24,474		$	22,049		$	2,425		11.0	%	$	1,114	5.9	%
Gross profit per unit sold:
New vehicle retail sales	$	1,313		$	1,700		$	(387	)	(22.8	)%	$	(87	)	(17.6	)%	$	1,565		$	1,312		$	253		19.3	%	$	69	14.0	%
Used vehicle retail sales	$	1,050		$	1,366		$	(316	)	(23.1	)%	$	(43	)	(19.8	)%	$	1,708		$	1,037		$	671		64.7	%	$	82	56.8	%
Used vehicle wholesale sales	$	(65	)	$	(136	)	$	71		52.2	%	$	(3	)	50.2	%	$	397		$	(65	)	$	462		709.7	%	$	15	686.9	%
Total used	$	640		$	784		$	(144	)	(18.4	)%	$	(28	)	(14.8	)%	$	1,268		$	637		$	631		99.0	%	$	60	89.7	%
Finance, insurance and other, net (per retail unit)	$	733		$	703		$	30		4.3	%	$	(39	)	9.8	%
F&I PRU																	$	732		$	725		$	7		0.9	%	$	32	(3.5	)%
Other:
SG&A expenses	$	51.1		$	55.7		$	(4.6	)	(8.3	)%	$	(2.9	)	(3.0	)%	$	50.1		$	54.4		$	(4.3	)	(7.9	)%	$	2.3	(12.1	)%
SG&A as % gross profit	85.7		%	85.3		%	0.4		%								60.6		%	86.5		%	(26.0		)%

The following discussion of our U.K. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. During the third quarter of 2020, our U.K. dealership operations have been steadily recovering from the impact on business caused by the COVID-19 pandemic.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.K. during the three months ended September 30, ~~2019 decreased $1.3~~2020 increased $156.2 million, or ~~0.2%~~26.7%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.K. during the three months ended September 30, ~~2019 decreased $12.7~~2020 increased $130.5 million, or ~~2.3%~~22.6%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue~~revenues increased ~~$18.1 million, or 3.2%,~~17.3% driven by ~~increases~~improvements in ~~new~~all of our dealership operations. In response to the COVID-19 pandemic, during March the government mandated the closure of all U.K. dealerships in an effort to stop the spread of the virus with the exception of emergency vehicle ~~parts and service and F&I revenue, partially offset by~~repairs. U.K. showrooms were allowed to reopen June 1, 2020. Since reopening, dealership operations have continued to improve throughout the third quarter. On a ~~decrease in used vehicle retail revenue. New~~constant currency basis, new vehicle retail same store ~~revenue on~~revenues grew 19.2% driven by a ~~constant currency basis increased 8.8%, as a 0.5% decrease~~10.6% increase in new vehicle retail same store unit sales, ~~was more than offset by~~coupled with a ~~9.3%~~7.8% increase in average ~~sales price. Used~~new vehicle retail same store ~~revenue on a constant currency basis and used~~sales price. While industry sales declined slightly, our new vehicle retail same store unit sales ~~both decreased 2.8%~~were up reflecting 2019 inventory shortages experienced in our Audi and VW brands as ~~shortages in new vehicle inventory resulting from~~a result of the stricter emissions standards imposed by the Worldwide Harmonised Light Vehicle Test ~~Procedure (“WLTP”) resulted in higher used~~Procedure. Used vehicle ~~demand during the third quarter of 2018. Parts and service~~retail same store revenue increased 7.3% on a constant currency basis as a result of an increase in customer-pay business driven by our efforts to increase our technician headcount through improved hiring methods and improved pay plans. F&I same store revenuerevenues on a constant currency basis increased ~~8.1%~~20.9% as used vehicle retail same store unit sales improved 14.1%, coupled with a ~~decline~~5.9% increase in average used retail same store sales price reflecting higher demand. Parts and service same store revenues increased 3.8% on a constant currency basis, driven by a 12.3% increase in customer-pay business, partially offset by declines in our other parts and service businesses. F&I same store revenues on a constant currency basis increased 8.3% as an increase in retail unit sales volumes was ~~more than~~partially offset by ~~a 9.8% increase in F&I PRU, a result of increased~~lower penetration ~~rates in finance contract and other insurance product offerings.~~rates.

Gross ~~profit~~Profit

Total gross profit in the U.K. during the three months ended September 30, ~~2019 decreased $3.7~~2020 increased $22.5 million, or ~~5.4%~~34.6%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.K. during the three months ended September 30, ~~2019 decreased $5.7~~2020 increased $19.9 million, or ~~8.7%~~31.6%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store gross profit ~~decreased $2.3 million, or 3.6%~~increased 25.7%, driven by ~~decreases in new and used vehicle retail gross profit, partially offset by~~ increases in ~~parts and service and F&I gross profit.~~all of our operations. New vehicle retail same store gross profit ~~decreased 17.9% as~~increased 26.1% on a ~~result of~~constant currency basis, driven by a ~~17.6% decrease~~10.6% growth in new vehicle retail same store unit sales, coupled with a 14.0% increase in new vehicle retail same store gross profit per unit. The increase in new vehicle gross profit per unit onprimarily reflects increased demand coupled with our current supply constraints. On a constant currency ~~basis. Used~~basis, used vehicle retail same store gross profit ~~also decreased 22.1% as~~improved 78.9%, reflecting a ~~result of a 2.8% decrease~~14.1% increase in used vehicle retail same store unit sales, ~~and~~coupled with a ~~19.8% decrease~~56.8% increase in used vehicle retail same store gross profit per unit sold. The increase in used vehicle retail same store gross profit per unit sold reflects supply constraints similar to new vehicles. Used vehicle wholesale same store gross profit increased 694.3% on a constant currency ~~basis. The gross profit pressure on new~~basis, driven by an increase in auction prices and ~~used vehicles was the result of continued economic pressure as a result of uncertainty around Brexit.~~improved processes. Parts and service same store gross profit on a constant currency basis increased ~~4.8% as a result of a 7.3%~~9.5% driven by the 12.3% increase in ~~revenue, partially offset by an increase in technician costs due to~~ our ~~hiring initiatives, all as~~higher margin customer-pay business discussed above. F&I same store ~~revenue~~revenues on a constant currency basis increased ~~8.1%~~8.3% as previously discussed.

SG&A ~~Expense~~Expenses

Reported Operating Data - U.K.

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,																Nine Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	911.6		$	971.1		$	(59.5	)	(6.1	)%	$	(56.6	)	(0.3	)%	$	800.1		$	911.5		$	(111.4	)	(12.2	)%	$	(0.8	)	(12.1	)%
Used vehicle retail sales	586.8			600.7			(13.9		)	(2.3	)%	(35.1		)	3.5	%	529.7			586.8			(57.1		)	(9.7	)%	3.1			(10.3	)%
Used vehicle wholesale sales	127.1			134.4			(7.3		)	(5.4	)%	(7.5		)	0.2	%	90.6			127.1			(36.6		)	(28.8	)%	0.3			(29.0	)%
Total used	713.9			735.1			(21.2		)	(2.9	)%	(42.6		)	2.9	%	620.3			714.0			(93.7		)	(13.1	)%	3.4			(13.6	)%
Parts and service sales	172.5			165.0			7.5			4.5	%	(10.5		)	10.9	%	139.5			172.5			(33.0		)	(19.1	)%	0.8			(19.6	)%
Finance, insurance and other, net	43.2			42.3			0.9			2.1	%	(2.7		)	8.4	%
F&I, net																	35.1			43.2			(8.1		)	(18.8	)%	—			(18.8	)%
Total revenues	$	1,841.2		$	1,913.5		$	(72.3	)	(3.8	)%	$	(112.4	)	2.1	%	$	1,595.0		$	1,841.2		$	(246.2	)	(13.4	)%	$	3.3		(13.6	)%
Gross profit:
New vehicle retail sales	$	39.6		$	49.5		$	(9.9	)	(20.0	)%	$	(2.3	)	(15.4	)%	$	34.7		$	39.6		$	(4.9	)	(12.4	)%	$	(0.2	)	(12.0	)%
Used vehicle retail sales	25.5			31.3			(5.8		)	(18.5	)%	(1.5		)	(13.7	)%	31.3			25.5			5.8			22.7	%	0.3			21.7	%
Used vehicle wholesale sales	(2.6		)	(2.2		)	(0.4		)	(18.2	)%	0.1			(24.8	)%	2.3			(2.6		)	5.0			188.8	%	—			188.4	%
Total used	22.9			29.1			(6.2		)	(21.3	)%	(1.4		)	(16.5	)%	33.6			22.9			10.8			47.0	%	0.3			45.9	%
Parts and service sales	95.5			94.1			1.4			1.5	%	(5.7		)	7.6	%	78.5			95.5			(17.0		)	(17.8	)%	0.4			(18.3	)%
Finance, insurance and other, net	43.2			42.3			0.9			2.1	%	(2.7		)	8.4	%
F&I, net																	35.1			43.2			(8.1		)	(18.8	)%	—			(18.8	)%
Total gross profit	$	201.2		$	215.0		$	(13.8	)	(6.4	)%	$	(12.1	)	(0.8	)%	$	181.9		$	201.2		$	(19.3	)	(9.6	)%	$	0.6		(9.9	)%
Gross margin:
New vehicle retail sales	4.3		%	5.1		%	(0.8		)%								4.3		%	4.3		%	—		%
Used vehicle retail sales	4.3		%	5.2		%	(0.9		)%								5.9		%	4.3		%	1.6		%
Used vehicle wholesale sales	(2.0		)%	(1.6		)%	(0.4		)%								2.6		%	(2.1		)%	4.6		%
Total used	3.2		%	4.0		%	(0.8		)%								5.4		%	3.2		%	2.2		%
Parts and service sales	55.4		%	57.0		%	(1.6		)%								56.3		%	55.4		%	0.9		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.9		%	11.2		%	(0.3		)%								11.4		%	10.9		%	0.5		%
Units sold:
Retail new vehicles sold	28,939			30,697			(1,758		)	(5.7	)%						23,424			28,939			(5,515		)	(19.1	)%
Retail used vehicles sold	25,284			24,818			466			1.9	%						22,165			25,284			(3,119		)	(12.3	)%
Wholesale used vehicles sold	16,033			16,924			(891		)	(5.3	)%						11,517			16,033			(4,516		)	(28.2	)%
Total used	41,317			41,742			(425		)	(1.0	)%						33,682			41,317			(7,635		)	(18.5	)%
Average sales price per unit sold:
New vehicle retail	$	31,501		$	31,635		$	(134	)	(0.4	)%	$	(1,955	)	5.8	%	$	34,157		$	31,498		$	2,658		8.4	%	$	(36	)	8.6	%
Used vehicle retail	$	23,208		$	24,204		$	(996	)	(4.1	)%	$	(1,390	)	1.6	%	$	23,899		$	23,210		$	689		3.0	%	$	141		2.4	%
Gross profit per unit sold:
New vehicle retail sales	$	1,368		$	1,613		$	(245	)	(15.2	)%	$	(79	)	(10.3	)%	$	1,482		$	1,370		$	112		8.2	%	$	(8	)	8.8	%
Used vehicle retail sales	$	1,009		$	1,261		$	(252	)	(20.0	)%	$	(60	)	(15.2	)%	$	1,411		$	1,008		$	403		40.0	%	$	12		38.9	%
Used vehicle wholesale sales	$	(162	)	$	(130	)	$	(32	)	(24.6	)%	$	9		(31.7	)%	$	203		$	(164	)	$	366		223.7	%	$	1		223.1	%
Total used	$	554		$	697		$	(143	)	(20.5	)%	$	(34	)	(15.7	)%	$	998		$	553		$	445		80.4	%	$	8		78.9	%
Finance, insurance and other, net (per retail unit)	$	797		$	762		$	35		4.6	%	$	(49	)	11.0	%
F&I PRU																	$	769		$	796		$	(27	)	(3.4	)%	$	1		(3.5	)%
Other:
SG&A expenses	$	175.8		$	181.6		$	(5.8	)	(3.2	)%	$	(10.7	)	2.7	%	$	141.8		$	175.8		$	(34.0	)	(19.3	)%	$	0.4		(19.6	)%
SG&A as % gross profit	87.4		%	84.5		%	2.9		%								78.0		%	87.4		%	(9.4		)%

Same Store Operating Data - U.K.

