UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172023
or
¨☐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: 1-13107
AutoNation, Inc.AUTONATION, INC.
(Exact name of registrant as specified in its charter)
 
Delaware73-1105145
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
200 SW 1st Avenue Fort Lauderdale, Florida33301
Fort Lauderdale,Florida33301
(Address of principal executive offices)(Zip Code)
(954)769-6000
(Registrant’s telephone number, including area code)
N/A
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareANNew 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes   þ   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
Large accelerated filerþAccelerated filer ☐
Non-accelerated filer☐Smaller reporting company  ☐
Large accelerated filer þ
Accelerated filer   o
Non-accelerated filer o   (Do not check if a smaller reporting company)
Smaller reporting company   o
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐   No  þ
As of October 31, 2017,25, 2023, the registrant had 91,243,78542,520,469 shares of common stock outstanding.




AUTONATION, INC.
FORM 10-Q
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
Page
Item 1.
September 30, 20172023 and December 31, 20162022
1
Three and Nine Months Ended September 30, 20172023 and 20162022
2
Equity3
34
for the Nine Months Ended September 30, 2017 and 2016
4
Notes to Unaudited Condensed Consolidated Financial Statements
6
Item 2.
2126
Item 3.
4852
Item 4.
4852
PART II. OTHER INFORMATION
Item 1A.
4954
Item 2.
5054
Item 6.5.
5054
Item 6.
55




Table of Contents

PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
 
September 30,
2023		December 31,
2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$64.0 $72.6 
Receivables, net877.3 858.8 
Inventory2,645.6 2,048.3 
Other current assets186.2 158.3 
Total Current Assets3,773.1 3,138.0 
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $47.9 million and $57.5 million, respectively320.0 303.1 
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.1 billion and $1.9 billion, respectively3,723.5 3,607.2 
OPERATING LEASE ASSETS371.0 323.5 
GOODWILL1,455.7 1,320.1 
OTHER INTANGIBLE ASSETS, NET931.8 837.0 
OTHER ASSETS665.9 530.8 
Total Assets$11,241.0 $10,059.7 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Vehicle floorplan payable - trade$1,358.7 $946.6 
Vehicle floorplan payable - non-trade1,456.1 1,162.7 
Accounts payable341.6 327.6 
Commercial paper350.0 50.0 
Current maturities of long-term debt12.8 12.6 
Current portion of non-recourse debt7.2 10.7 
Accrued payroll and benefits282.7 238.0 
Other current liabilities722.7 657.5 
Total Current Liabilities4,531.8 3,405.7 
LONG-TERM DEBT, NET OF CURRENT MATURITIES3,579.6 3,586.9 
NON-RECOURSE DEBT, NET OF CURRENT PORTION238.9 312.9 
NONCURRENT OPERATING LEASE LIABILITIES339.3 296.9 
DEFERRED INCOME TAXES60.4 76.5 
OTHER LIABILITIES349.0 333.0 
COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at September 30, 2023, and December 31, 2022, including shares held in treasury0.6 0.6 
Additional paid-in capital18.6 3.1 
Retained earnings4,426.8 3,663.7 
Treasury stock, at cost; 20,790,347 and 15,915,358 shares held, respectively(2,304.0)(1,619.6)
Total Shareholders’ Equity2,142.0 2,047.8 
Total Liabilities and Shareholders’ Equity$11,241.0 $10,059.7 
 September 30,
2017		 December 31,
2016
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$53.3
 $64.8
Receivables, net901.0
 1,032.9
Inventory3,408.6
 3,520.1
Other current assets87.2
 97.0
Total Current Assets4,450.1
 4,714.8
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1.2 billion and $1.1 billion, respectively2,949.2
 2,843.2
GOODWILL1,529.8
 1,511.3
OTHER INTANGIBLE ASSETS, NET616.3
 598.2
OTHER ASSETS409.4
 392.5
Total Assets$9,954.8
 $10,060.0
LIABILITIES AND SHAREHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
Vehicle floorplan payable - trade$2,069.3
 $2,308.8
Vehicle floorplan payable - non-trade1,561.2
 1,540.4
Accounts payable276.6
 303.7
Commercial paper995.0
 942.0
Current maturities of long-term debt566.9
 167.5
Other current liabilities659.1
 566.8
Total Current Liabilities6,128.1
 5,829.2
LONG-TERM DEBT, NET OF CURRENT MATURITIES1,295.7
 1,611.1
DEFERRED INCOME TAXES99.2
 91.5
OTHER LIABILITIES231.3
 217.9
COMMITMENTS AND CONTINGENCIES (Note 12)
 
SHAREHOLDERS’ EQUITY:   
Preferred stock, par value $0.01 per share; 5,000,000 shares authorized; none issued—
 —
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 120,562,149 shares issued at September 30, 2017, and December 31, 2016, including shares held in treasury1.2
 1.2
Additional paid-in capital30.2
 18.2
Retained earnings3,416.5
 3,133.3
Treasury stock, at cost; 29,317,911 and 19,909,940 shares held, respectively(1,247.4) (842.4)
Total Shareholders’ Equity2,200.5
 2,310.3
Total Liabilities and Shareholders’ Equity$9,954.8
 $10,060.0


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



1
Table of Contents

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended Nine Months EndedThree Months EndedNine Months Ended
September 30, September 30, September 30,September 30,
2017 2016 2017 2016 2023202220232022
Revenue:       Revenue:
New vehicle$3,108.4
 $3,195.9
 $8,835.5
 $9,068.0
New vehicle$3,187.6 $2,863.9 $9,400.5 $8,606.9 
Used vehicle1,228.3
 1,276.8
 3,670.3
 3,777.8
Used vehicle2,172.1 2,401.7 6,292.7 7,494.5 
Parts and service841.6
 843.8
 2,544.2
 2,498.9
Parts and service1,157.4 1,032.1 3,392.5 3,072.3 
Finance and insurance, net241.6
 229.6
 692.0
 678.1
Finance and insurance, net369.5 360.7 1,071.4 1,092.2 
Other12.5
 21.4
 109.1
 105.7
Other6.1 7.6 24.4 22.1 
TOTAL REVENUE5,432.4
 5,567.5
 15,851.1
 16,128.5
TOTAL REVENUE6,892.7 6,666.0 20,181.5 20,288.0 
Cost of sales:       Cost of sales:
New vehicle2,963.6
 3,037.7
 8,408.2
 8,597.8
New vehicle2,936.9 2,534.2 8,575.2 7,578.7 
Used vehicle1,142.6
 1,199.6
 3,433.1
 3,525.6
Used vehicle2,044.3 2,259.7 5,876.2 7,059.4 
Parts and service474.2
 480.0
 1,428.2
 1,418.8
Parts and service611.6 553.5 1,793.1 1,650.9 
Other6.1
 13.8
 89.8
 82.2
Other5.3 5.8 20.7 15.6 
TOTAL COST OF SALES (excluding depreciation shown below)4,586.5
 4,731.1
 13,359.3
 13,624.4
TOTAL COST OF SALESTOTAL COST OF SALES5,598.1 5,353.2 16,265.2 16,304.6 
Gross profit:       Gross profit:
New vehicle144.8
 158.2
 427.3
 470.2
New vehicle250.7 329.7 825.3 1,028.2 
Used vehicle85.7
 77.2
 237.2
 252.2
Used vehicle127.8 142.0 416.5 435.1 
Parts and service367.4
 363.8
 1,116.0
 1,080.1
Parts and service545.8 478.6 1,599.4 1,421.4 
Finance and insurance241.6
 229.6
 692.0
 678.1
Finance and insurance369.5 360.7 1,071.4 1,092.2 
Other6.4
 7.6
 19.3
 23.5
Other0.8 1.8 3.7 6.5 
TOTAL GROSS PROFIT845.9
 836.4
 2,491.8
 2,504.1
TOTAL GROSS PROFIT1,294.6 1,312.8 3,916.3 3,983.4 
Selling, general, and administrative expenses607.5
 591.3
 1,814.1
 1,765.2
Selling, general, and administrative expenses819.3 763.2 2,444.9 2,259.4 
Depreciation and amortization41.4
 36.3
 118.0
 107.0
Depreciation and amortization55.7 50.1 163.1 148.9 
Other income, net(14.2) (10.2) (54.4) (21.0)
Other (income) expense, netOther (income) expense, net0.1 (23.0)6.3 (24.5)
OPERATING INCOME211.2
 219.0
 614.1
 652.9
OPERATING INCOME419.5 522.5 1,302.0 1,599.6 
Non-operating income (expense) items:       Non-operating income (expense) items:
Floorplan interest expense(25.1) (18.2) (70.7) (56.4)Floorplan interest expense(38.3)(10.7)(98.2)(21.7)
Other interest expense(30.0) (28.9) (88.0) (85.9)Other interest expense(48.8)(33.7)(135.9)(97.4)
Interest income0.2
 0.3
 0.8
 0.8
Other income, net1.6
 2.6
 6.4
 3.4
Other income (loss), netOther income (loss), net(5.0)(4.6)4.6 (24.7)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES157.9
 174.8
 462.6
 514.8
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES327.4 473.5 1,072.5 1,455.8 
Income tax provision60.3
 67.0
 179.1
 198.7
Income tax provision83.7 120.8 268.5 364.5 
NET INCOME FROM CONTINUING OPERATIONS97.6
 107.8
 283.5
 316.1
NET INCOME FROM CONTINUING OPERATIONS243.7 352.7 804.0 1,091.3 
Loss from discontinued operations, net of income taxes(0.1) (0.5) (0.2) (0.9)
Income (loss) from discontinued operations, net of income taxesIncome (loss) from discontinued operations, net of income taxes— (0.1)0.9 (0.3)
NET INCOME$97.5
 $107.3
 $283.3
 $315.2
NET INCOME$243.7 $352.6 $804.9 $1,091.0 
BASIC EARNINGS (LOSS) PER SHARE:       BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations$1.00
 $1.06
 $2.84
 $3.05
Continuing operations$5.59 $6.35 $17.75 $18.65 
Discontinued operations$—
 $—
 $—
 $(0.01)Discontinued operations$— $— $0.02 $(0.01)
Net income$1.00
 $1.05
 $2.84
 $3.04
Net income$5.59 $6.35 $17.77 $18.65 
Weighted average common shares outstanding97.3
 101.9
 99.9
 103.8
Weighted average common shares outstanding43.6 55.5 45.3 58.5 
DILUTED EARNINGS (LOSS) PER SHARE:       DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations$1.00
 $1.05
 $2.83
 $3.02
Continuing operations$5.54 $6.31 $17.63 $18.53 
Discontinued operations$—
 $—
 $—
 $(0.01)Discontinued operations$— $— $0.02 $(0.01)
Net income$1.00
 $1.05
 $2.82
 $3.02
Net income$5.54 $6.31 $17.65 $18.52 
Weighted average common shares outstanding97.7
 102.6
 100.3
 104.5
Weighted average common shares outstanding44.0 55.9 45.6 58.9 
COMMON SHARES OUTSTANDING, net of treasury stock, at period end91.2
 101.2
 91.2
 101.2
COMMON SHARES OUTSTANDING, net of treasury stock, at period end42.8 52.3 42.8 52.3 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



2
Table of Contents

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data)
 
Nine Months Ended September 30, 2023
 Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Total
 SharesAmount
BALANCE AT DECEMBER 31, 202263,562,149 $0.6 $3.1 $3,663.7 $(1,619.6)$2,047.8 
Net income— — — 288.7 — 288.7 
Repurchases of common stock, including excise tax— — — — (307.5)(307.5)
Stock-based compensation expense— — 15.1 — — 15.1 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (15.2)(41.8)33.2 (23.8)
BALANCE AT MARCH 31, 202363,562,149 $0.6 $3.0 $3,910.6 $(1,893.9)$2,020.3 
Net income— — — 272.5 — 272.5 
Repurchases of common stock, including excise tax— — — — (209.5)(209.5)
Stock-based compensation expense— — 8.3 — — 8.3 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (0.3)— 0.5 0.2 
BALANCE AT JUNE 30, 202363,562,149 $0.6 $11.0 $4,183.1 $(2,102.9)$2,091.8 
Net income— — — 243.7 — 243.7 
Repurchases of common stock, including excise tax— — — — (202.0)(202.0)
Stock-based compensation expense— — 8.2 — — 8.2 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (0.6)— 0.9 0.3 
BALANCE AT SEPTEMBER 30, 202363,562,149 $0.6 $18.6 $4,426.8 $(2,304.0)$2,142.0 
 Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Treasury
Stock
 Total
 Shares Amount    
BALANCE AT DECEMBER 31, 2016120,562,149
 $1.2
 $18.2
 $3,133.3
 $(842.4) $2,310.3
Net income—
 —
 —
 283.3
 —
 283.3
Repurchases of common stock—
 —
 —
 —
 (436.0) (436.0)
Stock-based compensation expense—
 —
 18.1
 —
 —
 18.1
Shares awarded under stock-based compensation plans—
 —
 (6.3) —
 31.0
 24.7
Other—
 —
 0.2
 (0.1) —
 0.1
BALANCE AT SEPTEMBER 30, 2017120,562,149
 $1.2
 $30.2
 $3,416.5
 $(1,247.4) $2,200.5


Nine Months Ended September 30, 2022
 Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Total
 SharesAmount
BALANCE AT DECEMBER 31, 202186,562,149 $0.8 $3.2 $4,639.9 $(2,266.9)$2,377.0 
Net income— — — 362.1 — 362.1 
Repurchases of common stock— — — — (380.9)(380.9)
Stock-based compensation expense— — 15.9 — — 15.9 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (16.7)(58.1)46.3 (28.5)
BALANCE AT MARCH 31, 202286,562,149 $0.8 $2.4 $4,943.9 $(2,601.5)$2,345.6 
Net income— — — 376.3 — 376.3 
Repurchases of common stock— — — — (403.9)(403.9)
Stock-based compensation expense— — 5.3 — — 5.3 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (2.5)— 4.2 1.7 
BALANCE AT JUNE 30, 202286,562,149 $0.8 $5.2 $5,320.2 $(3,001.2)$2,325.0 
Net income— — — 352.6 — 352.6 
Repurchases of common stock— — — — (428.2)(428.2)
Stock-based compensation expense— — 5.1 — — 5.1 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (1.0)— 1.7 0.7 
BALANCE AT SEPTEMBER 30, 202286,562,149 $0.8 $9.3 $5,672.8 $(3,427.7)$2,255.2 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.





3
Table of Contents

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended
 September 30,
 20232022
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income$804.9 $1,091.0 
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations(0.9)0.3 
Depreciation and amortization163.1 148.9 
Amortization of debt issuance costs and accretion of debt discounts7.0 4.5 
Stock-based compensation expense31.6 26.3 
Provision for credit losses on auto loans receivable36.0 — 
Deferred income tax provision5.1 5.5 
Net gain related to business/property dispositions(1.1)(17.1)
(Gain) loss on corporate-owned life insurance asset(4.9)26.0 
Gain on sale of auto loans receivable(8.1)— 
Other6.2 1.1 
(Increase) decrease, net of effects from business acquisitions and divestitures:
Receivables(15.1)80.3 
Auto loans receivable, net(112.7)— 
Inventory(563.0)(9.1)
Other assets(108.2)(28.6)
Increase (decrease), net of effects from business acquisitions and divestitures:
Vehicle floorplan payable - trade412.0 124.0 
Accounts payable6.4 (52.2)
Other liabilities104.6 42.7 
Net cash provided by continuing operations762.9 1,443.6 
Net cash used in discontinued operations(0.3)(0.3)
Net cash provided by operating activities762.6 1,443.3 
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment(286.0)(236.2)
Proceeds from the disposal of assets held for sale2.5 22.8 
Cash received from business divestitures, net of cash relinquished— 55.2 
Cash used in business acquisitions, net of cash acquired(271.1)— 
Originations of auto loans receivable acquired through third-party dealers(110.9)— 
Collections on auto loans receivable acquired through third-party dealers110.1 — 
Proceeds from the sale of auto loans receivable68.7 — 
Deposits for investment— (81.6)
Other(10.3)(7.5)
Net cash used in continuing operations(497.0)(247.3)
Net cash used in discontinued operations— — 
Net cash used in investing activities(497.0)(247.3)
 Nine Months Ended
 September 30,
 2017 2016
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:   
Net income$283.3
 $315.2
Adjustments to reconcile net income to net cash provided by operating activities:   
Loss from discontinued operations0.2
 0.9
Depreciation and amortization118.0
 107.0
Amortization of debt issuance costs and accretion of debt discounts4.2
 4.0
Stock-based compensation expense18.1
 22.5
Deferred income tax provision7.7
 2.6
Net gain related to business/property dispositions(43.8) (29.7)
Non-cash impairment charges and valuation adjustments—
 14.0
Excess tax benefit from stock-based awards—
 (0.7)
Other(5.2) (2.4)
(Increase) decrease, net of effects from business combinations and divestitures:   
Receivables143.6
 137.5
Inventory94.1
 320.4
Other assets(21.2) (38.2)
Increase (decrease), net of effects from business combinations and divestitures:   
Vehicle floorplan payable - trade, net(212.7) (418.2)
Accounts payable(25.6) (3.9)
Other liabilities96.6
 48.6
Net cash provided by continuing operations457.3
 479.6
Net cash used in discontinued operations(0.3) (0.8)
Net cash provided by operating activities457.0
 478.8
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:   
Purchases of property and equipment(227.6) (187.6)
Property operating lease buy-outs(3.3) (5.0)
Proceeds from the sale of property and equipment2.6
 7.2
Proceeds from assets held for sale34.7
 —
Insurance recoveries on property and equipment1.2
 —
Cash received from business divestitures, net of cash relinquished47.8
 87.5
Cash used in business acquisitions, net of cash acquired(56.9) (362.5)
Net change in restricted cash(2.7) 3.8
Other(2.0) (0.2)
Net cash used in continuing operations(206.2) (456.8)
Net cash used in discontinued operations—
 —
Net cash used in investing activities(206.2) (456.8)


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



4
Table of Contents

AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Continued)
 
Nine Months Ended
 September 30,
 20232022
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stock(723.2)(1,177.4)
Proceeds from 3.85% Senior Notes due 2032— 698.8 
Net proceeds from (payments of) commercial paper300.0 (340.0)
Proceeds from non-recourse debt151.6 — 
Payments of non-recourse debt(232.1)— 
Payment of debt issuance costs(6.6)(6.6)
Net proceeds from vehicle floorplan payable - non-trade260.4 46.4 
Payments of other debt obligations(9.4)(8.7)
Proceeds from the exercise of stock options1.9 3.4 
Payments of tax withholdings for stock-based awards(25.2)(29.5)
Net cash used in continuing operations(282.6)(813.6)
Net cash used in discontinued operations— — 
Net cash used in financing activities(282.6)(813.6)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(17.0)382.4 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period95.4 60.6 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period$78.4 $443.0 
 Nine Months Ended
 September 30,
 2017 2016
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:   
Repurchases of common stock(426.3) (470.6)
Proceeds from revolving credit facility907.0
 1,050.0
Payments of revolving credit facility(825.0) (1,050.0)
Net proceeds from commercial paper53.0
 375.5
Net proceeds from vehicle floorplan payable - non-trade15.4
 78.7
Purchase of subsidiary shares—
 (15.2)
Payments of mortgage facility(7.6) (7.7)
Payments of capital leases and other debt obligations(3.5) (3.1)
Proceeds from the exercise of stock options24.7
 7.8
Excess tax benefit from stock-based awards—
 0.7
Net cash used in continuing operations(262.3) (33.9)
Net cash used in discontinued operations—
 —
Net cash used in financing activities(262.3) (33.9)
DECREASE IN CASH AND CASH EQUIVALENTS(11.5) (11.9)
CASH AND CASH EQUIVALENTS at beginning of period64.8
 74.1
CASH AND CASH EQUIVALENTS at end of period$53.3
 $62.2