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,																Nine Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	853.1		$	923.9		$	(70.8	)	(7.7	)%	$	(53.1	)	(1.9	)%	$	747.4		$	888.3		$	(140.9	)	(15.9	)%	$	(0.3	)	(15.8	)%
Used vehicle retail sales	546.1			580.2			(34.1		)	(5.9	)%	(32.8		)	(0.2	)%	498.0			573.0			(75.0		)	(13.1	)%	3.2			(13.7	)%
Used vehicle wholesale sales	120.6			130.2			(9.6		)	(7.4	)%	(7.1		)	(1.9	)%	84.8			123.6			(38.8		)	(31.4	)%	0.3			(31.6	)%
Total used	666.7			710.4			(43.7		)	(6.2	)%	(39.9		)	(0.5	)%	582.8			696.6			(113.8		)	(16.3	)%	3.5			(16.8	)%
Parts and service sales	154.7			152.8			1.9			1.2	%	(9.3		)	7.3	%	126.5			159.4			(32.8		)	(20.6	)%	0.7			(21.1	)%
Finance, insurance and other, net	40.4			40.6			(0.2		)	(0.5	)%	(2.4		)	5.3	%
F&I, net																	32.6			42.2			(9.6		)	(22.7	)%	—			(22.8	)%
Total revenues	$	1,714.9		$	1,827.7		$	(112.8	)	(6.2	)%	$	(104.7	)	(0.4	)%	$	1,489.3		$	1,786.4		$	(297.1	)	(16.6	)%	$	3.9		(16.8	)%
Gross profit:
New vehicle retail sales	$	37.3		$	48.0		$	(10.7	)	(22.3	)%	$	(2.2	)	(17.7	)%	$	32.5		$	38.8		$	(6.4	)	(16.4	)%	$	(0.2	)	(16.0	)%
Used vehicle retail sales	23.4			30.3			(6.9		)	(22.8	)%	(1.4		)	(18.1	)%	29.7			25.2			4.5			17.9	%	0.3			16.9	%
Used vehicle wholesale sales	(2.3		)	(1.8		)	(0.5		)	(27.8	)%	0.1			(35.9	)%	2.2			(2.4		)	4.7			193.0	%	—			192.5	%
Total used	21.1			28.5			(7.4		)	(26.0	)%	(1.3		)	(21.5	)%	31.9			22.7			9.2			40.3	%	0.3			39.1	%
Parts and service sales	86.0			88.0			(2.0		)	(2.3	)%	(5.1		)	3.6	%	71.3			89.3			(18.0		)	(20.1	)%	0.4			(20.6	)%
Finance, insurance and other, net	40.4			40.6			(0.2		)	(0.5	)%	(2.4		)	5.3	%
F&I, net																	32.6			42.2			(9.6		)	(22.7	)%	—			(22.8	)%
Total gross profit	$	184.8		$	205.1		$	(20.3	)	(9.9	)%	$	(11.0	)	(4.6	)%	$	168.4		$	193.1		$	(24.7	)	(12.8	)%	$	0.6		(13.1	)%
Gross margin:
New vehicle retail sales	4.4		%	5.2		%	(0.8		)%								4.3		%	4.4		%	—		%
Used vehicle retail sales	4.3		%	5.2		%	(0.9		)%								6.0		%	4.4		%	1.6		%
Used vehicle wholesale sales	(1.9		)%	(1.4		)%	(0.5		)%								2.7		%	(2.0		)%	4.6		%
Total used	3.2		%	4.0		%	(0.8		)%								5.5		%	3.3		%	2.2		%
Parts and service sales	55.6		%	57.6		%	(2.0		)%								56.4		%	56.0		%	0.4		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.8		%	11.2		%	(0.4		)%								11.3		%	10.8		%	0.5		%
Units sold:
Retail new vehicles sold	26,931			28,593			(1,662		)	(5.8	)%						21,775			27,891			(6,116		)	(21.9	)%
Retail used vehicles sold	23,245			23,782			(537		)	(2.3	)%						20,741			24,735			(3,994		)	(16.1	)%
Wholesale used vehicles sold	15,077			16,342			(1,265		)	(7.7	)%						10,780			15,657			(4,877		)	(31.1	)%
Total used	38,322			40,124			(1,802		)	(4.5	)%						31,521			40,392			(8,871		)	(22.0	)%
Average sales price per unit sold:
New vehicle retail	$	31,677		$	32,312		$	(635	)	(2.0	)%	$	(1,973	)	4.1	%	$	34,324		$	31,848		$	2,476		7.8	%	$	(15	)	7.8	%
Used vehicle retail	$	23,493		$	24,397		$	(904	)	(3.7	)%	$	(1,412	)	2.1	%	$	24,008		$	23,165		$	843		3.6	%	$	155		3.0	%
Gross profit per unit sold:
New vehicle retail sales	$	1,385		$	1,679		$	(294	)	(17.5	)%	$	(82	)	(12.6	)%	$	1,491		$	1,393		$	98		7.1	%	$	(7	)	7.6	%
Used vehicle retail sales	$	1,007		$	1,274		$	(267	)	(21.0	)%	$	(60	)	(16.2	)%	$	1,430		$	1,017		$	413		40.6	%	$	12		39.4	%
Used vehicle wholesale sales	$	(153	)	$	(110	)	$	(43	)	(39.1	)%	$	9		(47.3	)%	$	209		$	(154	)	$	363		235.1	%	$	1		234.3	%
Total used	$	551		$	710		$	(159	)	(22.4	)%	$	(32	)	(17.8	)%	$	1,012		$	563		$	449		79.8	%	$	8		78.3	%
Finance, insurance and other, net (per retail unit)	$	805		$	775		$	30		3.9	%	$	(47	)	10.0	%
F&I PRU																	$	767		$	802		$	(35	)	(4.3	)%	$	1		(4.4	)%
Other:
SG&A expenses	$	159.6		$	170.8		$	(11.2	)	(6.6	)%	$	(9.6	)	(0.9	)%	$	127.3		$	166.0		$	(38.7	)	(23.3	)%	$	0.4		(23.6	)%
SG&A as % gross profit	86.4		%	83.3		%	3.1		%								75.6		%	86.0		%	(10.4		)%

The following discussion of our U.K. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our U.K. dealership operations have been impacted by the restrictions put in place by the national government in efforts to contain the spread of COVID-19.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.K. during the nine months ended September 30, ~~2019~~2020 decreased ~~$72.3~~$246.2 million, or ~~3.8%~~13.4%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.K. during the nine months ended September 30, ~~2019~~2020 decreased ~~$112.8~~$297.1 million, or ~~6.2%~~16.6%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue~~revenues decreased ~~0.4% as a result~~16.8%, driven by decreases in all of ~~a decline in new and used vehicle revenues almost fully offset by an increase in parts and service and F&I revenue. The market conditions in the U.K. remain challenging, primarily~~our operations due to the ~~uncertainty surrounding Brexit.~~COVID-19 pandemic. Beginning March 21, 2020, the government mandated the closure of all U.K. dealerships in efforts to stop the spread of the virus. The government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs, and June 1, 2020 for showrooms. Since June, business has recovered but not enough to offset the declines caused by the shutdown. New vehicle retail same store ~~revenue~~revenues on a constant currency basis decreased ~~1.9%~~15.8%, as a ~~5.8%~~21.9% decrease in new vehicle retail same store unit sales was partially offset by a ~~4.1%~~7.8% increase in new vehicle retail same store average sales price per unit sold. ~~Used~~On a constant currency basis, used vehicle retail same store ~~revenue on a constant currency basis~~revenues decreased ~~0.2%~~13.7%, as a ~~2.3%~~16.1% decrease in used vehicle retail same store unit sales was partially offset by a ~~2.1%~~3.0% increase in used vehicle retail same store average sales price per unit sold. Parts and service same store ~~revenue increased 7.3%~~revenues decreased 21.1% on a constant currency basis driven by ~~increases~~declines of ~~8.5%~~13.1% in customer-pay, ~~13.1%~~32.4% in warranty, 35.5% in collision, and ~~6.6%~~27.0% in wholesale parts ~~partially offset by a decrease of 14.8%~~revenues. The decreases in ~~collision revenue. The increases in customer-pay~~all parts and ~~warranty revenue~~service businesses are a result of ~~our efforts~~the limitations on the business due to ~~increase our technician headcount through improved hiring methods and improved pay plans.~~COVID-19. F&I same store ~~revenue~~revenues on a constant currency basis ~~increased 5.3%~~decreased 22.8% driven by ~~increased~~the decline in retail unit sales and lower penetration ~~rates on finance fees and other insurance product offerings, as well as increased income per contract on vehicle service contracts.~~rates.

Gross ~~profit~~Profit

Total gross profit in the U.K. during the nine months ended September 30, ~~2019~~2020 decreased ~~$13.8~~$19.3 million, or ~~6.4%~~9.6%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.K. during the nine months ended September 30, ~~2019~~2020 decreased ~~$20.3~~$24.7 million, or ~~9.9%~~12.8%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store gross profit decreased ~~4.6%~~13.1%, driven by decreases in all of our operations, except for used vehicle, as a result of ~~a decline in new and used vehicle revenues, partially offset by an increase in parts and service and F&I revenue.~~the COVID-19 pandemic. New vehicle retail same store gross profit on a constant currency basis decreased ~~17.7%~~16.0%, driven by a ~~12.6% decrease~~21.9% decline in new vehicle retail same store unit sales, partially offset by a 7.6% increase in new vehicle retail same store average gross profit per unit sold. The increase in new vehicle retail same store gross profit per unit sold ~~coupled with~~reflects supply constraints related to the ~~decline~~COVID-19 pandemic as many manufacturers had put a hold on production earlier in ~~retail units discussed above.~~the year and have not returned to normal production levels. Used vehicle retail same store gross profit on a constant currency basis ~~decreased 18.1%~~increased 16.9% on a ~~2.3% decrease in used vehicle retail same store unit sales and a 16.2% decrease~~39.4% increase in used vehicle retail same store average gross profit per unit ~~sold. The gross profit pressures on new and used vehicles are~~sold, partially offset by a ~~result of continued economic pressure as a result of uncertainty around Brexit. In addition to the economic pressures from Brexit,~~16.1% decrease in used vehicle retail same store unit sales. The increase in used vehicle retail same store average gross profit per unit sold reflects supply constraints similar to new vehicles. Used vehicle wholesale same store gross profit improved 192.5% on a constant currency basis driven by an increase in ~~2018 was impacted by above average used vehicle values caused by the WLTP related new vehicle shortages.~~auction prices due to supply constraints and improved processes. Parts and service same store gross profit on a constant currency basis ~~increased 3.6%~~decreased 20.6% as a result of a ~~7.3% increase~~21.1% decline in ~~revenue discussed above, partially offset by an increase in technician costs as a result of hiring initiatives~~revenues discussed above. F&I same store gross profit on a constant currency basis ~~increased 5.3%~~decreased 22.8% as discussed above.

SG&A ~~Expense~~Expenses

Reported Operating Data - Brazil

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,																Three Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	69.8		$	64.9		$	4.9		7.6	%	$	(0.5	)	8.3	%	$	31.9		$	69.9		$	(38.0	)	(54.4	)%	$	(11.2	)	(38.3	)%
Used vehicle retail sales	22.8			20.3			2.5			12.3	%	(0.1		)	12.9	%	10.9			22.8			(11.9		)	(52.1	)%	(3.9		)	(35.1	)%
Used vehicle wholesale sales	4.4			4.2			0.2			4.8	%	—			4.8	%	2.4			4.4			(2.0		)	(44.8	)%	(0.9		)	(24.8	)%
Total used	27.2			24.5			2.7			11.0	%	(0.1		)	11.7	%	13.4			27.2			(13.8		)	(50.9	)%	(4.7		)	(33.5	)%
Parts and service sales	12.0			11.4			0.6			5.3	%	(0.1		)	5.9	%	8.0			12.0			(4.0		)	(33.6	)%	(2.9		)	(9.7	)%
Finance, insurance and other, net	1.9			2.2			(0.3		)	(13.6	)%	—			(13.6	)%
F&I, net																	1.1			1.9			(0.8		)	(41.4	)%	(0.4		)	(20.2	)%
Total revenues	$	110.9		$	103.0		$	7.9		7.7	%	$	(0.7	)	8.4	%	$	54.3		$	110.9		$	(56.6	)	(51.1	)%	$	(19.2	)	(33.8	)%
Gross profit:
New vehicle retail sales	$	4.5		$	5.2		$	(0.7	)	(13.5	)%	$	—		(13.5	)%	$	2.6		$	4.5		$	(1.8	)	(41.2	)%	$	(0.9	)	(20.5	)%
Used vehicle retail sales	1.8			1.3			0.5			38.5	%	—			38.5	%	1.0			1.8			(0.8		)	(42.6	)%	(0.4		)	(22.0	)%
Used vehicle wholesale sales	0.3			0.1			0.2			200.0	%	0.1			88.2	%	0.2			0.3			(0.1		)	(37.1	)%	(0.1		)	(14.7	)%
Total used	2.1			1.4			0.7			50.0	%	0.1			44.3	%	1.2			2.1			(0.9		)	(41.8	)%	(0.4		)	(20.9	)%
Parts and service sales	5.1			5.1			—			—	%	—			—	%	3.7			5.1			(1.5		)	(28.8	)%	(1.3		)	(3.4	)%
Finance, insurance and other, net	1.9			2.2			(0.3		)	(13.6	)%	—			(13.6	)%
F&I, net																	1.1			1.9			(0.8		)	(41.4	)%	(0.4		)	(20.2	)%
Total gross profit	$	13.6		$	13.9		$	(0.3	)	(2.2	)%	$	0.1		(1.9	)%	$	8.6		$	13.6		$	(5.0	)	(36.6	)%	$	(3.1	)	(14.0	)%
Gross margin:
New vehicle retail sales	6.4		%	8.0		%	(1.6		)%								8.3		%	6.4		%	1.9		%
Used vehicle retail sales	7.9		%	6.4		%	1.5		%								9.3		%	7.8		%	1.5		%
Used vehicle wholesale sales	6.8		%	2.4		%	4.4		%								8.0		%	7.1		%	1.0		%
Total used	7.7		%	5.7		%	2.0		%								9.1		%	7.7		%	1.4		%
Parts and service sales	42.5		%	44.7		%	(2.2		)%								46.1		%	43.0		%	3.1		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	12.3		%	13.5		%	(1.2		)%								15.8		%	12.2		%	3.6		%
Units sold:
Retail new vehicles sold	2,262			2,193			69			3.1	%						1,200			2,262			(1,062		)	(46.9	)%
Retail used vehicles sold	1,219			1,069			150			14.0	%						552			1,219			(667		)	(54.7	)%
Wholesale used vehicles sold	430			402			28			7.0	%						282			430			(148		)	(34.4	)%
Total used	1,649			1,471			178			12.1	%						834			1,649			(815		)	(49.4	)%
Average sales price per unit sold:
New vehicle retail	$	30,858		$	29,594		$	1,264		4.3	%	$	(210	)	5.0	%	$	26,558		$	30,883		$	(4,325	)	(14.0	)%	$	(9,343	)	16.2	%
Used vehicle retail	$	18,704		$	18,990		$	(286	)	(1.5	)%	$	(96	)	(1.0	)%	$	19,766		$	18,681		$	1,085		5.8	%	$	(6,995	)	43.3	%
Gross profit per unit sold:
New vehicle retail sales	$	1,989		$	2,371		$	(382	)	(16.1	)%	$	(6	)	(15.9	)%	$	2,196		$	1,980		$	216		10.9	%	$	(772	)	49.9	%
Used vehicle retail sales	$	1,477		$	1,216		$	261		21.5	%	$	1		21.6	%	$	1,840		$	1,453		$	387		26.7	%	$	(661	)	72.2	%
Used vehicle wholesale sales	$	698		$	249		$	449		180.3	%	$	135		76.0	%	$	696		$	726		$	(30	)	(4.1	)%	$	(247	)	30.0	%
Total used	$	1,273		$	952		$	321		33.7	%	$	37		28.7	%	$	1,453		$	1,263		$	190		15.1	%	$	(521	)	56.3	%
Finance, insurance and other, net (per retail unit)	$	546		$	674		$	(128	)	(19.0	)%	$	(1	)	(19.2	)%
F&I PRU																	$	621		$	533		$	88		16.5	%	$	(224	)	58.5	%
Other:
SG&A expenses	$	11.1		$	14.9		$	(3.8	)	(25.5	)%	$	0.1		(26.1	)%	$	6.9		$	11.0		$	(4.2	)	(37.8	)%	$	(2.5	)	(15.5	)%
SG&A as % gross profit	81.6		%	107.2		%	(25.6		)%								79.9		%	81.4		%	(1.5		)%

Same Store Operating Data - Brazil

(In millions, except unit ~~and per unit amounts)~~data)


	Three Months Ended September 30,																Three Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	67.4		$	64.1		$	3.3		5.1	%	$	(0.6	)	6.1	%	$	31.9		$	69.9		$	(38.0	)	(54.4	)%	$	(11.2	)	(38.3	)%
Used vehicle retail sales	22.1			17.4			4.7			27.0	%	(0.1		)	27.5	%	10.9			22.6			(11.7		)	(51.8	)%	(3.9		)	(34.7	)%
Used vehicle wholesale sales	4.4			3.4			1.0			29.4	%	—			29.4	%	2.4			4.4			(2.0		)	(44.8	)%	(0.9		)	(24.8	)%
Total used	26.5			20.8			5.7			27.4	%	(0.1		)	27.8	%	13.4			27.1			(13.7		)	(50.6	)%	(4.7		)	(33.1	)%
Parts and service sales	11.7			11.1			0.6			5.4	%	—			5.4	%	7.9			11.8			(3.8		)	(32.5	)%	(2.8		)	(8.4	)%
Finance, insurance and other, net	1.8			2.1			(0.3		)	(14.3	)%	0.1			(17.1	)%
F&I, net																	1.1			1.9			(0.8		)	(41.4	)%	(0.4		)	(20.3	)%
Total revenues	$	107.4		$	98.1		$	9.3		9.5	%	$	(0.6	)	10.2	%	$	54.3		$	110.5		$	(56.3	)	(50.9	)%	$	(19.2	)	(33.6	)%
Gross profit:
New vehicle retail sales	$	4.3		$	5.2		$	(0.9	)	(17.3	)%	$	(0.1	)	(15.0	)%	$	2.6		$	4.5		$	(1.9	)	(41.3	)%	$	(0.9	)	(20.7	)%
Used vehicle retail sales	1.7			1.1			0.6			54.5	%	0.1			45.7	%	1.0			1.8			(0.7		)	(42.3	)%	(0.4		)	(21.5	)%
Used vehicle wholesale sales	0.3			0.2			0.1			50.0	%	(0.1		)	116.9	%	0.2			0.3			(0.1		)	(37.1	)%	(0.1		)	(14.7	)%
Total used	2.0			1.3			0.7			53.8	%	—			53.8	%	1.2			2.1			(0.9		)	(41.5	)%	(0.4		)	(20.5	)%
Parts and service sales	5.1			5.0			0.1			2.0	%	(0.1		)	3.3	%	3.7			5.2			(1.5		)	(29.0	)%	(1.3		)	(3.6	)%
Finance, insurance and other, net	1.8			2.1			(0.3		)	(14.3	)%	0.1			(17.1	)%
F&I, net																	1.1			1.9			(0.8		)	(41.4	)%	(0.4		)	(20.3	)%
Total gross profit	$	13.2		$	13.6		$	(0.4	)	(2.9	)%	$	(0.1	)	(2.0	)%	$	8.6		$	13.6		$	(5.0	)	(36.7	)%	$	(3.1	)	(14.1	)%
Gross margin:
New vehicle retail sales	6.4		%	8.1		%	(1.7		)%								8.3		%	6.4		%	1.8		%
Used vehicle retail sales	7.7		%	6.3		%	1.4		%								9.3		%	7.8		%	1.5		%
Used vehicle wholesale sales	6.8		%	5.9		%	0.9		%								8.0		%	7.1		%	1.0		%
Total used	7.5		%	6.2		%	1.3		%								9.1		%	7.7		%	1.4		%
Parts and service sales	43.6		%	45.0		%	(1.4		)%								46.1		%	43.8		%	2.3		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	12.3		%	13.9		%	(1.6		)%								15.8		%	12.3		%	3.6		%
Units sold:
Retail new vehicles sold	2,145			2,173			(28		)	(1.3	)%						1,200			2,262			(1,062		)	(46.9	)%
Retail used vehicles sold	1,164			1,010			154			15.2	%						552			1,216			(664		)	(54.6	)%
Wholesale used vehicles sold	416			373			43			11.5	%						282			430			(148		)	(34.4	)%
Total used	1,580			1,383			197			14.2	%						834			1,646			(812		)	(49.3	)%
Average sales price per unit sold:
New vehicle retail	$	31,422		$	29,498		$	1,924		6.5	%	$	(286	)	7.5	%	$	26,558		$	30,883		$	(4,325	)	(14.0	)%	$	(9,343	)	16.2	%
Used vehicle retail	$	18,986		$	17,228		$	1,758		10.2	%	$	(76	)	10.6	%	$	19,766		$	18,613		$	1,152		6.2	%	$	(7,001	)	43.8	%
Gross profit per unit sold:
New vehicle retail sales	$	2,005		$	2,393		$	(388	)	(16.2	)%	$	(59	)	(13.9	)%	$	2,196		$	1,985		$	211		10.6	%	$	(772	)	49.5	%
Used vehicle retail sales	$	1,460		$	1,089		$	371		34.1	%	$	64		26.5	%	$	1,840		$	1,447		$	393		27.2	%	$	(662	)	72.9	%
Used vehicle wholesale sales	$	721		$	536		$	185		34.5	%	$	(181	)	94.5	%	$	696		$	726		$	(30	)	(4.1	)%	$	(247	)	30.0	%
Total used	$	1,266		$	940		$	326		34.7	%	$	(1	)	34.4	%	$	1,453		$	1,258		$	195		15.5	%	$	(522	)	56.9	%
Finance, insurance and other, net (per retail unit)	$	544		$	660		$	(116	)	(17.6	)%	$	19		(20.2	)%
F&I PRU																	$	621		$	533		$	87		16.3	%	$	(224	)	58.3	%
Other:
SG&A expenses	$	10.8		$	13.8		$	(3.0	)	(21.7	)%	$	(0.1	)	(20.9	)%	$	6.9		$	11.2		$	(4.4	)	(38.9	)%	$	(2.5	)	(17.0	)%
SG&A as % gross profit	81.8		%	101.5		%	(19.7		)%								79.8		%	82.6		%	(2.9		)%

The following discussion of our Brazil operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our Brazil dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

~~Revenue~~Revenues

Total ~~revenue~~revenues in Brazil during the three months ended September 30, ~~2019 increased $7.9~~2020 decreased $56.6 million, or ~~7.7%~~51.1%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in Brazil during the three months ended September 30, ~~2019 increased $9.3~~2020 decreased $56.3 million, or ~~9.5%~~50.9%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue increased 10.2%~~revenues decreased 33.6% driven by ~~increases~~declines in all business lines ~~except F&I.~~caused by the continued negative impacts of the COVID-19 pandemic. New vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~increased 6.1%~~decreased 38.3%, as a ~~7.5%~~46.9% decrease in new vehicle retail same store unit sales was partially offset by a 16.2% increase in new vehicle retail same store average sales price per unit sold more than offset a 1.3% decrease in new vehicle retail same store unit sales. The increase in average sales price was driven by a change in brand mix as growth in our higher priced luxury brands outpaced growth in our lower priced import brands.sold. Used vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~increased 27.5% as~~decreased 34.7%, reflecting a ~~result of a 15.2% increase~~54.6% decrease in used vehicle ~~retail~~ same store unit sales ~~and~~partially offset by a ~~10.6%~~43.8% increase in used vehicle retail same store average sales price per unit sold. ~~This increase was driven by~~Used vehicle wholesale same store revenues decreased 24.8% on a ~~recently implemented centralized~~constant currency basis reflecting a 34.4% decline in wholesale used vehicle ~~purchasing~~same store unit sales. Reduced demand and ~~pricing model~~a limited availability of inventory drove the reduction in new and used vehicle same store unit sales. The increases in new and used vehicle retail same store average sales price per unit reflect the supply constraints and a change in brand mix, which has ~~improved~~shifted towards our ~~acquisition of used vehicle inventory and driven the increased used vehicle unit sales.~~higher priced luxury brands. Parts and service same store revenue on a constant currency basis increased 5.4% driven by a 13.5% increase in customer-pay, partially offset by an 18.1% decrease in warranty revenue. The increase in customer-pay reflects management initiatives to enhance the effectiveness of our service sales process and improve efficiency of our parts and service operations. F&I same store revenuerevenues on a constant currency basis decreased ~~17.1%~~8.4% primarily asdriven by declines in collision and customer-pay revenues. F&I same store revenues on a ~~result of a~~constant currency basis decreased 20.3% primarily due to the decline in ~~fleet business.~~retail unit sales partially offset by an increase in the penetration rate and income per contract for our retail finance fees.

Gross ~~profit~~Profit

Total gross profit in Brazil during the three months ended September 30, ~~2019~~2020 decreased ~~$0.3~~$5.0 million, or ~~2.2%~~36.6%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in Brazil during the three months ended September 30, ~~2019~~2020 decreased ~~$0.4~~$5.0 million, or ~~2.9%~~36.7%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store gross profit decreased ~~2.0% as~~14.1% driven by declines in ~~new vehicle and F&I gross profit were partially offset by increases in used vehicle and parts and service gross profit.~~all business lines. New vehicle retail same store gross profit on a constant currency basis decreased ~~15.0% as~~20.7% driven by the 46.9% decline in new vehicle retail same store units sold partially offset by a ~~result of a decrease of 13.9%~~49.5% increase in new vehicle retail same store average gross profit per unit ~~sold, coupled with the decline in new vehicle retail units discussed above. The decrease in gross profit per unit reflects execution of strategic initiatives designed to reduce inventory levels.~~sold. Used vehicle retail same store gross profit on a constant currency basis ~~increased 45.7% on a 15.2% increase~~decreased 21.5% reflecting the 54.6% decline in used vehicle retail same store unit sales ~~and~~partially offset by a ~~26.5%~~72.9% increase in used vehicle retail same store average gross profit per unit sold. ~~The recently implemented centralized~~Used vehicle wholesale same store gross profit on a constant currency basis decreased 14.7% driven by the 34.4% decline in wholesale used vehicles same store unit sales partially offset by a 30.0% increase in used vehicle ~~purchasing and pricing model has improved our acquisition of used vehicle inventory and increased our~~wholesale same store average gross profit per ~~unit.~~unit sold. The improvement in new and used same store gross profit PRU was a direct result of supply constraints and a mix shift towards our luxury brands. Parts and service same store gross profit on a constant currency basis ~~increased 3.3% on~~decreased 3.6% as a ~~5.4% increase~~result of the 8.4% decrease in ~~revenue as discussed~~revenues described above. F&I same store ~~revenue~~gross profit on a constant currency basis decreased ~~17.1% primarily~~20.3% as ~~a result of a decline in fleet business.~~discussed above.