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


























5
Table of Contents

AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data)
1.INTERIM FINANCIAL STATEMENTS
1.INTERIM FINANCIAL STATEMENTS
Business and Basis of Presentation
AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailerretailers in the United States. As of September 30, 2017,2023, we owned and operated 361354 new vehicle franchises from 254253 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well-known in our key markets, sell 3334 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 93%88% of the new vehicles that we sold during the nine months ended September 30, 2017,2023, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, FCA US,BMW, Mercedes-Benz, Nissan, BMW,Stellantis, and Volkswagen (including Audi and Porsche). WeAs of September 30, 2023, we also ownowned and operate 73operated 53 AutoNation-branded collision centers, 17 AutoNation branded collision centers.USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company.
We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service,”service” (also referred to as “After-Sales”), which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products (also referred to as “Customer Financial Services”), which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. We also offer indirect financing on certain vehicles we sell through our captive finance company. For convenience, the terms “AutoNation,” “Company,” and “we” are used to refer collectively to AutoNation, Inc. and its subsidiaries, unless otherwise required by the context. Our dealershipstore and other operations are conducted by our subsidiaries.
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of AutoNation, Inc. and its subsidiaries; intercompany accounts and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principlesU.S. generally accepted in the United Statesaccounting principles (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. The Unaudited Condensed Consolidated Financial Statements herein should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included within our most recent Annual Report on Form 10-K. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position and results of operations for the periods presented.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality.statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We periodically evaluate estimates and assumptions used in the preparation of the financial statements and make changes on a prospective basis when adjustments are necessary. The significantSuch estimates made in the accompanying Unaudited Condensed Consolidated Financial Statements include certainand assumptions related toaffect, among other things, our goodwill, indefinite-lived intangible assets,asset, and long-lived assets,asset valuations; inventory valuation; equity investment valuation; assets held for sale,sale; assessments of variable consideration and related constraints related to retrospective commissions; accruals for chargebacks against revenue recognized from the sale of finance and insurance products,products; accruals related to self-insurance programs,programs; certain legal proceedings, estimated tax liabilities, and certain assumptions related to stock-based compensation.
Recent Accounting Pronouncements
Improvements to Employee Share-Based Payment Accounting
In March 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update that amends several aspectsproceedings; assessment of the accounting for share-based payment transactions, including theannual income tax consequences, classification within the statementexpense; valuation of cash flows,deferred income taxes and accounting for forfeitures. The amendments in this accounting standard update were effective for periods beginning after December 15, 2016.
The new standard requires excess tax benefits or deficiencies for share-based payments to be recognized as income tax benefit or expense, rather than within additional paid-in capital. Furthermore, cash flows related to excess tax benefits are required to be classified as operating activities incontingencies; the statementallowance for expected credit losses; and measurement of cash flows rather than financing activities. We adopted theseperformance-based compensation costs.








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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2.    REVENUE RECOGNITION
amendments effective January 1, 2017, on a prospective basis. For the nine months ended September 30, 2017, we recorded$2.5 millionDisaggregation of tax deficiencies, which is reflected as a component of the income tax provision on the Unaudited Condensed Consolidated Statement of Income and as cash used in operating activities on the Unaudited Condensed Consolidated Statement of Cash Flows. We elected not to adjust the prior year cash flow presentation.Revenue
The new standard also eliminates the requirement to estimate forfeitures when recognizing stock compensation expense during the vesting period. As permitted by the standard, we have elected to account for forfeituressignificant majority of stock-based awards as they occur. The new standard requires that this change be adopted on a modified retrospective basis, as such, we recorded a cumulative effect adjustment of $0.2 million (pre-tax) to reduce retained earnings and increase additional paid-in capital as of January 1, 2017.
The new standard also requires the presentation of cash paid to taxing authorities at settlement arising from the withholding of shares from employees be classified as a financing activity on the statement of cash flows, which is where we had previously classified these items. This change, therefore, did not impact our consolidated financial statements.
Simplifying the Goodwill Impairment Test
In January 2017, the FASB issued an accounting standard update that simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. Under the new standard, goodwill impairment should be recognized based on the amount by which the carrying amount of a reporting unit exceeds its fair value, but should not exceed the total amount of goodwill allocated to the reporting unit. The amendments in this accounting standard update are to be applied prospectively and are effective for interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this standard in connection with our annual goodwill impairment test as of April 30, 2017. The provisions of this accounting standard update did not have an impact on our consolidated financial statements. See Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our annual goodwill impairment testing.
Revenue Recognition
In May 2014, the FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assetsTaxes assessed by governmental authorities that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidancedirectly imposed on recognitionrevenue transactions are excluded from revenue and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract.
The amendments in this accounting standard update must be applied using either ofexpenses. In the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). We currently anticipate adopting the standard using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption.
This accounting standard updatetables, revenue is effective for reporting periods beginning after December 15, 2017. We will adopt this accounting standard update effective January 1, 2018. As part of our implementation process, we have gained an understanding of the new standard and performed an analysis to identify accounting policies that may need to change and additional disclosures that will be required. We have considered factors such as customer contracts with unique revenue recognition considerations, the nature and typedisaggregated by major lines of goods and services we offer,and timing of transfer of goods and services. The tables also include a reconciliation of the degreedisaggregated revenue to which contracts include multiple performancereportable segment revenue.

Three Months Ended September 30, 2023
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$916.1 $1,042.5 $1,229.0 $— $3,187.6 
Used vehicle649.1 602.4 773.1 147.5 2,172.1 
Parts and service301.7 299.6 402.4 153.7 1,157.4 
Finance and insurance, net115.6 129.1 111.5 13.3 369.5 
Other1.4 3.6 0.1 1.0 6.1 
$1,983.9 $2,077.2 $2,516.1 $315.5 $6,892.7 
Timing of Revenue Recognition
Goods and services transferred at a point in time$1,765.2 $1,841.7 $2,175.5 $211.3 $5,993.7 
Goods and services transferred over time(2)
218.7 235.5 340.6 104.2 899.0 
$1,983.9 $2,077.2 $2,516.1 $315.5 $6,892.7 
Three Months Ended September 30, 2022
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$875.0 $814.1 $1,174.8 $— $2,863.9 
Used vehicle764.3 667.4 853.0 117.0 2,401.7 
Parts and service275.8 266.2 364.5 125.6 1,032.1 
Finance and insurance, net117.1 123.1 112.5 8.0 360.7 
Other0.6 4.4 1.6 1.0 7.6 
$2,032.8 $1,875.2 $2,506.4 $251.6 $6,666.0 
Timing of Revenue Recognition
Goods and services transferred at a point in time$1,839.4 $1,673.0 $2,199.8 $169.9 $5,882.1 
Goods and services transferred over time(2)
193.4 202.2 306.6 81.7 783.9 
$2,032.8 $1,875.2 $2,506.4 $251.6 $6,666.0 


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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Nine Months Ended September 30, 2023
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$2,667.1 $2,910.1 $3,823.3 $— $9,400.5 
Used vehicle1,880.4 1,707.7 2,275.8 428.8 6,292.7 
Parts and service888.0 859.3 1,188.9 456.3 3,392.5 
Finance and insurance, net332.2 369.5 332.3 37.4 1,071.4 
Other2.8 17.6 1.2 2.8 24.4 
$5,770.5 $5,864.2 $7,621.5 $925.3 $20,181.5 
Timing of Revenue Recognition
Goods and services transferred at a point in time$5,134.6 $5,200.1 $6,613.1 $616.7 $17,564.5 
Goods and services transferred over time(2)
635.9 664.1 1,008.4 308.6 2,617.0 
$5,770.5 $5,864.2 $7,621.5 $925.3 $20,181.5 
Nine Months Ended September 30, 2022
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$2,555.6 $2,548.1 $3,503.2 $— $8,606.9 
Used vehicle2,374.2 2,074.6 2,673.7 372.0 7,494.5 
Parts and service820.0 788.0 1,083.4 380.9 3,072.3 
Finance and insurance, net355.7 375.2 338.1 23.2 1,092.2 
Other2.6 13.1 3.3 3.1 22.1 
$6,108.1 $5,799.0 $7,601.7 $779.2 $20,288.0 
Timing of Revenue Recognition
Goods and services transferred at a point in time$5,538.8 $5,205.8 $6,697.5 $536.0 $17,978.1 
Goods and services transferred over time(2)
569.3 593.2 904.2 243.2 2,309.9 
$6,108.1 $5,799.0 $7,601.7 $779.2 $20,288.0 
(1) “Corporate and other” is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and our mobile automotive repair and maintenance business.
(2)Represents revenue recognized during the period for automotive repair and maintenance services.
Transaction Price Allocated to Remaining Performance Obligations
We sell a vehicle maintenance program (the AutoNation Vehicle Care Program or “VCP”) under which a customer purchases a specific number of maintenance services to be redeemed at an AutoNation location over a five-year term from the date of purchase. We satisfy our performance obligations or variable consideration,related to this program and recognize revenue as the pattern in which revenue is currently recognized, among other things. Whilemaintenance services are rendered, since the customer benefits when we have not completed the implementation process, we have substantially evaluated all of our revenue streams and we expect similar performance obligations to result under the new standard as compared with deliverables and separate units of accounting currently identified. As a result, we expect the timing of our revenue recognition for most of our revenue streams to generally remain the same, however we have identified certain revenue streams that will be affected by the new standard.maintenance service.
First, the timing of revenue recognition associated with customer loyalty programs that we offer in certain of our stores will be deferred. We currently accrue the incremental cost of loyalty points awarded under current guidance. Under the new standard, a customer loyalty program that provides a customer with a material right is accounted for as a separate performance obligation with revenue recognized when the loyalty points are redeemed. Second, the timing of revenue recognition for automotive repair and maintenance services will be accelerated, as we have determined these performance obligations are satisfied over time under the new standard. Lastly, a portion of the transaction price related to sales of finance and insurance contracts will be considered variable consideration and subject to accelerated recognition under the new standard. The new standard requires an entity to estimate variable consideration and apply the constraint in determining the transaction price. We currently expect that all changes to our revenue recognition as a result of adopting the new standard will result in a net, after-tax cumulative effect adjustment to retained earnings in the range of $7 million to $10 million.
We do not expect a significant impact in the amount or timing of gain or loss recognition related to our periodic sales of real estate. We are also currently evaluating the changes in controls and processes that are necessary to implement the new standard, but do not expect material changes.
Accounting for Leases
In February 2016, the FASB issued an accounting standard update that amends the accounting guidance on leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The amendments in this accounting standard update are effective for us on January 1, 2019, with early adoption permitted. We will adopt this accounting standard update effective January 1, 2019. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.
We expect that this standard will have a material effect on our financial statements due to the recognition of new ROU assets and lease liabilities on our balance sheet for real estate and equipment operating leases. We expect that our leasing activity may increase between now and the adoption date. We expect to elect all of the standard’s available practical expedients on adoption. Consequently, on adoption, we expect to recognize additional operating liabilities ranging from $300 million to $400 million, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. We have a significant number of real estate leases, including for land and buildings. The majority of our leases for land are classified as operating leases under current lease accounting guidance. For new leases entered into after adoption, the new lease standard may affect the pattern of expense recognition related to the land component of a new real estate lease, since those land leases may be classified as financing leases under the new standard.
Classification of Certain Cash Receipts and Cash Payments
In August 2016, the FASB issued an accounting standard update that provides classification guidance on eight specific cash flow issues, for which guidance previously did not exist or was unclear. The amendments in this accounting standard update are effective for periods beginning after December 15, 2017. Early adoption is permitted for any entity in any interim or annual period. We will adopt this accounting standard update effective January 1, 2018. The provisions of this accounting standard update will not have a material impact on our consolidated statements of cash flows.