SG&A ~~Expense~~Expenses

Reported Operating Data - Brazil

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,																Nine Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	208.5		$	204.2		$	4.3		2.1	%	$	(17.7	)	10.8	%	$	109.1		$	208.4		$	(99.2	)	(47.6	)%	$	(27.4	)	(34.5	)%
Used vehicle retail sales	63.4			66.3			(2.9		)	(4.4	)%	(5.6		)	4.1	%	38.3			63.4			(25.1		)	(39.6	)%	(9.6		)	(24.4	)%
Used vehicle wholesale sales	13.3			11.5			1.8			15.7	%	(0.9		)	23.6	%	9.2			13.3			(4.1		)	(31.1	)%	(2.5		)	(12.2	)%
Total used	76.7			77.8			(1.1		)	(1.4	)%	(6.5		)	7.0	%	47.5			76.7			(29.3		)	(38.1	)%	(12.1		)	(22.3	)%
Parts and service sales	36.1			34.5			1.6			4.6	%	(3.0		)	13.5	%	23.4			36.1			(12.7		)	(35.2	)%	(6.6		)	(17.0	)%
Finance, insurance and other, net	5.6			6.0			(0.4		)	(6.7	)%	(0.4		)	0.2	%
F&I, net																	3.4			5.6			(2.2		)	(39.9	)%	(0.9		)	(24.2	)%
Total revenues	$	326.9		$	322.5		$	4.4		1.4	%	$	(27.6	)	10.0	%	$	183.4		$	326.9		$	(143.5	)	(43.9	)%	$	(47.0	)	(29.5	)%
Gross profit:
New vehicle retail sales	$	12.6		$	13.3		$	(0.7	)	(5.3	)%	$	(0.9	)	1.8	%	$	7.5		$	12.6		$	(5.1	)	(40.3	)%	$	(2.0	)	(24.6	)%
Used vehicle retail sales	4.7			4.0			0.7			17.5	%	(0.4		)	26.2	%	2.5			4.7			(2.2		)	(46.6	)%	(0.7		)	(31.9	)%
Used vehicle wholesale sales	0.9			0.4			0.5			125.0	%	(0.1		)	150.9	%	0.5			0.9			(0.4		)	(45.6	)%	(0.1		)	(30.1	)%
Total used	5.6			4.4			1.2			27.3	%	(0.5		)	37.0	%	3.0			5.6			(2.6		)	(46.5	)%	(0.8		)	(31.6	)%
Parts and service sales	15.8			15.5			0.3			1.9	%	(1.3		)	10.6	%	10.3			15.8			(5.5		)	(34.7	)%	(2.9		)	(16.4	)%
Finance, insurance and other, net	5.6			6.0			(0.4		)	(6.7	)%	(0.4		)	0.2	%
F&I, net																	3.4			5.6			(2.2		)	(39.9	)%	(0.9		)	(24.2	)%
Total gross profit	$	39.6		$	39.2		$	0.4		1.0	%	$	(3.1	)	9.0	%	$	24.2		$	39.6		$	(15.4	)	(38.9	)%	$	(6.6	)	(22.2	)%
Gross margin:
New vehicle retail sales	6.0		%	6.5		%	(0.5		)%								6.9		%	6.1		%	0.8		%
Used vehicle retail sales	7.4		%	6.0		%	1.4		%								6.5		%	7.4		%	(0.9		)%
Used vehicle wholesale sales	6.8		%	3.5		%	3.3		%								5.2		%	6.6		%	(1.4		)%
Total used	7.3		%	5.7		%	1.6		%								6.3		%	7.3		%	(1.0		)%
Parts and service sales	43.8		%	44.9		%	(1.1		)%								44.1		%	43.8		%	0.3		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	12.1		%	12.2		%	(0.1		)%								13.2		%	12.1		%	1.1		%
Units sold:
Retail new vehicles sold	6,911			6,429			482			7.5	%						3,865			6,911			(3,046		)	(44.1	)%
Retail used vehicles sold	3,295			3,163			132			4.2	%						2,006			3,295			(1,289		)	(39.1	)%
Wholesale used vehicles sold	1,386			1,081			305			28.2	%						1,081			1,386			(305		)	(22.0	)%
Total used	4,681			4,244			437			10.3	%						3,087			4,681			(1,594		)	(34.1	)%
Average sales price per unit sold:
New vehicle retail	$	30,169		$	31,762		$	(1,593	)	(5.0	)%	$	(2,564	)	3.1	%	$	28,238		$	30,153		$	(1,915	)	(6.4	)%	$	(7,093	)	17.2	%
Used vehicle retail	$	19,241		$	20,961		$	(1,720	)	(8.2	)%	$	(1,720	)	—	%	$	19,100		$	19,251		$	(151	)	(0.8	)%	$	(4,794	)	24.1	%
Gross profit per unit sold:
New vehicle retail sales	$	1,823		$	2,069		$	(246	)	(11.9	)%	$	(137	)	(5.3	)%	$	1,950		$	1,826		$	123		6.7	%	$	(514	)	34.9	%
Used vehicle retail sales	$	1,426		$	1,265		$	161		12.7	%	$	(109	)	21.1	%	$	1,245		$	1,421		$	(175	)	(12.3	)%	$	(343	)	11.8	%
Used vehicle wholesale sales	$	649		$	370		$	279		75.4	%	$	(60	)	95.7	%	$	444		$	637		$	(192	)	(30.2	)%	$	(126	)	(10.4	)%
Total used	$	1,196		$	1,037		$	159		15.3	%	$	(94	)	24.2	%	$	965		$	1,189		$	(224	)	(18.8	)%	$	(267	)	3.7	%
Finance, insurance and other, net (per retail unit)	$	549		$	626		$	(77	)	(12.3	)%	$	(40	)	(5.8	)%
F&I PRU																	$	576		$	551		$	25		4.5	%	$	(150	)	31.8	%
Other:
SG&A expenses	$	35.0		$	38.2		$	(3.2	)	(8.4	)%	$	(2.3	)	(2.2	)%	$	23.1		$	35.0		$	(11.9	)	(34.0	)%	$	(6.4	)	(15.8	)%
SG&A as % gross profit	88.4		%	97.4		%	(9.0		)%								95.3		%	88.3		%	7.0		%

Same Store Operating Data - Brazil

(In millions, except unit ~~and per unit amounts)~~data)


	Nine Months Ended September 30,																Nine Months Ended September 30,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	193.6		$	202.6		$	(9.0	)	(4.4	)%	$	(16.7	)	3.8	%	$	109.1		$	205.6		$	(96.4	)	(46.9	)%	$	(27.4	)	(33.6	)%
Used vehicle retail sales	60.2			62.6			(2.4		)	(3.8	)%	(5.6		)	5.2	%	38.3			60.7			(22.4		)	(36.9	)%	(9.6		)	(21.1	)%
Used vehicle wholesale sales	12.7			10.4			2.3			22.1	%	(1.1		)	32.8	%	9.2			11.2			(2.0		)	(18.1	)%	(2.5		)	4.4	%
Total used	72.9			73.0			(0.1		)	(0.1	)%	(6.7		)	9.1	%	47.4			71.9			(24.4		)	(34.0	)%	(12.1		)	(17.1	)%
Parts and service sales	34.6			34.2			0.4			1.2	%	(2.9		)	9.8	%	23.4			35.4			(12.0		)	(33.9	)%	(6.6		)	(15.2	)%
Finance, insurance and other, net	5.1			6.0			(0.9		)	(15.0	)%	(0.4		)	(8.6	)%
F&I, net																	3.4			5.6			(2.2		)	(39.1	)%	(0.9		)	(23.2	)%
Total revenues	$	306.2		$	315.8		$	(9.6	)	(3.0	)%	$	(26.7	)	5.4	%	$	183.4		$	318.3		$	(135.0	)	(42.4	)%	$	(47.0	)	(27.7	)%
Gross profit:
New vehicle retail sales	$	11.9		$	13.2		$	(1.3	)	(9.8	)%	$	(0.8	)	(3.7	)%	$	7.5		$	12.6		$	(5.1	)	(40.3	)%	$	(2.0	)	(24.6	)%
Used vehicle retail sales	4.3			3.8			0.5			13.2	%	(0.4		)	22.8	%	2.5			4.7			(2.2		)	(46.6	)%	(0.7		)	(31.8	)%
Used vehicle wholesale sales	0.9			0.4			0.5			125.0	%	(0.1		)	154.6	%	0.5			0.9			(0.4		)	(44.5	)%	(0.1		)	(28.8	)%
Total used	5.2			4.2			1.0			23.8	%	(0.5		)	34.7	%	3.0			5.5			(2.6		)	(46.3	)%	(0.8		)	(31.4	)%
Parts and service sales	15.2			15.4			(0.2		)	(1.3	)%	(1.4		)	7.5	%	10.3			15.5			(5.2		)	(33.4	)%	(2.9		)	(14.7	)%
Finance, insurance and other, net	5.1			6.0			(0.9		)	(15.0	)%	(0.4		)	(8.6	)%
F&I, net																	3.4			5.6			(2.2		)	(39.1	)%	(0.9		)	(23.2	)%
Total gross profit	$	37.4		$	38.8		$	(1.4	)	(3.6	)%	$	(3.1	)	4.1	%	$	24.2		$	39.2		$	(15.0	)	(38.3	)%	$	(6.6	)	(21.4	)%
Gross margin:
New vehicle retail sales	6.1		%	6.5		%	(0.4		)%								6.9		%	6.1		%	0.8		%
Used vehicle retail sales	7.1		%	6.1		%	1.0		%								6.5		%	7.7		%	(1.2		)%
Used vehicle wholesale sales	7.1		%	3.8		%	3.3		%								5.2		%	7.7		%	(2.5		)%
Total used	7.1		%	5.8		%	1.3		%								6.3		%	7.7		%	(1.4		)%
Parts and service sales	43.9		%	45.0		%	(1.1		)%								44.1		%	43.8		%	0.3		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	12.2		%	12.3		%	(0.1		)%								13.2		%	12.3		%	0.9		%
Units sold:
Retail new vehicles sold	6,296			6,390			(94		)	(1.5	)%						3,865			6,866			(3,001		)	(43.7	)%
Retail used vehicles sold	3,083			3,088			(5		)	(0.2	)%						2,006			3,217			(1,211		)	(37.6	)%
Wholesale used vehicles sold	1,253			1,043			210			20.1	%						1,081			1,319			(238		)	(18.0	)%
Total used	4,336			4,131			205			5.0	%						3,087			4,536			(1,449		)	(31.9	)%
Average sales price per unit sold:
New vehicle retail	$	30,750		$	31,706		$	(956	)	(3.0	)%	$	(2,657	)	5.4	%	$	28,238		$	29,938		$	(1,701	)	(5.7	)%	$	(7,089	)	18.0	%
Used vehicle retail	$	19,526		$	20,272		$	(746	)	(3.7	)%	$	(1,829	)	5.3	%	$	19,086		$	18,861		$	225		1.2	%	$	(4,781	)	26.5	%
Gross profit per unit sold:
New vehicle retail sales	$	1,890		$	2,066		$	(176	)	(8.5	)%	$	(130	)	(2.2	)%	$	1,950		$	1,839		$	110		6.0	%	$	(514	)	33.9	%
Used vehicle retail sales	$	1,395		$	1,231		$	164		13.3	%	$	(123	)	23.0	%	$	1,244		$	1,453		$	(210	)	(14.4	)%	$	(345	)	9.3	%
Used vehicle wholesale sales	$	718		$	384		$	334		87.0	%	$	(75	)	111.9	%	$	444		$	656		$	(212	)	(32.3	)%	$	(126	)	(13.1	)%
Total used	$	1,199		$	1,017		$	182		17.9	%	$	(108	)	28.3	%	$	964		$	1,222		$	(258	)	(21.1	)%	$	(268	)	0.9	%
Finance, insurance and other, net (per retail unit)	$	544		$	633		$	(89	)	(14.1	)%	$	(41	)	(7.6	)%
F&I PRU																	$	576		$	551		$	25		4.6	%	$	(150	)	31.9	%
Other:
SG&A expenses	$	33.5		$	36.8		$	(3.3	)	(9.0	)%	$	(2.4	)	(2.5	)%	$	23.0		$	34.4		$	(11.4	)	(33.1	)%	$	(6.4	)	(14.7	)%
SG&A as % gross profit	89.6		%	94.8		%	(5.2		)%								95.1		%	87.8		%	7.3		%

~~Revenue~~Revenues

Total ~~revenue~~revenues in Brazil during the nine months ended September 30, ~~2019 increased $4.4~~2020 decreased $143.5 million, or ~~1.4%~~43.9%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in Brazil during the nine months ended September 30, ~~2019~~2020 decreased ~~$9.6~~$135.0 million, or ~~3.0%~~42.4%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue increased 5.4%~~revenues decreased 27.7% with ~~increases~~declines in all revenue lines ~~excluding F&I.~~except for used vehicle wholesale. Beginning March 20, 2020, all our dealerships were required to close in efforts to stop the spread of the virus and while our service centers reopened and operated throughout the second quarter, our showrooms did not reopen until May 2020 with reduced hours. New vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~increased 3.8%~~decreased 33.6%, as a ~~5.4%~~43.7% decrease in new vehicle retail same store unit sales was partially offset by an 18.0% increase in new vehicle retail same store average sales price per unit ~~sold more than offset~~sold. Used vehicle retail same store revenues on a ~~1.5%~~constant currency basis decreased 21.1%, as a 37.6% decrease in ~~new~~used vehicle retail same store unit ~~sales. The increase in average~~ sales ~~price was driven by~~more than offset a change in brand mix as our higher priced luxury brands outpaced the growth in our lower priced import brands. Used vehicle retail same store revenue on a constant currency basis increased 5.2%, as a 5.3%26.5% increase in used vehicle retail same store average sales price per unit ~~sold more than offset~~sold. Used vehicle wholesale same store revenues increased 4.4% on a ~~0.2% decrease~~constant currency basis. The improvement in used vehicle wholesale same store revenues and the increases in new and used vehicle retail same store average sales price per unit ~~sales.~~sold reflect supply constraints and a shift in brand mix to higher priced luxury brands. The ~~increase was driven~~decline in total units sold reflects the shutdowns and subsequent lower demand and inventory shortages caused by ~~a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and increased~~ the ~~profitability of our used vehicle business.~~COVID-19 pandemic. Parts and service same store revenue on a constant currency basis increased 9.8% as a 16.8% increase in customer-pay business was partially offset by an 8.7% decrease in warranty business. The increase in customer-pay reflects management initiatives to enhance the effectiveness of our service sales process and improve efficiency of our parts and service operations. F&I same store revenuerevenues on a constant currency basis decreased ~~8.6%~~15.2% driven by declines in customer-pay, warranty and collision revenues partially offset by an increase in wholesale revenues. F&I same store revenues on a constant currency basis decreased 23.2% primarily as a result of a decline in ~~fleet business.~~our retail unit sales partially offset by an improvement in income per contract on our retail finance fees.