8
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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table includes estimated revenue expected to be recognized in the future related to VCP performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:
2.RECEIVABLES, NET
Revenue Expected to Be Recognized by Period
TotalNext 12 Months13 - 36 Months37 - 60 Months
Revenue expected to be recognized on VCP contracts sold as of period end$106.2 $36.2 $51.6 $18.4 
As a practical expedient, since automotive repair and maintenance services are performed within one year or less, we do not disclose estimated revenue expected to be recognized in the future for automotive repair and maintenance performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue.
Contract Assets and Liabilities
When the timing of our provision of goods or services is different from the timing of payments made by our customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated with automotive repair and maintenance services, as well as our estimate of variable consideration that has been included in the transaction price for certain finance and insurance products (retrospective commissions). These contract assets are reclassified to receivables when the right to consideration becomes unconditional. Contract liabilities primarily relate to upfront payments received from customers for the sale of VCP contracts.
Our receivables from contracts with customers are included in Receivables, net, our current contract asset is included in Other Current Assets, our long-term contract asset is included in Other Assets, our current contract liability is included in Other Current Liabilities, and our long-term contract liability is included in Other Liabilities in our Unaudited Condensed Consolidated Balance Sheets.
The following table provides the balances of our receivables from contracts with customers and our current and long-term contract assets and contract liabilities:
September 30, 2023December 31, 2022
Receivables from contracts with customers, net$629.1 $634.5 
Contract Asset (Current)$22.5 $27.7 
Contract Asset (Long-Term)$3.4 $8.6 
Contract Liability (Current)$41.9 $41.8 
Contract Liability (Long-Term)$70.0 $66.6 
The change in the balances of our contract assets and contract liabilities primarily result from the timing differences between our performance and the customer’s payment, as well as changes in the estimated transaction price related to variable consideration for performance obligations satisfied in previous periods. The following table presents revenue recognized during the period from amounts included in the contract liability balance at the beginning of the period and adjustments to revenue related to performance obligations satisfied in previous periods:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Amounts included in contract liability at the beginning of the period$8.5 $8.1 $26.9 $25.9 
Performance obligations satisfied in previous periods$4.1 $(0.9)$1.5 $3.8 
Other significant changes include contract assets reclassified to receivables of $28.7 million for the nine months ended September 30, 2023, and $30.5 million for the nine months ended September 30, 2022.


9
Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3.EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period, including vested restricted stock unit (“RSU”) awards. Diluted EPS is computed by dividing net income by the weighted average number of shares outstanding, noted above, including the dilutive effect of unvested RSU awards and stock options.
The following table presents the calculation of basic and diluted EPS:
Three Months EndedNine Months Ended
September 30,September 30,
 2023202220232022
Net income from continuing operations$243.7 $352.7 $804.0 $1,091.3 
Income (loss) from discontinued operations, net of income taxes— (0.1)0.9 (0.3)
Net income$243.7 $352.6 $804.9 $1,091.0 
Basic weighted average common shares outstanding43.6 55.5 45.3 58.5 
Dilutive effect of unvested RSUs and stock options0.4 0.4 0.3 0.4 
Diluted weighted average common shares outstanding44.0 55.9 45.6 58.9 
Basic EPS amounts(1):
Continuing operations$5.59 $6.35 $17.75 $18.65 
Discontinued operations$— $— $0.02 $(0.01)
Net income$5.59 $6.35 $17.77 $18.65 
Diluted EPS amounts(1):
Continuing operations$5.54 $6.31 $17.63 $18.53 
Discontinued operations$— $— $0.02 $(0.01)
Net income$5.54 $6.31 $17.65 $18.52 
(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding.
A summary of anti-dilutive equity instruments excluded from the computation of diluted EPS is as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
 2023202220232022
Anti-dilutive equity instruments excluded from the computation of diluted EPS— 0.1 — 0.1 


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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.RECEIVABLES, NET
The components of receivables, net of allowanceallowances for doubtful accounts,expected credit losses, are as follows:
September 30,
2023		December 31,
2022
Contracts-in-transit and vehicle receivables$408.0 $441.1 
Trade receivables172.4 156.6 
Manufacturer receivables212.3 174.4 
Income taxes receivable (see Note 9)24.8 20.2 
Other61.8 68.2 
879.3 860.5 
Less: allowances for expected credit losses(2.0)(1.7)
Receivables, net$877.3 $858.8 
 September 30,
2017		 December 31,
2016
Trade receivables$147.3
 $147.6
Manufacturer receivables222.9
 234.9
Other74.5
 48.7
 444.7
 431.2
Less: allowances for doubtful accounts(5.1) (5.8)
 439.6
 425.4
Contracts-in-transit and vehicle receivables461.4
 595.9
Income taxes receivable (see Note 6)—
 11.6
Receivables, net$901.0
 $1,032.9

Contracts-in-transit and vehicle receivables primarily represent receivables from financial institutions for the portion of the vehicle sales price financed by our customers. Trade receivables represent amounts due for parts and services that have been delivered or sold, excluding amounts due from manufacturers, as well as receivables from finance organizations for commissions on the sale of finance and insurance products. Manufacturer receivables represent amounts due from manufacturers for holdbacks, rebates, incentives, floorplan assistance, and warranty claims. Contracts-in-transit and vehicle receivables primarily represent receivables from financial institutions for the portion of the vehicle sales price financed by our customers.
We evaluate our receivables for collectability based on the age of receivables and past collection experience, current information, and reasonable and supportable forecasts.

5.AUTO LOANS RECEIVABLE
Auto loans receivable include amounts due from customers related to retail vehicle sales financed through our auto finance company (referred to as AutoNation Finance), as well as retail vehicle installment sales contracts acquired through third-party independent dealers. In September 2023, we discontinued acquiring installment sales contracts through third-party independent dealers. Auto loans receivable are presented net of an allowance for expected credit losses. Auto loans receivable represent a large group of smaller-balance homogeneous loans, which we consider to be part of one class of financing receivable and one portfolio segment for purposes of determining our allowance for expected credit losses.
AutoNation Finance operating results include the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated credit losses, and direct expenses, as well as gains or losses on the sale of auto loans receivable. AutoNation Finance income (loss) is included as a component of Other (Income) Expense, Net (within Operating Income). Interest income on auto loans receivable is recognized when earned based on contractual loan terms. Direct costs associated with loan originations are capitalized and amortized using the effective interest method.
Auto Loans Receivable, Net
The components of auto loans receivable, net of unearned discounts and allowances for expected credit losses, at September 30, 2023, and December 31, 2022, are as follows:
September 30,
2023		December 31,
2022
Total auto loans receivable$373.6 $377.0 
Accrued interest and fees4.1 4.4 
Deferred loan origination costs0.7 0.5 
Less: unearned discounts(10.5)(21.3)
Less: allowances for expected credit losses(47.9)(57.5)
Auto loans receivable, net$320.0 $303.1 

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Credit Quality
We utilize proprietary credit scoring models to rate the risk of default for customers that apply for financing by evaluating customer credit history and certain credit application information. Our evaluation considers information such as payment history for prior or existing credit accounts, as well as application information such as income, collateral, and down payment. The scoring models yield credit program tiers that represent the relative likelihood of repayment. The assigned credit tier influences the terms of the agreement, such as the required loan-to-value ratio and interest rate. After origination, credit tier assignments by customer are generally not updated.
We monitor the credit quality of the auto loans receivable on an ongoing basis and also validate the accuracy of the credit scoring models periodically. Loan performance is reviewed on a recurring basis to identify whether the assigned credit tiers adequately reflect the customers’ likelihood of repayment, and if needed, adjustments are made to the scoring models on a prospective basis.
Auto Loans Receivable by Major Credit Program
The following tables present auto loans receivable as of September 30, 2023, and December 31, 2022, disaggregated by major credit program tier:
Fiscal Year of Origination
As of September 30, 202320232022202120202019Prior to 2019Total
Credit Program Tier(1):
Platinum$70.4 $16.5 $9.2 $4.0 $4.0 $0.7 $104.8 
Gold52.8 39.8 21.0 8.2 5.8 1.2 128.8 
Silver50.4 37.4 19.2 6.3 3.9 0.6 117.8 
Bronze6.2 1.4 7.3 1.9 0.1 0.1 17.0 
Copper0.4 0.4 3.5 0.7 0.1 0.1 5.2 
Total auto loans receivable$180.2 $95.5 $60.2 $21.1 $13.9 $2.7 $373.6 
Current-period gross write-offs$4.5 $27.3 $12.5 $3.7 $2.1 $0.6 $50.7 
Fiscal Year of Origination
As of December 31, 202220222021202020192018Prior to 2018Total
Credit Program Tier(1):
Platinum$21.9 $12.9 $6.4 $7.4 $2.2 $0.2 $51.0 
Gold53.7 30.0 12.9 10.6 3.2 0.4 110.8 
Silver61.9 29.8 10.4 8.0 1.9 0.1 112.1 
Bronze41.4 17.1 7.4 3.7 1.0 0.1 70.7 
Copper19.2 8.0 2.6 1.8 0.7 0.1 32.4 
Total auto loans receivable$198.1 $97.8 $39.7 $31.5 $9.0 $0.9 $377.0 
(1) Classified based on credit grade assigned when customer was initially approved for financing.
Allowance for Credit Losses
The allowance for credit losses represents the net credit losses expected over the remaining contractual life of our auto loans receivable. The allowance for credit losses is determined using a vintage-level statistical model that captures the relationship between historical changes in gross losses and the lifetime loss curves by month on book, credit tiers at origination, and seasonality, adjusted for expected recoveries based on historical recovery trends. The credit loss model also incorporates reasonable and supportable forecasts about the future utilizing a forecast of a macroeconomic variable, specifically, the change

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
in U.S. disposable personal income, which we believe is most strongly correlated to evaluating and predicting expected credit losses of our auto loans receivable. We utilize a reasonable and supportable forecast period of one year, after which we immediately revert to historical experience.

We periodically consider whether the use of alternative variables would result in improved credit loss model accuracy and revise the model when appropriate. We also consider whether qualitative adjustments are necessary for factors that are not reflected in the quantitative methods but impact the measurement of estimated credit losses. Such adjustments include the expectations of the impact of recent economic trends on customer behavior.
The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the auto loans receivable. The change in the allowance for credit losses is recognized through an adjustment to the provision for credit losses.
Rollforward of Allowance for Credit Losses
The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the nine months ended September 30, 2023:
3.INVENTORY AND VEHICLE FLOORPLAN PAYABLENine Months Ended
September 30, 2023
Balance as of beginning of year$57.5 
Provision for credit losses36.0 
Write-offs(50.7)
Recoveries(1)
21.2 
Sold loans(16.1)
Balance as of September 30, 2023$47.9 
(1) Includes proceeds from the recovery of vehicle collateral, net of costs incurred.
During the three and nine months ended September 30, 2023, we sold loans with an aggregate amortized cost of $60.6 million, net of allowance for expected credit losses of $16.1 million, for cash proceeds of $68.7 million. We recorded a net gain on sale of $8.1 million pre-tax. We have no continuing involvement in the sold loans as they were sold without recourse to us for their post-sale performance.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Past Due Auto Loans Receivable
An account is considered delinquent if 95% of the required principal and interest payments have not been received as of the date such payments were due. All loans continue to accrue interest until repayment, write-off, or when a loan reaches 75 days past due. If payment is received after a loan has stopped accruing interest due to reaching 75 days past due, the loan will be deemed current and the accrual of interest resumes. When a write-off occurs, accrued interest is written off by reversing interest income. Payments received on nonaccrual assets are recorded using a combination of the cost recovery method and the cash basis method depending on whether the related loan has been written off. In general, accounts are written off on the last business day of the month during which the earliest of the following occurs: the receivable is 120 days or more delinquent as of the last business day of the month, the vehicle has been repossessed and liquidated, or the related vehicle has been in repossession inventory for at least 60 days. The following table presents past due auto loans receivable, as of September 30, 2023, and December 31, 2022:
Age Analysis of Past-Due Auto Loans Receivable as of
September 30,
2023		December 31,
2022
31-60 Days$18.6 $13.0 
61-90 Days5.5 4.1
Greater than 90 Days3.7 2.6
Total Past Due$27.8 $19.7 
Current345.8 357.3
Total$373.6 $377.0 

6.INVENTORY AND VEHICLE FLOORPLAN PAYABLE
The components of inventory are as follows:
September 30,
2023		December 31,
2022
New vehicles$1,578.7 $1,009.7 
Used vehicles801.0 789.1 
Parts, accessories, and other265.9 249.5 
Inventory$2,645.6 $2,048.3 
 September 30,
2017		 December 31,
2016
New vehicles$2,651.7
 $2,761.5
Used vehicles555.7
 559.1
Parts, accessories, and other201.2
 199.5
Inventory$3,408.6
 $3,520.1


The components of vehicle floorplan payable are as follows:
September 30,
2017		 December 31,
2016		September 30,
2023		December 31,
2022
Vehicle floorplan payable - trade$2,069.3
 $2,308.8
Vehicle floorplan payable - trade$1,358.7 $946.6 
Vehicle floorplan payable - non-trade1,561.2
 1,540.4
Vehicle floorplan payable - non-trade1,456.1 1,162.7 
Vehicle floorplan payable$3,630.5
 $3,849.2
Vehicle floorplan payable$2,814.8 $2,109.3 
Vehicle floorplan payable-trade reflects amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with the corresponding manufacturers’ captive finance subsidiaries (“trade lenders”). Vehicle floorplan payable-non-trade represents amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with non-trade lenders, as well as amounts borrowed under our secured used vehicle floorplan facilities. Changes in vehicle floorplan payable-trade are reported as operating cash flows and changes in vehicle floorplan payable-non-trade are reported as financing cash flows in the accompanying Unaudited Condensed Consolidated Statements of Cash Flows.
Our inventory costs are generally reduced by manufacturer holdbacks, incentives, floorplan assistance, and non-reimbursement-based manufacturer advertising rebates, while the related vehicle floorplan payables are reflective of the gross

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
cost of the vehicle. The vehicle floorplan payables, as shown in the above table, will generallymay also be higher than the inventory cost due to the timing of the sale of a vehicle and payment of the related liability.


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related vehicles are sold. Our manufacturer agreements generally allow the manufacturer to draft against new vehicle floorplan facilities so the lender funds the manufacturer directly for the purchase of new vehicle inventory. Vehicle floorplan facilities are primarily collateralized by vehicle inventories and related receivables.
At September 30, 2023, our new vehicle floorplan facilities utilized Prime-based and SOFR-based interest rates. Our new vehicle floorplan facilities utilize LIBOR-basedoutstanding had a weighted-average interest rates, which averaged 2.7% for the nine months endedrate of 7.0% at September 30, 2017,2023, and 2.0% for the nine months ended5.9% at December 31, 2022. As of September 30, 2016. At September 30, 2017,2023, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.7$4.6 billion, of which $3.2$2.2 billion had been borrowed.
At September 30, 2023, our used vehicle floorplan facilities utilized Prime-based and SOFR-based interest rates. Our used vehicle floorplan facilities utilize LIBOR-basedoutstanding had a weighted-average interest rates, which averaged 2.7% for the nine months ended rate of 7.0% at September 30, 2017,2023, and 2.0% for the nine months ended 5.9% at December 31, 2022. As of September 30, 2016. At September 30, 2017,2023, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $510.0$775.6 million,, of which $394.3$591.3 million had been borrowed. The remaining borrowing capacity of $115.7$184.3 million was limited to $0.5$0.3 million based on the eligible used vehicle inventory that could have been pledged as collateral.


4.GOODWILL AND INTANGIBLE ASSETS, NET
7.GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill and intangible assets, net, consist of the following:
September 30,
2023		December 31,
2022
Goodwill (1)
$1,455.7 

$1,320.1 
Franchise rights - indefinite-lived$876.2 $816.2 
Other intangibles70.7 30.7 
946.9 846.9 
Less: accumulated amortization(15.1)(9.9)
Other intangible assets, net$931.8 $837.0 
(1) The change in goodwill from the prior period is primarily due to the acquisition of the mobile repair and maintenance business we acquired in January 2023. Such goodwill is reflected in our Mobile Service reporting unit.
 September 30,
2017		 December 31,
2016
Goodwill$1,529.8
 $1,511.3
    
Franchise rights - indefinite-lived$603.7
 $589.4
Other intangibles20.9
 16.3
 624.6
 605.7
Less: accumulated amortization(8.3) (7.5)
Other intangible assets, net$616.3
 $598.2
Goodwill and our franchise rights assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2023, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts. We elected to perform quantitative franchise rights impairment tests as of April 30, 2023, and no impairment charges resulted from these quantitative tests.
See Note 1513 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our annual impairment tests of goodwill and franchise rights.





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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

8.DEBT
5.LONG-TERM DEBT AND COMMERCIAL PAPER
Long-termNon-Vehicle Long-Term Debt
Non-vehicle long-term debt consistsconsisted of the following:
 September 30,
2017		 December 31,
2016
6.75% Senior Notes due 2018$400.0
 $400.0
5.5% Senior Notes due 2020350.0
 350.0
3.35% Senior Notes due 2021300.0
 300.0
4.5% Senior Notes due 2025450.0
 450.0
Revolving credit facility (1)
82.0
 —
Mortgage facility (2)
145.7
 153.2
Capital leases and other debt143.7
 136.2
 1,871.4
 1,789.4
Less: unamortized debt discounts and debt issuance costs(8.8) (10.8)
Less: current maturities(566.9) (167.5)
Long-term debt, net of current maturities$1,295.7
 $1,611.1
(1) In October 2017, we amended our existing unsecured credit agreement and extended the stated termination date to October 19, 2022.
(2) The mortgage facility requires monthly principal and interest payments of $1.6 million based on a fixed amortization schedule with a balloon payment of $143.9 million due November 2017.
Debt DescriptionMaturity DateInterest PayableSeptember 30,
2023		December 31,
2022
3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 
2.4% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 700.0 
Revolving credit facilityJuly 18, 2028Monthly— — 
Finance leases and other debtVarious dates through 2041365.3 375.5 
3,615.3 3,625.5 
Less: unamortized debt discounts and debt issuance costs(22.9)(26.0)
Less: current maturities(12.8)(12.6)
Long-term debt, net of current maturities$3,579.6 $3,586.9 
Debt Refinancing Transaction
On October 19, 2017,July 18, 2023, we amended and restated our existing unsecured credit agreement to, among other things, (1) increase the revolving credit facility (the “facility”) commitment from $1.8 billion to $1.9 billion, (2) extend the stated terminationmaturity date of the facility to October 19, 2022, (2) modifyJuly 18, 2028, (3) allow for the maximum leverage ratio ofcovenant to increase from 3.75x to allow4.25x for an increasefour fiscal quarters in the event that we complete a material acquisition, and (4) replace the maximum leveragecapitalization ratio to 4.25x following the closing date of the amended credit agreement, subject to step-downs back to 3.75x over time, and (3) modify the guarantor requirement to allow the release of all of the guarantors under our credit agreement at such time and for so long as such guarantors cease to guarantee other certain material indebtedness.covenant with a minimum interest coverage ratio covenant.
Senior Unsecured Notes and Credit Agreement
At September 30, 2017, we had outstanding $400.0 million of 6.75%The interest rates payable on our 3.5% Senior Notes, due 2018. Interest is payable on April 15 and October 15 of each year. These notes will mature on April 15, 2018, and were therefore reclassified to current maturities during the second quarter of 2017.
At September 30, 2017, we had outstanding $350.0 million of 5.5% Senior Notes due 2020. Interest is payable on February 1 and August 1 of each year. These notes will mature on February 1, 2020.
At September 30, 2017, we had outstanding $300.0 million of 3.35% Senior Notes due 2021. Interest is payable on January 15 and July 15 of each year. These notes will mature on January 15, 2021.
At September 30, 2017, we had outstanding $450.0 million of 4.5% Senior Notes, due 2025. Interest is payable on April 1 and October 1 of each year. These notes will mature on October 1, 2025.
The interest rate payable on the 20213.8% Senior Notes, and 20254.75% Senior Notes isare subject to adjustment upon the occurrence of certain credit rating events as provided in the indentures for these senior unsecured notes.
Under our amended and restated credit agreement, we have a $1.8$1.9 billion revolving credit facility that matures on October 19, 2022.July 18, 2028. The credit agreement also contains an accordion feature that allows us, subject to credit availability and certain other conditions, to increase the amount of the revolving credit facility, together with any added term loans, by up to $500.0 million in the aggregate. As of September 30, 2017,2023, we had no borrowings outstanding of $82.0 million under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of ourthe revolving credit facility. The amount available to be borrowed under the revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

credit, which was $49.0$0.8 million at September 30, 2017,2023, leaving a borrowing capacity under the revolvingour credit facilityagreement of $1.7$1.9 billion at September 30, 2017. As of September 30, 2017, this borrowing capacity was limited under the applicable maximum consolidated leverage ratio contained in our credit agreement to $679.0 million.2023.
Our revolving credit facility under theour amended and restated credit agreement provides for a commitment fee on undrawn amounts ranging from 0.150%0.125% to 0.25%0.20% and interest on borrowings at LIBORSOFR plus a credit spread adjustment of 0.10% or the base rate, in each case plus an applicable margin. The applicable margin ranges from 1.25%1.125% to 1.625%1.50% for LIBORSOFR borrowings and 0.25%0.125% to 0.625%0.50% for base rate borrowings. The interest rate charged for our revolving credit facility is affected by our leverage ratio. For instance, an increase in our leverage ratio from greater than or equal to 2.0x but less than 3.25x to greater than or equal to 3.25x would result in a 12.5 basis point increase in the applicable margin.
Our senior unsecured notes and borrowings under our credit agreement are guaranteed by substantially all of our subsidiaries. Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc. (the parent company) has no independent assets or operations, theoperations. If guarantees of itsour subsidiaries arewere to be issued under our existing registration statement, we expect that such