Gross ~~profit~~Profit

Total gross profit in Brazil during the nine months ended September 30, ~~2019 increased $0.4~~2020 decreased $15.4 million, or ~~1.0%~~38.9%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in Brazil during the nine months ended September 30, ~~2019~~2020 decreased ~~$1.4~~$15.0 million, or ~~3.6%~~38.3%, as compared to the same period in ~~2018.~~2019. On a constant currency basis total same store gross profit ~~increased 4.1% as growth~~decreased 21.4% driven by declines in ~~used vehicles and parts and service was partially offset by decreases in new vehicle and F&I.~~all business lines. New vehicle retail same store gross profit on a constant currency basis decreased ~~3.7%~~24.6%, driven by a ~~1.5%~~43.7% decrease in new vehicle retail same store units sold ~~and~~partially offset by a ~~2.2% decrease~~33.9% increase in new vehicle retail same store average gross profit per unit sold. ~~The decrease in gross profit per unit reflects execution of strategic initiatives designed to reduce inventory levels.~~ Used vehicle retail same store gross profit on a constant currency basis ~~increased 22.8%~~decreased 31.8%, asreflecting a ~~23.0%~~37.6% decrease in used vehicle retail same store unit sales partially offset by a 9.3% increase in used vehicle retail same store average gross profit per unit ~~sold more than offset a 0.2% decrease~~sold. The improvement in new and used vehicle retail same store gross profit per unit ~~sales. This increase was driven by~~reflects the shift towards our higher priced luxury brands and supply constraints experienced during the COVID-19 pandemic as many manufacturers had put a ~~recently implemented centralized used vehicle purchasing~~hold on production earlier in the year and ~~pricing model which has improved our acquisition of used vehicle inventory and increased the profitability of our used vehicle business.~~have not returned to normal production levels. Parts and service same store gross profit ~~increased 7.5%~~decreased 14.7% on a constant currency basis, driven by the ~~9.8% increase~~15.2% decrease in parts and service ~~revenue.~~revenues described above. F&I same store ~~revenue~~gross profit on a constant currency basis decreased ~~8.6% driven by a decline in fleet business.~~23.2% as discussed above.

SG&A ~~Expense~~Expenses

The following discussion of our results of operations is on a consolidated basis, unless otherwise noted.

Depreciation and Amortization ~~Data~~Expense

Our total depreciation and amortization expense increased from ~~$16.9~~$18.2 million to ~~$18.0~~$19.1 million and from ~~$50.0~~$53.0 million to ~~$53.0~~$56.5 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, when compared to the same period in ~~2018. This~~2019. The slight increase is ~~substantially explained by the~~attributed to an increase in property and equipment in our U.S. segment, as we continue to strategically add dealership-related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.segment.

~~Impairments~~Impairment of Assets

~~The Company evaluates~~We evaluate intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill, ~~assets~~ for impairment annually, or more frequently if events or circumstances indicate possible impairment. ~~The Company performs interim reviews~~During the three months ended June 30, 2020 we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit and franchise rights ~~to determine if a dealership is performing below forecasted franchise cash flow.~~impairment charges of $11.1 million within the U.K. segment and $0.1 million within the Brazil segment. During the three months ended September 30, 2019 as a result of increased uncertainty in the U.K. due to the delayed decision regarding Brexit that could impact our new vehicle business and certain U.S. dealerships identified in our quarterly review, the Company identified circumstances indicating possible impairment of itswe recorded franchise rights requiring a quantitative assessment. In calculating fair value, the Company used a direct value method discounted cash flow model, or income approach, specifically the excess earnings method. Based on the results of the Company's assessment, the Company determined that the fair value of the franchise rights on seven of its U.K. dealerships and one of its U.S. dealerships was below its respective carrying values. This resulted in franchise asset impairment charges of $5.6 million in the U.K. segment and $3.0 million in the U.S. segment. See Part I, “Item 1. Financial Statements,” Note 8 “Intangibles” for additional discussion of our interim impairment assessment.

~~The Company performs interim reviews of its~~We also review long-lived assets that are held-for-use, including our property and equipment and ROU assets, for impairment ~~when evidence exists~~at the lowest level of identifiable cash flows whenever there are indicators that the carrying value of ~~an asset~~these assets may not be recoverable. During the three months ended June 30, 2020, we recognized ROU asset impairment charges of $1.7 million relating to seven dealerships within the U.K. segment and $0.2 million relating to one dealership within the Brazil segment. During the three months ended September 30, 2019 ~~the Company~~we recognized a ROU asset impairment charge of $1.4 million ~~relating to two operating leases~~ in the U.K. segment and asset impairment charges of $0.2 million in the U.S. segment. ~~In addition to the ROU assets impairment, the Company also recorded $0.3 million of fixed asset impairments.~~

~~Total impairments during~~During the three months ended ~~September~~June 30, 2019 we recognized asset impairment charges of $0.5 million within the Brazil segment. See Part I, “Item 1. Financial Statements,” Note 1 “Interim Financial Information” for additional discussion of our interim impairment assessment.

The impairment charges were ~~$10.3 million.~~

~~During the nine months ended September 30, 2019, the Company recorded $10.8 million~~recognized within Asset impairments in ~~impairments, comprised~~our Condensed Consolidated Statements of ~~$8.6 million of U.S. and U.K. franchise impairments described above, and $2.2 million of ROU assets and other fixed asset impairments.~~

During the three and nine months ended September 30, 2018, the Company recorded $23.2 million and $27.4 million, respectively, of asset impairments, primarily related to impairment of franchise rights.Operations.

Floorplan Interest Expense

Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on ~~the one-month London Interbank Offered Rate (“LIBOR”) (or~~LIBOR, Prime rate ~~in some cases), plus a spread in the U.S. and U.K., and~~or a benchmark ~~rate plus a spread in Brazil.~~rate. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure for a fixed interest rate over the term of the variable interest rate ~~debt.~~borrowing.

~~Our total floorplan interest expense increased 4.8% for~~For the three months ended September 30, ~~2019,~~2020, total floorplan interest expense decreased 47.1% as compared to the same period in ~~2018, due to higher inventory levels in the U.S., partially offset by lower interest rate swap expense.~~

2019. For the nine months ended September 30, ~~2019, our~~2020, total floorplan interest expense ~~increased 8.5%~~decreased 33.8% as compared to the same period in ~~2018,~~2019. The decrease in both comparative periods is primarily due to ~~higher~~lower inventory levels ~~in the U.S.~~ and ~~higher~~lower weighted average interest rates mainly due to a decline in LIBOR, partially offset by ~~lower~~higher expense on our interest rate ~~swap expense.~~swaps.

Other Interest Expense, ~~net~~Net

Other interest expense, net consists of interest charges primarily on our real estate related debt, working capital lines of credit and other long-term debt, partially offset by interest income. For the three months ended September 30, ~~2019,~~2020, other interest expense, net decreased from ~~$19.1~~$18.9 million to ~~$18.9~~$14.6 million as compared to the same period in ~~2018. The decrease was primarily attributable to a decrease in the weighted average interest rates corresponding with a decrease in LIBOR.~~2019. For the nine months ended September 30, ~~2019,~~2020, other interest expense, net decreased from ~~$57.4~~$55.8 million to $49.0 million as compared to the same period in 2019. The decrease in both comparable periods was primarily attributable to lower interest rates achieved through debt refinancings in the current year, including the redemption of $300.0 million in aggregate principal of our 5.25% Senior Notes on April 2, 2020, which was funded at lower interest rates through increased borrowings on our real estate related debt and Acquisition Line, and the redemption of $550.0 million aggregate principal of our 5.00% Senior Notes on September 2, 2020, which was funded through the issuance of $550.0 million aggregate principal amount of our 4.00% Senior Notes on August 17, 2020. See “Sources and Uses of Liquidity from Financing Activities” within “Liquidity and Capital Resources” below for further discussion of our debt refinancings in the current year.

Loss on Extinguishment of Debt

On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due June 2023, at a premium of 102.625%. The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million. We recognized a loss on extinguishment of $10.4 million which included write offs of an unamortized discount in the amount of $1.9 million and unamortized debt issuance costs in the amount of $0.6 million.

Provision for Income Taxes

Our provision for income taxes increased $23.6 million to $34.6 million for the three months ended September 30, 2020 as compared to the same period in 2019. For the nine months ended September 30, 2020, our provision for income taxes increased $17.4 million to $55.8 million, as compared to the same period in ~~2018.~~2019. The ~~decrease was primarily attributable to a decrease in the weighted average borrowings on our real estate related debt.~~

~~Provision for Income Taxes~~

~~Our provision for income taxes increased $1.4 million to $11.0 million for the three months ended September 30, 2019, as compared to the same period in 2018,~~increases were primarily due to ~~an increase of pretax book income. For the nine months ended September 30, 2019, our provision for income taxes decreased $0.1 million to~~ ~~$38.5 million, as compared to the same period~~increases in ~~2018, primarily due to a decrease of~~ pretax book income. For the three months ended September 30, ~~2019,~~2020, our effective tax rate ~~increased~~decreased to ~~22.4%~~21.5% from ~~21.6%,~~22.3% as compared to the same period in ~~2018.~~2019. This ~~increase~~decrease was primarily due to changes to valuation allowances provided for net operating losses in certain U.S. states and in ~~Brazil,~~Brazil. For the nine months ended September 30, 2020, our effective tax rate decreased to 23.1% from 23.4% as ~~well as higher~~compared to the same period in 2019. This decrease was primarily due to increased tax deductions in excess of book expense with respect to ~~restricted stock awards~~RSAs that vested in ~~2018. For the nine months ended September 30, 2019, our effective tax rate of 23.4% was nearly unchanged from 23.3%~~2020, partially offset by higher disallowed excess compensation expense in 2020 and reductions to valuation allowances provided for ~~the same period~~net operating losses in ~~2018.~~certain U.S. states and in Brazil that were higher in 2019.

We expect our effective tax rate for the ~~full-year~~remainder of ~~2019~~2020 will be between 23.0% and 24.0%. We believe that it is ~~more likely than not~~more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences. The anticipated effects of the COVID-19 pandemic should not materially impact our estimated effective tax rate for the full-year of 2020.

Liquidity and Capital Resources

Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our Floorplan Line and FMCC Facility levels (see Part I, “Item 1. Financial Statements,” Note 7,10 “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. Based on current facts and circumstances, we believe we will have adequate cash flow, coupled with available borrowing capacity, to fund our current operations, capital expenditures and acquisitions for the ~~remainder of 2019.~~next 12 months. If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for ~~2019~~2020 change, we may need to access the private or public capital markets to obtain additional funding. See “Sources and Uses of Liquidity from Investing Activities” below for further discussion of expectations regarding future capital expenditures.

Cash on Hand

As of September 30, ~~2019,~~2020, our total cash on hand was ~~$41.0~~$66.2 million. The balance of cash on hand excludes ~~$25.2~~$126.7 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility ~~and $3.6 million restricted cash~~ as of September 30, ~~2019.~~2020. We use the pay down of our Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.

Cash Flows

We utilize various credit facilities to finance the purchase of our new and used vehicle inventory. With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows to or from us. With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S. and the funds flow directly between us and the lender.

We categorize the cash flows associated with borrowings and repayments on these various credit facilities as Cash Flows from Operating ActivitiesorCash Flows from Financing Activities in our Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities on in the Condensed Consolidated Statements of Cash Flows in conformity with U.S. GAAP. All borrowings from, and repayments to, the Revolving Credit Facility (see Part I, “Item 1. Financial Statements,” Note 7,10 “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. and Brazil unaffiliated with our manufacturer partners (collectively, “Non-OEM Floorplan Credit Facilities”), are presented within Cash Flows from Financing Activities in conformity with U.S. GAAP. However, the incurrence of all floorplan notes payable represents an activity necessary to acquire inventory for resale, resulting in a trade payable. Our decision to utilize our Revolving Credit Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities. Therefore, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided byby/used in operating ~~activities,” which makes such reclassification,~~activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP and avoids the potential to mislead the users of our financial statements.

In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions. Therefore, borrowings and repayments of all floorplan financing associated with dealership ~~acquisition~~acquisitions and ~~disposition~~dispositions are characterized as either ~~operating~~Cash Flow from Operating Activities or ~~financing activities~~Cash Flow from Financing Activities in our ~~statement~~Condensed Consolidated Statements of ~~cash flows~~Cash Flows presented in conformity with U.S. GAAP, depending on the relationship described above. However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, which more closely reflects the cash flows associated with our ~~acquisitions~~acquisition and disposition strategy and eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. We have made such adjustments in our adjusted operating cash flow presentations.