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
guarantees would be full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries arewould be minor.
Other Long-Term Debt
At September 30, 2017,2023, we had $145.7 million outstanding under a mortgage facility with an automotive manufacturer’s captive finance subsidiary that matures on November 30, 2017. The mortgage facility utilizes a fixed interest rate of 5.864% and is secured by 10-year mortgages on certain of our store properties. The mortgage facility requires monthly principal and interest payments of $1.6 million based on a fixed amortization schedule with a balloon payment of $143.9 million due November 2017. We are subject to make-whole payments if the mortgage facility is prepaid prior to its maturity date.
At September 30, 2017, we had capital leaseleases and other debt obligations of $143.7$365.3 million,, which are due at various dates through 2037.2041.
Commercial Paper
We have a commercial paper program pursuant to which we may issue short-term, unsecured commercial paper notes on a private placement basis up to abasis. On August 16, 2023, we increased the maximum aggregate principal amount that may be outstanding at any time ofunder the commercial paper program from $1.0 billion to $1.9 billion. The interest rate for the commercial paper notes varies based on duration and market conditions. The maturities of the commercial paper notes may vary, but may not exceed 397 days from the date of issuance. The commercial paper notes are guaranteed by substantially all of our subsidiaries. Proceeds from the issuance of commercial paper notes are used to repay borrowings under the revolving credit facility, to finance acquisitions, and for strategic initiatives, working capital, capital expenditures, share repurchases, and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings could negatively impact our ability to issue, or the interest rates for, commercial paper notes.
At September 30, 2017,2023, we had $995.0$350.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 1.80%6.05% and a weighted-average remaining term of 1416 days. At December 31, 2016,2022, we had $942.0$50.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 1.26%4.30% and a weighted-average remaining term of 24 days.1 day.

Non-Recourse Debt
Non-recourse debt relates to auto loans receivable of our captive auto finance company funded through non-recourse funding facilities, including warehouse facilities and asset-backed term funding transactions.
We have two warehouse facility agreements with certain banking institutions through wholly-owned, bankruptcy-remote, special purpose entities, primarily to finance the purchase and origination of auto loans receivable. We fund auto loans receivable through these warehouse facilities, which are secured by the eligible auto loans receivable pledged as collateral.
Additionally, we have term securitizations that were put in place to provide long-term funding for certain auto loans receivable initially funded through the warehouse facilities. In these transactions, a pool of auto loans receivable is sold to a bankruptcy-remote, special purpose entity that, in turn, transfers the receivables to a special purpose securitization trust (“term securitization trust”). The term securitization trust issues asset-backed securities, secured or otherwise supported by the transferred receivables, and the proceeds from the sale of the asset-backed securities are used to finance the securitized receivables.
We are required to evaluate the term securitization trusts for consolidation. We retain the servicing rights for the auto loans receivable that were funded through the term securitizations. In our capacity as servicer of the underlying auto loans receivable, we have the power to direct the activities of the trusts that most significantly impact the economic performance of the trusts. In addition, we have the obligation to absorb losses (subject to limitations) and the rights to receive any returns of the trusts, which could be significant. Accordingly, we are the primary beneficiary of the trusts and are required to consolidate them.
We recognize transfers of auto loans receivable into the warehouse facilities and term securitizations (together, “non-recourse debt”) as secured borrowings, which result in recording the auto loans receivable and the related non-recourse debt on our Unaudited Condensed Consolidated Balance Sheets. The non-recourse debt is structured to legally isolate the auto loans receivable, which can only be used as collateral to settle obligations of the related non-recourse debt. The term securitization trusts and investors and the creditors of the warehouse facilities have no recourse to our assets for payment of the debt beyond the related receivables, the amounts on deposit in reserve accounts, and the restricted cash from collections on auto loans receivable.

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6.INCOME TAXES
Income taxes payableAUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Non-recourse debt outstanding at September 30, 2023, and December 31, 2022, consisted of the following:
September 30,
2023		December 31, 2022
Warehouse facilities$189.0 $181.8 
Term securitization debt of consolidated VIEs59.2 146.9 
248.2 328.7 
Less: unamortized debt discounts and debt issuance costs(2.1)(5.1)
Less: current maturities(7.2)(10.7)
Non-recourse debt, net of current maturities$238.9 $312.9 
The timing of principal payments on the non-recourse debt is based on the timing of principal collections and defaults on the related auto loans receivable. The current portion of non-recourse debt represents the portion of the payments received from the auto loans receivable that are due to be distributed as principal payments on the non-recourse debt in the following period.
We generally enter into warehouse facility agreements for one-year terms and typically renew the agreements annually. One of the warehouse facilities matures on October 1, 2024, and the other matures on December 17, 2023. Aggregate commitments under the warehouse facilities total $350.0 million.
The term securitization debt of consolidated VIEs consists of various notes with interest rates ranging from 1.49% to 4.45% and maturity dates ranging from August 2026 to May 2028. Term securitization debt is expected to become due and be paid prior to the final legal maturities based on amortization of the auto loans receivable pledged as collateral. The term securitization agreements require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash of consolidated VIEs under the various term securitization agreements totaled $4.6 million as of September 30, 2023, and $14.9 million as of December 31, 2022, and is included in Other Current LiabilitiesAssets and Other Assets in our Unaudited Condensed Consolidated Balance Sheets. Auto loans receivable pledged to the term securitization debt of consolidated VIEs totaled $32.8$59.8 million atas of September 30, 2017. 2023, and $151.4 million as of December 31, 2022.

9.INCOME TAXES
Income taxes receivable included in Receivables, net totaled $11.6$24.8 million at September 30, 2023 and $20.2 million at December 31, 2016.2022.
We file income tax returns in the U.S. federal jurisdiction and various states. As a matter of course, various taxing authorities, including the IRS, regularly audit us. These audits may culminate in proposed assessments which may ultimately result in our owing additional taxes. With few exceptions, we are no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2018. Currently, no tax years are under examination by the IRS, and tax years from 20092019 to 20162021 are under examination by certain U.S. state jurisdictions. These audits may result in proposed assessments where the ultimate resolution may result inWe believe that our owing additional taxes.tax positions comply with applicable tax law and that we have adequately provided for these matters.
It is our policy to account for interest and penalties associated with income tax obligations as a component of Income Tax Provision in the accompanying Unaudited Condensed Consolidated Financial Statements.Statements of Income.





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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.SHAREHOLDERS’ EQUITY
7.SHAREHOLDERS’ EQUITY
A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
Three Months EndedNine Months Ended
 September 30,September 30,
 2023202220232022
Shares repurchased1.3 3.8 5.3 10.9 
Aggregate purchase price (1)
$200.0 $428.2 $712.4 $1,213.1 
Average purchase price per share$155.91 $113.51 $135.38 $110.96 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.0 million and $6.6 million for the three and nine months ended September 30, 2023, respectively.
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Shares repurchased9.2
 1.0
 10.1
 9.9
Aggregate purchase price$400.0
 $50.0
 $434.9
 $470.6
Average purchase price per share$43.28
 $48.62
 $42.99
 $47.48

In August 2017, our Board of Directors authorized the repurchase of an additional $250 million of shares of our common stock. As of September 30, 2017, $113.72023, $472.0 million remained available forunder our stock repurchase limit most recently authorized by our Board of Directors.
We have 5.0 million authorized shares of preferred stock, par value $0.01 per share, repurchases undernone of which are issued or outstanding. The Board of Directors has the program.authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends of such preferred stock.
A summary of shares of common stock issued in connection with the exercise of stock options follows:
Three Months EndedNine Months Ended
Three Months Ended Nine Months Ended September 30,September 30,
September 30, September 30,2023202220232022
2017 2016 2017 2016
Shares issued0.1
 0.1
 0.7
 0.3
Shares issued (in actual number of shares)Shares issued (in actual number of shares)7,000 16,570 37,996 71,030 
Proceeds from the exercise of stock options$1.9
 $4.6
 $24.7
 $7.8
Proceeds from the exercise of stock options$0.4 $0.8 $1.9 $3.4 
Average exercise price per share$35.27
 $35.55
 $33.77
 $30.93
Average exercise price per share$57.15 $48.15 $50.34 $47.94 
The following table presents a summary of shares of common stock issued in connection with grants of restricted stock andthe settlement of restricted stock units (“RSUs”),RSUs, as well as shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the vestingsettlement of restricted stock (in actual number of shares):RSUs:
Three Months EndedNine Months Ended
 September 30,September 30,
(In actual number of shares)2023202220232022
Shares issued987 1,227 531,994 775,312 
Shares surrendered to AutoNation to satisfy tax withholding obligations278 570 182,527 263,521 

11. ACQUISITIONS AND DIVESTITURES
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Shares issued—
 —
 20,000
 152,683
Shares surrendered to AutoNation to satisfy tax withholding obligations141
 4,788
 26,061
 37,673

8.STOCK-BASED COMPENSATION
In January 2017, our Board, upon the recommendation of its Compensation Committee, discontinued the AutoNation, Inc. 2008 Employee Equity and Incentive Plan and approved the AutoNation, Inc. 2017 Employee Equity and Incentive Plan (the “2017 Plan”), in each case subject to stockholder approval of the 2017 Plan at our 2017 Annual Meeting of Stockholders (the “2017 Annual Meeting”). The 2017 Plan provides for the grant of time-based and performance-based RSUs and restricted stock, stock options, stock appreciation rights, and other stock-based and cash-based awards to employees. A maximum of 5.5 million shares may be issued under the 2017 Plan.
In January 2017, our Board’s Compensation Committee approved the 2017 annual equity awards for eligible employees under the 2017 Plan, which awards were issued on March 1, 2017, subject to stockholder approval of the 2017 Plan. Our stockholders approved the 2017 Plan at the 2017 Annual Meeting held on April 19, 2017, and on that date, the 2017 annual equity awards were considered granted for accounting purposes. The 2017 annual equity awards include time-based and performance-based RSUs. Time-based RSUs vest in equal installments over four years. The performance-based RSUs are subject to a one-year earnings performance measure. Certain performance-based RSUs vest in equal installments over four years, and others cliff vest after three years subject to the achievement of certain additional performance goals measured over a three-year period. The additional performance goals are based on an additional measure of earnings, a measure of return on invested capital, and a measure of our performance relative to certain customer satisfaction indices.
We granted 0.6 million RSUs during the nine months ended September 30, 2017, which were primarily related to the 2017 annual equity awards discussed above. The fair value of each RSU award grant is based on the closing price of our


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(Continued)

common stock on the date of grant. Compensation cost for time-based RSUs is recognized on a straight-line basis over the shorter of the stated vesting period or the period until employees become retirement-eligible, and for performance-based awards, is recognized over the requisite service period based on the current expectation that performance goals will be achieved at the stated target level. The amount of compensation cost recognized on performance-based RSUs depends on the relative satisfaction of the performance condition based on performance to date.

9.EARNINGS PER SHARE
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share (“EPS”) under the two-class method. Our restricted stock awards are considered participating securities because they contain non-forfeitable rights to dividends. As the number of shares granted under such awards that have not yet vested is immaterial, all earnings per share amounts reflect such shares as if they were fully vested shares and the disclosures associated with the two-class method are not presented.
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period, including outstanding unvested restricted stock awards and vested RSU awards. Diluted EPS is computed by dividing net income by the weighted average number of shares outstanding, noted above, adjusted for the dilutive effect of stock options and unvested RSU awards.
The following table presents the calculation of basic and diluted EPS:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income from continuing operations$97.6
 $107.8
 $283.5
 $316.1
Loss from discontinued operations, net of income taxes(0.1) (0.5) (0.2) (0.9)
Net income$97.5
 $107.3
 $283.3
 $315.2
        
Weighted average common shares outstanding used in calculating basic EPS97.3
 101.9
 99.9
 103.8
Effect of dilutive stock options and unvested RSUs0.4
 0.7
 0.4
 0.7
Weighted average common shares outstanding used in calculating diluted EPS97.7
 102.6
 100.3
 104.5
        
Basic EPS amounts(1):
       
Continuing operations$1.00
 $1.06
 $2.84
 $3.05
Discontinued operations$—
 $—
 $—
 $(0.01)
Net income$1.00
 $1.05
 $2.84
 $3.04
        
Diluted EPS amounts(1):
       
Continuing operations$1.00
 $1.05
 $2.83
 $3.02
Discontinued operations$—
 $—
 $—
 $(0.01)
Net income$1.00
 $1.05
 $2.82
 $3.02
(1) Earnings per share amounts are calculated discretely and therefore may not add up to the total due to rounding.

A summary of anti-dilutive equity instruments excluded from the computation of diluted earnings per share is as follows:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Anti-dilutive equity instruments excluded from the computation of diluted earnings per share3.2
 3.0
 3.3
 2.9


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


10.DIVESTITURES
During the third quarter of 2017, we divested one Domestic store and one Import store and recorded a gain of $9.3 million. During the second quarter of 2017, we divested one Import store and recorded a gain of $14.8 million. During the first quarter of 2017, we divested one Import store and recorded a gain of $4.3 million.
During the third quarter of 2016, we divested one Domestic store and one Import store and recorded a net gain of $11.8 million. During the second quarter of 2016, we divested one Domestic store and six Import stores and recorded a net gain of $11.5 million. During the first quarter of 2016, we divested two Import stores and recorded a gain of $6.2 million.
The gains on these divestitures are included in Other Income, Net (within Operating Income) in our Unaudited Condensed Consolidated Statements of Income. The financial condition and results of operations of these businesses were not material to our consolidated financial statements.

11.ACQUISITIONS
During the nine months ended September 30, 2017,2023, we purchased four collision centers located in Texas, Florida, Washington,acquired RepairSmith, a mobile solution for automotive repair and California. Wemaintenance, and we also purchased one store located in Florida.seven stores. Acquisitions are included in the Unaudited Condensed Consolidated Financial Statements from the date of acquisition. The purchase price allocations for these business combinations are preliminary and subject to final adjustment.adjustments, primarily related to the valuation of working capital, deferred tax assets and liabilities, and residual goodwill. We purchased 18did not purchase any stores during the nine months ended September 30, 2016.2022.
The acquisitions that occurred during the nine months ended September 30, 20172023, were not material to our financial condition or results of operations. Additionally, on a pro forma basis as if the results of these acquisitions had been included in our consolidated results for the entire nine month periods ended September 30, 20172023 and 2016,2022, revenue and net income would not have been materially different from our reported revenue and net income for these periods.

We did not divest any stores during the nine months ended September 30, 2023. We divested three stores during the nine months ended September 30, 2022. We recognized net gains related to divestitures of $16.1 million during the nine months

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ended September 30, 2022, which are included in Other Income, Net (within Operating Income) in our Consolidated Statement of Operations. The financial condition and results of operations of these businesses were not material to our consolidated financial statements.

12.CASH FLOW INFORMATION
Cash, Cash Equivalents, and Restricted Cash
The total amounts presented on our statements of cash flows include cash, cash equivalents, and restricted cash. Restricted cash includes additional collateral for non-recourse debt borrowings and collections on auto loans receivable that are due to be distributed to non-recourse debt holders in the following period. The following table provides a reconciliation of cash and cash equivalents reported on our Unaudited Condensed Consolidated Balance Sheets to the total amounts reported on our Unaudited Condensed Consolidated Statements of Cash Flows:
September 30,
2023		December 31,
2022
Cash and cash equivalents$64.0 $72.6 
Restricted cash included in Other Current Assets12.6 15.6 
Restricted cash included in Other Assets1.8 7.2 
Total cash, cash equivalents, and restricted cash$78.4 $95.4 
Non-Cash Investing and Financing Activities
We had accrued purchases of property and equipment of $33.5 million at September 30, 2023, and $29.7 million at September 30, 2022.
Nine Months Ended
September 30,
20232022
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilities$78.6 $53.2 
Finance lease liabilities$40.3 $20.2 
Interest and Income Taxes Paid
We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $218.2 million during the nine months ended September 30, 2023, and $96.7 million during the nine months ended September 30, 2022. We made income tax payments, net of income tax refunds, of $267.2 million during the nine months ended September 30, 2023, and $368.0 million during the nine months ended September 30, 2022.

13.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.

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Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which 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 1Quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity can access at the measurement date
12.Level 2COMMITMENTS AND CONTINGENCIESInputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly
Level 3Unobservable inputs
The following methods and assumptions were used by us in estimating fair value disclosures for financial instruments:
•Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, warehouse credit facilities, and variable rate debt: The amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
•Auto loans receivable, net: Auto loans receivable are presented net of an allowance for expected credit losses, which we believe approximates fair value.
•Investments in Equity Securities: Our equity investments with readily determinable fair values are measured at fair value using Level 1 inputs. The fair value of our equity investments with readily determinable fair values totaled $13.3 million at September 30, 2023, and $15.4 million at December 31, 2022.
Our equity investment that does not have a readily determinable fair value is measured using the measurement alternative as permitted by accounting standards and was recorded at cost, to be subsequently adjusted for observable price changes. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at September 30, 2023, and $56.7 million at December 31, 2022. This equity investment reflects a cumulative upward adjustment of $3.4 million based on an observable price change. We did not record any upward adjustments during the nine months ended September 30, 2023. Additionally, we have not recorded any impairments or downward adjustments to the carrying amount of this equity investment as of and for the nine months ended September 30, 2023.
Investments in equity securities are reported in Other Current Assets and Other Assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. Realized and unrealized gains and losses are reported in Other Income (Loss), Net (non-operating) in the Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.
Nine Months Ended
September 30,
20232022
Net losses recognized during the period on equity securities$(2.3)$(0.1)
Less: Net losses recognized during the period on equity securities sold during the period— — 
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date$(2.3)$(0.1)
•Fixed rate long-term debt: Our fixed rate long-term debt consists primarily of amounts outstanding under our senior unsecured notes. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). A summary of the aggregate carrying values and fair values of our senior unsecured notes is as follows:
September 30,
2023		December 31,
2022
Carrying value$3,227.1 $3,224.0 
Fair value$2,817.8 $2,803.6 

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(Continued)
Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used, are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination. The fair values less costs to sell of long-lived assets or disposal groups held for sale are assessed each reporting period they remain classified as held for sale. Subsequent changes in the held for sale long-lived asset’s or disposal group's fair value less cost to sell (increase or decrease) are reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset or disposal group at the time it was initially classified as held for sale.
The following table presents assets measured and recorded at fair value on a nonrecurring basis during the nine months ended September 30, 2023 and 2022:
20232022
DescriptionFair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)		Gain/(Loss)Fair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)		Gain/(Loss)
Long-lived assets held and used$— $(2.7)$— $(1.0)
Goodwill and Other Intangible Assets
Goodwill for our reporting units and our indefinite-lived intangible assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist. Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2023 and 2022, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts. We elected to perform quantitative franchise rights impairment tests as of April 30, 2023 and 2022, and no impairment charges resulted from these quantitative tests.
The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using Level 3 inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.
Long-Lived Assets and Right-of-Use Assets
Fair value measurements for our long-lived assets and right-of-use assets are based on Level 3 inputs. Changes in fair value measurements are reviewed and assessed each quarter for properties classified as held for sale, or when an indicator of impairment exists for properties classified as held and used or for right-of-use assets. The valuation process is generally based on a combination of the market and replacement cost approaches. In certain cases, fair value measurements are based on pending agreements to sell the related assets.
In a market approach, we use transaction prices for comparable properties that have recently been sold. These transaction prices are adjusted for factors related to a specific property. We evaluate changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace a specific long-lived asset is considered, which is adjusted for depreciation from physical deterioration, as well as functional and economic obsolescence, if present and measurable.
To validate the fair values determined under the valuation process noted above, we also obtain independent third-party appraisals for our properties and/or third-party brokers’ opinions of value, which are generally developed using the same valuation approaches described above, and we evaluate any recent negotiations or discussions with third-party real estate brokers related to a specific long-lived asset or market. 