The following table reconciles cash flows provided by (used in) operating, investing and financing activities on a U.S. GAAP basis to the corresponding adjusted amounts ~~(dollars in~~(in millions):

Nine Months Ended September 30,
2019 2018 % Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 310.8
$ 357.4
(13.0 )%
Change in floorplan notes payable - credit facilities, excluding floorplan offset account and net acquisition and disposition related activity (69.0 ) (75.3 )
Change in floorplan notes payable - manufacturer affiliates associated with net acquisition and disposition related activity 0.1
(2.0 )
Adjusted net cash provided by (used in) operating activities $ 241.9
$ 280.1
(13.6 )%
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities $ (193.5 ) $ (145.5 ) (33.0 )%
Change in cash paid for acquisitions, associated with floorplan notes payable 14.3
16.3

Change in proceeds from disposition of franchises, property and equipment, associated with floorplan notes payable (19.5 ) (24.3 )
Adjusted net cash provided by (used in) investing activities $ (198.7 ) $ (153.5 ) (29.4 )%
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities $ (90.1 ) $ (204.2 ) 55.9 %
Change in net borrowings and repayments on floorplan notes payable - credit facilities, excluding net activity associated with our floorplan offset account 74.1
85.3

Adjusted net cash provided by (used in) provided by financing activities $ (16.0 ) $ (118.9 ) 86.5 %



	Nine Months Ended September 30,
	2020			2019			% Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities:	$	712.7		$	310.8		129.3	%
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisition and disposition	(368.9		)	(68.9		)
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisition and disposition and floorplan offset activity	14.5			0.1
Adjusted net cash provided by (used in) operating activities	$	358.3		$	242.0		48.1	%
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities:	$	(78.8	)	$	(193.5	)	59.3	%
Change in cash paid for acquisitions, associated with Floorplan notes payable	—			14.3
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable	—			(19.5		)
Adjusted net cash provided by (used in) investing activities	$	(78.8	)	$	(198.7	)	60.4	%
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities:	$	(590.4	)	$	(90.1	)	(555.1	)%
Change in Floorplan notes payable, excluding floorplan offset	354.4			74.0
Adjusted net cash provided by (used in) financing activities	$	(236.0	)	$	(16.1	)	(1,368.5	)%

Sources and Uses of Liquidity from Operating Activities

For the nine months ended September 30, 2020, we generated $712.7 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated $358.3 million in net cash flows from operating activities, primarily consisting of $186.4 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $56.5 million, stock-based compensation of $27.0 million, asset impairments of $23.8 million, operating lease assets of $18.1 million and a loss on extinguishment of $13.7 million related to the 5.00% Senior Notes and 5.25% Senior Notes. Adjusted net cash flows from operating activities also included a $31.1 million adjusted net change in operating assets and liabilities, including cash inflows of $499.6 million from decreases in inventory levels, $41.1 million from net decreases in prepaid expenses and other assets, $33.0 million from net decreases in contracts-in-transit and vehicle receivables and $25.2 million from net decreases in accounts and notes receivables. These cash inflows were partially offset by cash outflows of $492.3 million from adjusted net floorplan repayments and $58.8 million from decreases in accounts payable and accrued expenses.

For the nine months ended September 30, 2019, we generated $310.8 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated ~~$241.9~~$242.0 million in net cash flows from operating activities, primarily consisting of $125.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $53.0 million, operating lease assets of $21.2 million, stock-based compensation of ~~$14.4~~$14.5 million, asset impairments of $10.8 million and deferred income taxes of $3.6 million, partially offset by a $5.9 million gain on the disposition of assets. Adjusted net cash flows from operating activities also includes a ~~$15.1~~$15.0 million adjusted net change in operating assets and liabilities, including cash inflows of ~~$99.1~~$99.0 million from increases in accounts payable and accrued expenses and $41.7 million from decreases in inventory levels. These cash inflows were partially offset by cash outflows of $70.0 million from ~~the~~ adjusted net ~~decrease in~~ floorplan ~~borrowings, $31.6~~repayments, $31.7 million from net increases in accounts and notes ~~receivable~~receivables and $21.3 million from ~~the decrease~~decreases in operating lease liabilities.

For the nine months ended September 30, 2018, we generated $357.4 million of net cash flow from operating activities. On an adjusted basis for the same period, we generated $280.1 million in net cash flow from operating activities, primarily consisting of $127.1 million in net income, as well as non-cash adjustments related to depreciation and amortization of $50.0 million, stock-based compensation of $14.2 million, deferred income taxes of $4.1 million, asset impairments of $27.4 million and an $81.2 million net change in operating assets and liabilities, partially offset by a $27.0 million gain on sale of assets. Included in the adjusted net changes of operating assets and liabilities were cash inflows of $70.2 million from the net decrease in vehicle receivables and contracts-in-transit; $33.7 million from decreases in inventory levels; $35.5 million from increases in accounts payable and accrued expenses; and $28.4 million from the net decrease in accounts and notes receivable. These cash inflows were partially offset by adjusted cash outflows of $63.4 million from the net decrease in floorplan borrowings and $22.4 million from the net increase in prepaid expenses and other assets.

Working Capital

At September 30, ~~2019,~~2020, we had a ~~$10.8~~$104.6 million ~~deficit~~surplus of working capital. This represents ~~a decrease~~an increase of ~~$26.5~~$10.5 million from December 31, ~~2018,~~2019, when we had ~~$15.7~~a $94.0 million surplus of working capital. The decrease is primarily the implementation of Topic 842 in which we recognized an incremental current liability, representing our operating lease liability, of $26.1 million upon transition and utilized the optional transition method whereby balances as of December 31, 2018 were unchanged. See Note 1, “Interim Financial Information” and Note 11, “Leases” in the Notes to Condensed Consolidated Financial Statements for further information. Changes in our working capital are ~~also~~ typically explained by changes in floorplan notes payable outstanding. Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles. Borrowings on our used vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are limited to 85% of the aggregate book value of our used vehicle inventory, except in the U.K. and Brazil. At times, we have made payments on our floorplan notes payable using excess cash flows from operations and the proceeds of debt and equity offerings. As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures or general corporate purposes.

Sources and Uses of Liquidity from Investing Activities

During the nine months ended September 30, 2020, we used $78.8 million in net cash flows from investing activities on both an unadjusted and adjusted basis, which represented $78.8 million used for purchases of property and equipment and to construct new and improve existing facilities, $1.3 million used for acquisition activity, partially offset by cash inflows of $1.3 million related to the disposition of property and equipment. Of the $78.8 million in property and equipment purchases, $55.4 million was used for non-real estate related capital expenditures, $22.4 million was used for the purchase of real estate associated with existing dealership operations and $1.0 million represented the net decrease in the accrual for capital expenditures from year-end.

During the nine months ended September 30, 2019, we used $193.5 million in net cash flows from investing activities. On an adjusted basis for the same period, we used $198.7 million in net cash flows from investing activities, representing ~~$139.5~~$139.6 million used for purchases of property and equipment and to construct new and improve existing facilities and $82.7 million used for dealership acquisition activity, partially offset by cash inflows of $23.6 million related to the disposition of franchises and property and equipment. Of the ~~$139.5~~$139.6 million in property and equipment purchases, $70.8 million was used for non-real estate related capital expenditures, $65.1 million was used for the purchase of real estate associated with existing dealership operations and $3.6 million ~~represents~~represented the net decrease in the accrual for capital expenditures from year-end.

During the nine months ended September 30, 2018, we used $145.5 million in net cash flow for investing activities. On an adjusted basis for the same period, we used $153.5 million in net cash flow for investing activities, primarily consisting of $119.0 million of cash outflows for dealership acquisition activity and $118.3 million for purchases of property and equipment and to construct new, and improve existing facilities, partially offset by cash inflows of $83.4 million related to dispositions of franchises and fixed assets. Within this total of property and equipment purchases, $85.5 million was used for capital expenditures, $30.1 million was used for the purchase of real estate associated with existing dealership operations and $2.7 million represents the net decrease in the accrual for capital expenditures from year-end.

Capital Expenditures

Our capital expenditures include costs to extend the useful lives of current facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of ~~2019~~2020 will be approximately ~~$100~~$80 million excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash. ~~This amount excludes real estate purchases associated with dealership acquisitions and lease buy-outs.~~

Acquisitions

We evaluate the expected return on investment in our consideration of potential business purchases. ~~In general, the purchase price, excluding real estate and floorplan liabilities, is approximately 15% to 20% of the annual revenue.~~ Cash needed to complete our acquisitions ~~normally~~generally comes from excess working capital, operating cash flows of our dealerships and borrowings under our floorplan facilities, term loans and our Acquisition ~~Line (see Note 7, “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information).~~Line.

Sources and Uses of Liquidity from Financing Activities

For the nine months ended September 30, 2020, we used $590.4 million in net cash flows from financing activities. On an adjusted basis for the same period, we used $236.0 million in net cash flows from financing activities, primarily related to cash outflows of $857.9 million related to the extinguishment of our 5.00% and 5.25% Senior Notes, $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments. These cash outflows were partially offset by $550.0 million from the issuance of our 4.00% Senior Notes. The $162.1 million net borrowings on other debt primarily reflected increased mortgage borrowings in the U.S. to partially fund the redemption of the 5.25% Senior Notes.

For the nine months ended September 30, 2019, we used $90.1 million in net cash flows from financing activities. On an adjusted basis for the same period, we used ~~$16.0~~$16.1 million in net cash flows from financing activities, primarily related to cash outflows of ~~$38.0~~$35.8 million in net ~~payments~~repayments on ~~real estate~~other debt and ~~$14.8~~$14.9 million in dividend payments, partially offset by $19.1 million in net borrowings on our Acquisition Line and ~~$15.9 million in net borrowings on our Floorplan Lines (representing the net cash activity in our floorplan offset accounts).~~

For the nine months ended September 30, 2018, we used $204.2 million in net cash flow from financing activities. On an adjusted basis for the same period, we used $118.9 million in net cash flow from financing activities, primarily related to cash outflows of $108.6 million to repurchase our Company's common stock, $28.5 million of net payments on real estate debt, and $16.0 million for dividend payments. These outflows were partially offset by cash inflows related to $7.2 million of net borrowings on our Acquisition Line, $7.4 million of net borrowings of other debt and $17.2$15.8 million in net borrowings on our Floorplan Lines (representing the net cash activity in our floorplan offset accounts).

Credit Facilities, Debt Instruments and Other Financing Arrangements

Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.

The following table summarizes the position of our U.S. credit facilities as of September 30, ~~2019~~2020 (in millions):

U.S. Credit Facilities
Total
Commitment
Outstanding Available
Floorplan Line ⁽¹⁾
$ 1,447.8
$ 1,164.6
$ 283.2
Acquisition Line ⁽²⁾
352.2
73.0
279.2
Total Revolving Credit Facility 1,800.0
1,237.6
562.4
FMCC Facility ⁽³⁾
300.0
166.7
133.3
Total U.S. Credit Facilities ⁽⁴⁾
$ 2,100.0
$ 1,404.3
$ 695.7



	Total Commitment		Outstanding		Available
Floorplan line ⁽¹⁾	$	1,396.0	$	732.3	$	663.7
Acquisition line ⁽²⁾	349.0		75.9		273.1
Total Revolving Credit Facility	1,745.0		808.1		936.9
FMCC facility ⁽³⁾	300.0		114.7		185.3
Total U.S. credit facilities ⁽⁴⁾	$	2,045.0	$	922.8	$	1,122.2

⁽¹⁾The available balance at September 30, ~~2019~~2020 includes ~~$25.0~~$108.2 million of immediately available funds. The remaining available balance can be used for inventory financing.

⁽²⁾The outstanding balance of ~~$73.0~~$75.9 million is related to outstanding letters of credit of ~~$23.5~~$17.8 million and ~~$49.5~~$58.1 million in borrowings as of September 30, ~~2019.~~2020. The borrowings outstanding under the Acquisition Line ~~represent 40.0~~included no U.S dollar borrowings and £45 million of British pound sterling borrowingstranslated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line. The available borrowings may be limited from time to time, based on certain debt covenants.

⁽³⁾The available balance at September 30, ~~2019~~2020 includes ~~$0.2~~$18.5 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing.

⁽⁴⁾The outstanding balance excludes ~~$278.8~~$239.1 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and ~~non-Revolving Credit Facility~~ rental vehicle ~~financing.~~

~~Revolving Credit Facility~~

~~The Revolving Credit Facility contains a number~~financing not associated with any of ~~significant covenants that, among other things, restrict~~ our ability to make disbursements outside of the ordinary course of business, dispose of assets, incur additional indebtedness, create liens on assets, make investments and engage in mergers or consolidations. We are also required to comply with specified financial tests and ratios defined in the Revolving Credit Facility, such as the fixed charge coverage and total adjusted leverage ratios. Further, the Revolving Credit Facility restricts our ability to make certain payments, such as dividends or other distributions of assets, properties, cash, rights, obligations, or securities (“Restricted Payments”). As of September 30, 2019, the Revolving Credit Facility Restricted Payment Basket totaled $126.6 million and we were in compliance with all our financial covenants.

~~Based upon our current five-year operating and financial projections, we believe that we will remain compliant with such covenants in the future.~~

~~Other Inventory Credit Facilities and Financing Arrangements~~U.S. credit facilities.

We have other credit facilities in the U.S., U.K. and Brazil with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our ~~5.00% Notes and 5.25%~~4.00% Senior Notes, as well as real estate related and other long-term debt instruments.

4.00% Senior Notes Issuance

On August 17, 2020, we issued Senior Notes maturing on August 15, 2028 in aggregate principal amount of $550.0 million. Interest on the notes is payable semi-annually on February 15^th and August 15^th at a coupon rate of 4.00%. The notes were issued at par and carry an effective interest rate of 4.21% after consideration of associated debt issuance costs. At our option, we may redeem some or all of the Senior Notes at varying redemption prices (expressed as percentages of principal amount of the notes) and redemption periods throughout the term. Refer to Part I, “Item 1. Financial Statements,” Note 9 “Debt” within our Notes to Condensed Consolidated Financial Statements for further information regarding our 4.00% Senior Notes.

5.00% Senior Notes Redemption and Debt Refinancing

On September 2, 2020, we fully redeemed $550.0 million in aggregate principal amount of our outstanding 5.00% Senior Notes due June 2022, at par value. We recognized a loss on extinguishment of $3.3 million which included write offs of an unamortized discount in the amount of $2.6 million and unamortized debt issuance costs in the amount of $0.7 million. Additionally, we paid accrued interest of $6.9 million. The redemption was funded with $550.0 million of our newly issued 4.00% Senior Notes due 2028. See 4.00% Senior Notes Issuance. These refinancings are expected to lower our annual interest expense by approximately $5.5 million.

5.25% Senior Notes Redemption and Debt Refinancing

On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due 2023, at a premium of 102.625%. The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million. We recognized a loss on extinguishment of $10.4 million which included write offs of an unamortized discount in the amount of $1.9 million and unamortized debt issuance costs in the amount of $0.6 million. Additionally, we paid $4.6 million of accrued interest up to the date of redemption. The redemption was funded through a combination of Acquisition Line borrowings, mortgage borrowings, and excess cash. Additional mortgage debt was funded during the second quarter of 2020 to provide supplemental liquidity. These refinancings are expected to lower our annual interest expense by approximately $10.8 million.

Covenants

Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets, and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of September 30, 2020, we were in compliance with the requirements of the financial covenants under our debt agreements. We are required to maintain the ratios detailed in the following table:



	As of September 30, 2020
	Required	Actual
Total adjusted leverage ratio	< 5.50	2.54
Fixed charge coverage ratio	> 1.20	3.91

As of September 30, 2020, we had $66.2 million of cash on hand and an additional $126.7 million invested in our floorplan offset accounts, bringing total cash liquidity to $192.9 million. In addition, we had $273.1 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $466.0 million as of September 30, 2020. Based on our position as of September 30, 2020 and our outlook as discussed within “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

See Part I, “Item 1. Financial Statements,” Note 7,9 “Debt” and Note 10 “Floorplan Notes Payable” ~~and Note 8, “Debt”~~ in ~~the~~our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities, ~~debt instruments~~ and other financing arrangements existing as of September 30, ~~2019.~~2020.

Stock Repurchases and Dividends

Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit. On April 7, 2020, we canceled our most recently authorized share repurchase program in light of the COVID-19 pandemic. During the first quarter 2020 and through the cancellation date, 597,764 shares were repurchased at an average price of $81.83 per share, for a total of $48.9 million.

~~Dividends~~During the first quarter of 2020, our Board of Directors approved a quarterly cash dividend of $0.30 per share on all shares of our common stock, which resulted in $5.3 million paid to common shareholders and $0.2 million to unvested RSA holders. On April 7, 2020, we temporarily suspended quarterly dividends in light of the COVID-19 pandemic.

~~The~~On October 5, 2020, our Board of Directors approved a new $200.0 million share repurchase program. Future share repurchases and the payment of any future dividends isare subject to the ~~discretion~~business judgment of our Board of Directors, ~~after considering the~~taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, ~~outlook for our business, general business conditions, the political and legislative environments~~covenant compliance, current economic environment and other ~~factors.~~

Further, we are limited under the terms of the Revolving Credit Facility, certain mortgage term loans, our 5.00% Notes and 5.25% Notes, in our ability to make cash dividend payments to our stockholders and to repurchase shares of our outstanding common stock. As of September 30, 2019, the restricted payment baskets limited us to $126.6 million in restricted payments. Generally, these restricted payment baskets will increase in the future periods by 50.0% of our future cumulative net income, adjusted to exclude the Company’s foreign operations, non-cash interest expense, non-cash asset impairment charges and non-cash stock-based compensation, plus the net proceeds received from the sale of our capital stock, and decrease by the amount of future payments for cash dividends and share repurchases. For the nine months ended September 30, 2019, we paid dividends of $14.3 million to common stock shareholders and $0.5 million to unvested restricted stock award holders.factors considered relevant.

Recent Regulatory Developments

In Brazil, Law No. 13,709/2018, the General Data Protection Act (Lei Geral de Proteção de Dados, or “GDPA”) will come into force in May 2021 and will change personal data protection in Brazil. The GDPA establishes a new legal framework covering personal data processing, including client, supplier and employee data. The GDPA establishes, among others, personal data owners’ rights, the legal basis for personal data protection, requirements for obtaining consent from personal data owners, obligations and requirements related to security incidents, data leaks and data transfers, as well as the creation of a National Data Protection Authority. We have begun initial preparations to comply with the GDPA ahead of its May 2021 effective date; however, we may have difficulty adapting our systems and processes to the new legislation due to the legislation’s complexity. In the event of non-compliance with the GDPA, we may be subject to penalties, beginning in August 2021, including making certain disclosures to authorities, the required deletion of personal data and fines, per infraction, of up to 2% (subject to an upper limit of R$50,000,000) of our revenues in Brazil during our last fiscal year, excluding taxes. See the risk factor titled “We are subject to substantial governmental laws and regulations, which if we are found to be in violation of, or subject to liabilities under, may adversely affect our business and results of operations” in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

On March 31, 2020, the U.S. Environmental Protection Agency and National Highway Traffic Safety Administration under the Trump Administration issued a final rule re-setting corporate average fuel economy (“CAFE”) and greenhouse gas (“GHG”) emissions standards for model years 2021-2026 passenger cars and light trucks. The March 31, 2020 final rule will increase stringency of CAFE and GHG emissions standards by 1.5% each year through model year 2026, as compared with the standards issued in 2012, which would have required annual increases of about 5%. Legal challenges to the March 31, 2020 final rule are expected. See the risk factor titled “Our operations are subject to environmental laws and regulations that may expose us to significant costs and liabilities” in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. We address interest rate risks primarily through the use of interest rate swaps. We do not currently hedge foreign exchange risk, as discussed further below. The following quantitative and qualitative information is provided regarding our foreign currency exchange rates and financial instruments to which we are a party at September 30, ~~2019~~2020 and from which we may incur future gains or losses from changes in market interest rates and/or foreign currency rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.

Interest Rates

We have interest rate risk inon our variable-rate debt ~~obligations. As~~obligations, primarily consisting of ~~September 30, 2019, we had $1.8 billion of variable-rate borrowings outstanding.~~our Floorplan Line. Based on the ~~average~~ amount of variable-rate borrowings outstanding ~~for the nine months ended~~of $1.6 billion and $1.8 billion as of September 30, 2020 and 2019, ~~and before the impact of our interest rate swaps described above,~~respectively, a 100 basis-point change in interest rates would have resulted in an approximate ~~$18.0~~$6.9 million and $9.0 million change to our annual interest ~~expense. After~~expense, respectively, after consideration of the average interest rate swaps ~~described~~ in effect during the ~~nine months ended September 30, 2019,~~periods.

The majority of our floorplan notes payable, mortgages and other debt are benchmarked to LIBOR. On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or requiring banks to submit rates for the calculation of LIBOR after 2021. The use of an alternative rate could result in increased interest expense, in addition to costs to amend the loan agreements and other applicable arrangements to a ~~100 basis-point change would have yielded a net annual change of $9.0 million in annual interest expense.~~new reference rate.

Our exposure to changes in interest rates with respect to our variable-rate floorplan borrowings is partially mitigated by manufacturers’ interest assistance, which ~~historically has been~~in some cases is influenced by changes in ~~market-based~~market based variable interest rates. We reflect interest assistance as a reduction of new vehicle inventory ~~carrying value~~cost until the associated vehicle is sold. During the nine months ended September 30, 2020 and 2019, we recognized $33.0 million and $35.6 million of interest assistance as a reduction of new vehicle cost of ~~sales.~~sales, respectively.

For additional information about the potential impact of LIBOR phase out on our results of operations, see Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

Foreign Currency Exchange Rates

The functional currency of our U.K. subsidiaries is the ~~British pound sterling~~GBP and of our Brazil subsidiaries is the ~~Brazilian real.~~BRL. Our exposure to fluctuating exchange rates relates to the effects of translating financial statements of ~~these~~those subsidiaries into our reporting currency, which we do not hedge against based on our investment strategy in these foreign operations. A 10% devaluation in average exchange rates for the ~~British pound sterling~~GBP to the ~~U.S. dollar~~USD would have resulted in a $145.0 million and $167.4 million decrease to our revenues for the nine months ended September 30, ~~2019.~~2020 and 2019, respectively. A 10% devaluation in average exchange rates for the ~~Brazilian real~~BRL to the ~~U.S. dollar~~USD would have resulted in a $16.7 million and $29.7 million decrease to our revenues for the nine months ended September 30, ~~2019.~~2020 and 2019, respectively.

For additional information about our market sensitive financial instruments, ~~please~~ see Part ~~II,~~I, “Item ~~7. Management’s Discussion & Analysis of~~1. Financial ~~Condition~~Statements,” Note 6 “Financial Instruments and ~~Results of Operations”, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and Note 4.~~Fair Value Measurements” within our Notes to ~~“Item 8.~~Condensed Consolidated Financial ~~Statements and Supplementary Data” in our 2018 Form 10-K.~~Statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the ~~Securities~~ Exchange Act, ~~of 1934, as amended (the “Exchange Act”),~~ we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2019~~2020 at the reasonable assurance level.

In light of the COVID-19 pandemic, a significant portion of our back office employees remain working remotely due to the restricted social distancing environment or other restrictions. Established business continuity plans were activated in order to mitigate the impact to our control environment, operating procedures, data and internal controls. The design of our processes and controls allow for remote execution with accessibility to secure data.

Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We implemented new internal controls and made changes to existing internal controls to ensure that we adequately evaluated and properly assessed the impact of the new accounting standard related to leases on our financial statements to facilitate its adoption on January 1, 2019 and ongoing compliance. There were no significant changes to our internal control over financial reporting due to the adoption of the new standard.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. For a discussion of our legal proceedings, see Part I, “Item 1. Financial Statements,” Note 12 “Commitments and Contingencies” within our Notes to Condensed Consolidated Financial ~~Statements, Note 10, “Commitments and Contingencies”.~~Statements.

~~Item 1A.~~ ~~Risk Factors~~

~~There have been no material changes during the period ended September 30, 2019 in our “Risk Factors” as discussed in~~ Item 1A. ~~of our 2018 Form 10-K, other than the risks describe below.~~Risk Factors

The U.K.’s withdrawal from the E.U. may have a negative effect on some global economic conditions, financial markets and our business, which could adversely affect our U.K. revenue and results of operations.

The U.K. extended the exit with the E.U. to January 31, 2020. However, Brexit could occur earlier if the U.K. and E.U. mutually agree, or later if another extension is granted. The future terms of the U.K.’s relationship with the E.U. remain uncertain. The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets eitherExcept as set forth below, during a transitional period or more permanently. Brexit could adversely affect U.K., European and worldwide economic and market conditions, could contribute to instability in some global financial and foreign exchange markets, including continued volatility in the value of the British pound sterling or otherwise adversely affect trading agreements or similar cross-border cooperation arrangements (whether economic, tax, legal, regulatory or otherwise) beyond the date of Brexit. More specifically, it could lead to:

a decrease in sales or revenues attributable to increased retail prices of new vehicles as the majority of vehicles sold in the U.K. are imported from other countries in Europe and could be subject to additional tariffs;

an increase in supply chain risk for automotive retailers and manufacturers due to the impact of changes in the U.K.’s access to free trade agreements, resulting in custom checks and tariffs, which could delay delivery of vehicles or parts;

continued volatility in the currencies in which we transact our business. As exchange rates fluctuate, our revenue and results of operations as reported under U.S. GAAP fluctuates. A weakening British pound sterling as compared to the U.S. Dollar negatively impacts our U.S. Dollar reported results of operations. Our U.K. business generated approximately 21% of our total revenue for the nine months ended September 30, 2020, there were no changes to the Risk Factors disclosed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.

~~economic risk:~~The global outbreak of the ~~U.K. economy~~COVID-19 pandemic has materially adversely affected, and may ~~be negatively impacted, resulting in a decrease to our revenues.~~

~~labor risk: Brexit might impact the hiring and movement of employees and subject companies to local labor laws.~~

regulatory risk: exposure to different laws and regulations might impact businesses. For example, the loss of passporting arrangements that permit U.K. entities to serve E.U. businesses and customers and efforts required to relocate U.K. operations or use E.U. subsidiaries. Also airlines have potential antitrust issues.

~~Any of these effects of Brexit and others we cannot anticipate could~~further materially adversely affect, our business, ~~consolidated financial position,~~ results of operations and cash flows.

The global outbreak of the COVID-19 pandemic has materially disrupted, and could continue to significantly disrupt, our operations and adversely affect our financial condition and results of operations. The measures taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of the COVID-19 pandemic included mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. As a result, we were required to completely shut down or significantly reduce the operating capacity of all of our dealerships in the U.S., the U.K. and Brazil in late March 2020 and early April 2020. These measures significantly reduced our new and used vehicle sales volumes, parts and service revenues and F&I revenues, as well as impacted our vehicle and parts supply chain during March 2020 and April 2020 in particular. On October 31, 2020, the U.K. government announced a national lockdown of non-essential businesses, which includes our dealership vehicle showrooms, beginning November 5, 2020 through December 2, 2020, at which time the government will determine whether the lockdown restrictions are extended. Our dealership service operations will remain open, however this mandate will adversely impact our vehicle sales in the fourth quarter. If the U.K. lockdown is extended for a significant period of time, or if additional lockdowns, other travel and business restrictions or additional restrictions are imposed in our other markets, the adverse impact on our business, results of operations and cash flows could be material. Such business disruptions suffered as a result of the COVID-19 pandemic are not covered by our insurance policies.

In addition, the impacts from the COVID-19 pandemic caused most vehicle manufacturers and parts suppliers to suspend or limit their production or distribution of new vehicles and parts and they have not returned to normal levels yet. This has materially adversely affected, and could continue to materially adversely affect, the financial condition and results of operations of our vehicle manufacturers and impacts their ability to profitably design, market, produce or distribute new vehicles and parts. This in turn has had, and could continue to have, a material adverse effect on our business, results of operations and financial condition.

The increased volatility in market conditions due to the COVID-19 pandemic could also make it more difficult for us to raise additional capital in order to supplement our cash flow from operations. If we are unable to raise necessary additional funds on acceptable terms or do not have sufficient cash flow from operations, our business and, in particular, our acquisitions and integration strategy could be adversely affected. The substantial cost-cutting measures, stockholder dividend suspension, share repurchase cancellation and other liquidity preserving measures we have taken or may take in the future may not sufficiently reduce the risks associated with our indebtedness, including maintaining available borrowing capacity and compliance with financial covenants and having the ability to refinance or repay indebtedness on favorable terms or at all. Further, any decrease in liquidity or our share price, tightened credit conditions, reduced access to the capital markets or reduced operating performance due to the COVID-19 pandemic may adversely affect our financial performance as well as our ability to purchase or sell certain dealerships.

As the potential impact from the COVID-19 pandemic is difficult to predict, the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any potential impact will depend on future developments and new information that may emerge regarding the severity and duration of the COVID-19 pandemic and the actions taken by authorities to contain it or address its impact, all of which are beyond our control. Even with the various restrictions on business activity lifted, there is no guarantee when or if customer demand and workforce availability will return to prior levels, and our operations could be impacted by any restrictions we may have to impose or costs we may have to incur to ensure the ongoing safety of our employees, customers and others. In addition, there is no assurance that our relationship with and the financial and operational capacities of vehicle manufacturers and distributors will remain the same. These potential impacts, while uncertain, could adversely affect our business, financial condition and results of operations.

The impairment of our goodwill and/or indefinite-lived intangibles could have a material adverse effect on our results of operations.

We assess goodwill and other indefinite-lived intangibles for impairment on an annual basis, or more frequently when events or circumstances indicate that an impairment may have occurred. See Part I, “Item 1. Financial Statements,” Note 8 “Intangibles” within our Notes to Condensed Consolidated Financial Statements for further discussion of our impairment model and related assumptions. During the three months ended June 30, 2020, we performed an interim impairment assessment of goodwill and intangible franchise rights to determine if events or changes in circumstances, including the impacts of the COVID-19 pandemic, indicated that it was more-likely-than-not that the assets were impaired. Based on the results of our assessment, it was concluded that it was more-likely-than-not that our goodwill for the Brazil reporting unit (resulting in an impairment charge of $10.7 million) and some of our intangible franchise rights for the U.K. and Brazil (resulting in impairment charges of $11.1 million and $0.1 million, respectively) were impaired as of June 30, 2020, which was mainly attributed to our assumptions that the potential long-term impacts of the COVID-19 pandemic had worsened during the second quarter of 2020. During the three months ended September 30, 2020, we performed an interim qualitative impairment assessment and as a result determined that it is not more-likely-than not that the capitalized value of goodwill and intangible franchise rights were impaired, primarily reflecting the improving business environments in the U.S. and U.K. regions. We may be required to record additional impairment charges if the COVID-19 pandemic and any lockdowns or restrictions to contain the pandemic continue long-term. Any such impairment charge could have a material adverse effect on our results of operations.

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

Recent Sales of Unregistered Securities

None.

Use of Proceeds

None.

Issuer Purchases of Equity Securities

~~None.~~ Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit. On October 5, 2020, our Board of Directors approved a new $200.0 million share repurchase program. Future share repurchases are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.

Item 5. Other Information

On October 30, 2020, we amended our Eleventh Amended and Restated Revolving Credit Agreement (“Credit Facility”) to align certain restricted payments terms in the Credit Facility with the same provisions in our recently issued 4.00% Senior Notes due 2028 (“bond indenture”). The effect of this change is to permit an additional $30.0 million of restricted payments annually before the general restricted payment basket in the Credit Facility is impacted, as provided in the bond indenture. This incremental $30.0 million only applies if we maintain a Total Leverage Ratio throughout the calendar year that does not exceed 3.25 to 1.00. The Credit Facility amendment is made retroactive to the bond indenture date of August 17, 2020.

Item 6. Exhibits

The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.

EXHIBIT INDEX



Exhibit Number		Description

3.1	—	Amended and Restated Certificate of Incorporation of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed May 22, 2015)
3.2	—	Third Amended and Restated Bylaws of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed April 6, 2017)
4.1	—	Indenture, dated as of August 17, 2020, by and among Group 1 Automotive, Inc., the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of Group 1 Automotive Inc.’s Current Report on Form 8-K (File No. 001-13461) filed August 17, 2020)
4.2	—	Form of 4.000% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.1).
10.1*†	—	Retention, Confidentiality and Non-Compete Agreement dated August 20, 2020 between Group 1 Automotive, Inc. and Daniel McHenry
10.2*	—	Waiver and First Amendment to Eleventh Amended and Restated Revolving Credit Agreement dated as of March 3, 2020 among Group 1 Automotive, Inc., the Subsidiary Borrowers listed therein, the Lenders listed therein, U.S. Bank National Association, N.A., as Administrative Agent, and Comerica Bank, as Floor Plan Agent
10.3*†	—	Group 1 Automotive, Inc. Deferred Compensation Plan, As Amended and Restated, effective January 1, 2021
10.4*†	—	First Amendment to the Group 1 Automotive, Inc. 2014 Long Term Incentive Plan, effective May 13, 2020
10.5*	—	Second Amendment to Eleventh Amended and Restated Revolving Credit Agreement dated as of October 30, 2020 among Group1 Automotive, Inc., the Subsidiary Borrowers listed therein, the Lenders listed therein, U.S. Bank National Association, N.A., as Administrative Agent, and Comerica Bank, as Floor Plan Agent
31.1*	—	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	—	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	—	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	—	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	—	XBRL Instance Document
101.SCH*	—	XBRL Taxonomy Extension Schema Document
101.CAL*	—	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	—	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	—	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	—	XBRL Taxonomy Extension Presentation Linkbase Document
104*	—	Cover Page Interactive Data File (formatted in Inline XBRL and contained in exhibit 101)



*		Filed or furnished herewith
†		Management contract or compensatory plan or arrangement

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.




			Group 1 Automotive, Inc.

Date:	November 4, 2020	By:	/s/ ~~John C. Rickel~~Daniel J. McHenry
		~~John C. Rickel~~	Daniel J. McHenry
			Senior Vice President and Chief Financial Officer
		~~(Duly Authorized Officer and Principal Financial~~
		~~and Accounting Officer)~~

~~Date:~~ ~~October 30, 2019~~

6764



	September 30, 2019			December 31, 2018
Revolving credit facility - floorplan notes payable	$	1,189.8		$	1,251.4
Revolving credit facility - floorplan notes payable offset account	(25.0		)	(33.6		)
Revolving credit facility - floorplan notes payable, net	1,164.8			1,217.8
Other non-manufacturer facilities	35.0			41.1
Floorplan notes payable - credit facility and other, net	$	1,199.8		$	1,258.9

FMCC facility	$	166.9		$	160.8
FMCC facility offset account	(0.2		)	(0.1		)
FMCC facility, net	166.7			160.7
Other manufacturer affiliate facilities	243.8			257.1
Floorplan notes payable - manufacturer affiliates, net	$	410.5		$	417.8



	September 30, 2019			December 31, 2018
5.00% Senior Notes due June 1, 2022 (aggregate principal of $550.0) ⁽¹⁾	$	546.1		$	545.0
5.25% Senior Notes due December 15, 2023 (aggregate principal of $300.0) ⁽¹⁾	297.9			297.5
Acquisition Line	49.2			31.8
Real estate related	382.9			420.8
Finance leases ⁽²⁾	66.1			48.6
Other	34.2			33.6
Total debt	1,376.4			1,377.3
Less: unamortized debt issuance costs	(2.4		)	(2.9		)
Less: current maturities of long-term debt and short-term financing	(66.0		)	(93.0		)
Long-term debt, net of current maturities	$	1,308.0		$	1,281.4



	September 30, 2019				December 31, 2018
	Carrying Value⁽¹⁾		Fair Value		Carrying Value⁽¹⁾		Fair Value
5.00% Senior Notes	$	546.1	$	558.6	$	545.0	$	521.6
5.25% Senior Notes	297.9		309.1		297.5		286.5
Real estate related	44.8		45.2		79.7		76.2
Total	$	888.8	$	912.9	$	922.2	$	884.3



	September 30, 2019		December 31, 2018
Assets from interest rate risk management activities:
Prepaid expenses and other current assets	$	—	$	0.4
Other assets	0.3		13.1
Total	$	0.3	$	13.5
Liabilities from interest rate risk management activities:
Accrued expenses and other current liabilities	$	0.5	$	0.1
Other liabilities	13.9		1.7
Total	$	14.4	$	1.8



Leases	Balance Sheet Classification	September 30, 2019
Assets:
Operating	Operating lease assets	$	204.7
Finance	Property and equipment, net	59.0
Total		$	263.7
Liabilities:
Current:
Operating	Current operating lease liabilities	$	23.9
Finance	Current maturities of long-term debt	6.4
Noncurrent:
Operating	Operating lease liabilities, net of current portion	195.5
Finance	Long-term debt, net of current maturities	59.7
Total		$	285.5



Lease Expense	Income Statement Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating	Selling, general and administrative expenses	$	10.0		$	31.1
Operating	Asset impairments	1.4			1.4
Variable	Selling, general and administrative expenses	0.6			1.6
Sublease income	Selling, general and administrative expenses	(0.4		)	(1.0		)
Finance:
Amortization of lease assets	Depreciation and amortization expense	1.7			4.1
Interest on lease liabilities	Other interest expense, net	1.5			3.5
Net lease expense		$	14.8		$	40.7



	September 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the nine months ended September 30, 2019)	$	6.8		$	4.6
2020	38.5			8.5
2021	36.7			8.5
2022	32.4			8.4
2023	29.4			7.2
Thereafter	170.0			65.6
Total lease payments	313.8			102.8
Less: Interest	(94.4		)	(36.7		)
Present value of lease liabilities	$	219.4		$	66.1



Other Information	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31.1
Operating cash flows from finance leases	$	3.5
Financing cash flows from finance leases	$	2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	18.2
Operating leases, modifications and remeasurements	$	(9.5	)
Finance leases, initial recognition	$	14.0
Finance leases, modifications and remeasurements	$	8.2



	September 30, 2019		December 31, 2018
Amounts due from manufacturers	$	111.8	$	105.1
Parts and service receivables	57.0		52.0
Finance and insurance receivables	24.9		26.4
Other	31.0		13.7
Total accounts and notes receivable	224.7		197.2
Less: allowance for doubtful accounts	2.5		3.2
Accounts and notes receivable, net	$	222.2	$	194.0



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	4.0		$	37.0	$	—		$	41.0
Contracts-in-transit and vehicle receivables, net	—		185.9			70.3		—			256.2
Accounts and notes receivable, net	0.1		173.8			48.3		—			222.2
Intercompany accounts receivable	49.2		10.3			—		(59.5		)	—
Inventories, net	—		1,466.9			325.8		—			1,792.7
Prepaid expenses and other current assets	0.6		20.6			53.2		—			74.4
TOTAL CURRENT ASSETS	49.9		1,861.5			534.6		(59.5		)	2,386.5
Property and equipment, net of accumulated depreciation of $380.5	—		1,233.2			251.6		—			1,484.8
Operating lease assets	—		118.5			86.2		—			204.7
Goodwill	—		879.7			99.3		—			979.0
Intangible franchise rights	—		224.5			28.4		—			252.9
Investment in subsidiaries	3,282.7		—			—		(3,282.7		)	—
Other assets	—		11.9			9.2		—			21.1
TOTAL ASSETS	$	3,332.6	$	4,329.3		$	1,009.3	$	(3,342.2	)	$	5,329.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0	$	—	$	1,164.7		$	35.1	$	—		$	1,199.8
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2	—		279.3			131.2		—			410.5
Current maturities of long-term debt	—		38.0			28.0		—			66.0
Current operating lease liabilities	—		17.2			6.7		—			23.9
Accounts payable	—		211.6			271.7		—			483.3
Intercompany accounts payable	1,253.5		—			75.9		(1,329.4		)	—
Accrued expenses and other current liabilities	—		182.0			31.8		—			213.8
TOTAL CURRENT LIABILITIES	1,253.5		1,892.8			580.4		(1,329.4		)	2,397.3
Long-term debt, net of current maturities	891.4		306.7			109.9		—			1,308.0
Operating lease liabilities, net of current portion	—		109.1			86.4		—			195.5
Deferred income taxes and other liabilities	1.4		236.4			4.1		—			241.9
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,186.3		3,054.2			228.5		(3,282.7		)	1,186.3
Intercompany note receivable	—		(1,269.9		)	—		1,269.9			—
TOTAL STOCKHOLDERS’ EQUITY	1,186.3		1,784.3			228.5		(2,012.8		)	1,186.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,332.6	$	4,329.3		$	1,009.3	$	(3,342.2	)	$	5,329.0



U.S. Credit Facilities	Total Commitment		Outstanding		Available
Floorplan Line ⁽¹⁾	$	1,447.8	$	1,164.6	$	283.2
Acquisition Line ⁽²⁾	352.2		73.0		279.2
Total Revolving Credit Facility	1,800.0		1,237.6		562.4
FMCC Facility ⁽³⁾	300.0		166.7		133.3
Total U.S. Credit Facilities ⁽⁴⁾	$	2,100.0	$	1,404.3	$	695.7