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The non-cash impairment charges related to long-lived assets held and used are included in Other (Income) Expense, Net in our Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.
We had assets held for sale in continuing operations of $41.6 million as of September 30, 2023, and $5.7 million as of December 31, 2022, primarily related to inventory, goodwill, and property of disposal groups held for sale, as well as property held for sale. We had no assets held for sale in discontinued operations as of September 30, 2023, and $1.1 million as of December 31, 2022, which was related to property held for sale. Assets held for sale are included in Other Current Assets in our Unaudited Condensed Consolidated Balance Sheets.

14.COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of our business, including litigation with customers, third-party dealers, wage and hour and other employment-related lawsuits, and actions brought by governmental authorities. Some of these lawsuits purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. We disclose the amount accrued if material or if such disclosure is necessary for our financial statements to not be misleading. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material or a statement that such an estimate cannot be made. Our evaluation of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter.
As of September 30, 20172023 and 2016,2022, we have accrued for the potential impact of loss contingencies that are probable and reasonably estimable, and there was no indication of a reasonable possibility that a material loss, or additional material loss, may have been incurred. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our results of operations, financial condition, or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition, or cash flows.
Other Matters
AutoNation, acting through its subsidiaries, is the lessee under many real estate leases that provide for the use by our subsidiaries of their respective store premises. Pursuant to these leases, our subsidiaries generallywe agree to indemnify the lessor and other related parties from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, we enter into agreements with third parties in


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(Continued)

connection with the sale of assets or businesses in which we agree to indemnify the purchaser or related parties from certain liabilities or costs arising in connection with the assets or business. Also, in the ordinary course of business in connection with purchases or sales of goods and services, we enter into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, our liability would be limited by the terms of the applicable agreement.
From time to time, primarily in connection with dispositions of automotive stores, our subsidiarieswe assign or sublet to the store purchaser the subsidiaries’our interests in any real property leases associated with such stores. In general, our subsidiarieswe retain responsibility for the performance of certain obligations under such leases to the extent that the assignee or sublessee does not perform, whether such performance is required prior to or following the assignment or subletting of the lease. Additionally, AutoNation and its subsidiarieswe generally remain subject to the terms of any guarantees made by us and our subsidiaries in connection with such leases. Although weWe generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses,defenses. We presently have no reason to believe that we will be called on to perform under any such remaining assigned leases or subleases. We estimate that lessee rental payment obligations during the remaining terms of these leases with expirations ranging from 20172024 to 2034 are approximately $22$5 million at September 30, 2017. We do not have any material known commitments that we or our subsidiaries will be called on to perform under any such assigned leases or subleases at September 30, 2017.2023. There can be no assurance that any performance by AutoNation or its subsidiaries required of us under these leases would not have a material adverse effect on our business, financial condition, and cash flows.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
At September 30, 2017,2023, surety bonds, letters of credit, and cash deposits totaled $107.2$111.5 million,, of which $49.0$0.8 million were letters of credit. In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance. We do not currently provide cash collateral for outstanding letters of credit.
In the ordinary course of business, we are subject to numerous laws and regulations, including automotive, environmental, health and safety, and other laws and regulations. We do not anticipate that the costs of compliance with such compliancelaws will have a material adverse effect on our business, results of operations, cash flows, or financial condition, although such outcome is possible given the nature of our operations and the extensive legal and regulatory framework applicable to our business. We do not have any material known environmental commitments or contingencies.


13.SEGMENT INFORMATION
At September 30, 2017 and 2016, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and FCA US. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, and Audi. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
“Corporate and other” is comprised of our other businesses, including collision centers, auction operations, and AutoNation USA stand-alone used vehicle sales and service centers, all of which generate revenues but do not meet the quantitative thresholds for determining reportable segments, as well as unallocated corporate overhead expenses and retrospective commissions for certain finance and insurance transactions that we arrange under agreements with third parties.15.BUSINESS AND CREDIT CONCENTRATIONS
The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

In the following tables of financial data, revenue and segment income of our reportable segments are reconciled to consolidated revenue and consolidated income from continuing operations before income taxes, respectively.
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Revenue:       
Domestic$1,912.4
 $2,044.9
 $5,557.7
 $5,888.2
Import1,789.7
 1,779.0
 5,123.5
 5,202.1
Premium Luxury1,634.3
 1,680.6
 4,894.9
 4,865.6
Total5,336.4
 5,504.5
 15,576.1
 15,955.9
Corporate and other96.0
 63.0
 275.0
 172.6
Total consolidated revenue$5,432.4
 $5,567.5
 $15,851.1
 $16,128.5

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Segment income(1):
       
Domestic$69.0
 $83.9
 $190.5
 $246.9
Import81.0
 79.3
 227.9
 230.0
Premium Luxury78.8
 80.9
 243.3
 256.8
Total228.8
 244.1
 661.7
 733.7
Corporate and other(42.7) (43.3) (118.3) (137.2)
Other interest expense(30.0) (28.9) (88.0) (85.9)
Interest income0.2
 0.3
 0.8
 0.8
Other income, net1.6
 2.6
 6.4
 3.4
Income from continuing operations before income taxes$157.9
 $174.8
 $462.6
 $514.8
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
14.BUSINESS AND CREDIT CONCENTRATIONS
We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. During the nine months ended September 30, 2023, approximately 63% of our total retail new vehicle unit sales was generated by our stores in Florida, Texas, and California. We are subject to a concentration of risk in the event of financial distress of or other adverse event related to a major vehicle manufacturer or related lender or supplier. The core brands of vehicles that we sell, representing approximately 93%88% of the new vehicles that we sold during the nine months ended September 30, 2017,2023, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, FCA US,BMW, Mercedes-Benz, Nissan, BMW,Stellantis, and Volkswagen (including Audi and Porsche). Our business could be materially adversely impacted by a bankruptcy of or other adverse event related to a major vehicle manufacturer or related lender or supplier.
We had receivables from manufacturers or distributors of $222.9$212.3 million at September 30, 2017,2023, and $234.9$174.4 million at December 31, 2016.2022. Additionally, a large portion of our Contracts-in-Transitcontracts-in-transit included in Receivables, Net,net, in the accompanying Unaudited Condensed Consolidated Balance Sheets, are due from automotive manufacturers’ captive finance subsidiaries, which provide financing directly to our new and used vehicle customers. Concentrations of credit risk with respect to non-manufacturer trade receivables are limited due to the wide variety of customers and markets in which our products are sold as well as their dispersion across many different geographic areas in the United States. Consequently, at September 30, 2017,2023, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.
During the nine months ended
16.SEGMENT INFORMATION
At September 30, 2017, approximately 62%2023 and 2022, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
“Corporate and other” is comprised of our total retail newother businesses, including AutoNation USA used vehicle unit sales was generatedstores, collision centers, parts distribution centers, auction operations, and our mobile automotive repair and maintenance business, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as the results of our auto finance company, unallocated corporate overhead expenses, and other income items.
The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our stores in Florida, Texas,chief operating decision maker to allocate resources and California. During the third quarter of 2017, certain stores inassess performance. Our chief operating decision maker is our Texas and Florida markets were impacted by Hurricanes Harvey and Irma, respectively. We incurred approximately $3 million of

Chief Executive Officer.


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table provides information on revenues from external customers and segment income of our reportable segments:
unrecovered hurricane-related losses associated with flooded vehicles and minor property damage sustained at multiple locations.

15.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which 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 1Quoted prices in active markets for identical assets or liabilities
Level 2Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
Three Months EndedNine Months Ended
 September 30, 2023September 30, 2023
 DomesticImportPremium LuxuryDomesticImportPremium Luxury
Revenues from external customers$1,983.9 $2,077.2 $2,516.1 $5,770.5 $5,864.2 $7,621.5 
Segment income (1)
$107.2 $164.7 $192.9 $341.5 $498.1 $641.2 
Three Months EndedNine Months Ended
 September 30, 2022September 30, 2022
 DomesticImportPremium LuxuryDomesticImportPremium Luxury
Revenues from external customers$2,032.8 $1,875.2 $2,506.4 $6,108.1 $5,799.0 $7,601.7 
Segment income (1)
$142.7 $180.3 $235.2 $445.2 $559.0 $722.2 
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
The following methods and assumptions were used by us in estimating fair value disclosuresis a reconciliation of total segment income for financial instruments:
Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, and variable rate debt: The amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
Fixed rate long-term debt: Our fixed rate long-term debt primarily consists of amounts outstanding under our senior unsecured notes and mortgages. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). We estimate the fair value of our mortgages using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of the aggregate carrying values and fair values of our fixed rate long-term debt is as follows:
 September 30,
2017		 December 31,
2016
Carrying value$1,780.6
 $1,778.6
Fair value$1,857.4
 $1,862.2

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination. The fair values less costs to sell of long-lived assets held for sale are assessed each reporting period they remain classified as held for sale. Subsequent changes in the held for sale long-lived asset’s fair value less cost to sell (increase or decrease) is reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset at the time it was initially classified as held for sale.
Goodwill and Other Intangible Assets
Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. We elected to perform a quantitative goodwill impairment test as of April 30, 2017. As discussed in Note 1 above, the FASB issued an accounting standard that requires goodwill impairment to be measured based on the amount by which the carrying amount of a reporting unit exceeds its fair value. The adoption of this standard had no impactreportable segments to our consolidated financial statements as the fair values of each of our reporting units were substantially in excess of their carrying values as of April 30, 2017.income from continuing operations before income taxes:

Three Months EndedNine Months Ended
 September 30,September 30,
 2023202220232022
Total segment income for reportable segments$464.8 $558.2 $1,480.8 $1,726.4 
Corporate and other(83.6)(46.4)(277.0)(148.5)
Other interest expense(48.8)(33.7)(135.9)(97.4)
Other income (loss), net(5.0)(4.6)4.6 (24.7)
Income from continuing operations before income taxes$327.4 $473.5 $1,072.5 $1,455.8 


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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The quantitative goodwill impairment test requires a determination of whether the fair value of a reporting unit is less than its carrying value. We estimate the fair value of our reporting units using an “income” valuation approach, which discounts projected free cash flows of the reporting unit at a computed weighted average cost of capital as the discount rate. The income valuation approach requires the use of significant estimates and assumptions, which include revenue growth rates and future operating margins used to calculate projected future cash flows, weighted average costs of capital, and future economic and market conditions. In connection with this process, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization, including consideration of a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest. We believe that this reconciliation process is consistent with a market participant perspective. We base our cash flow forecasts on our knowledge of the automotive industry, our recent performance, our expectations of our future performance, and other assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We also make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.
For our April 30, 2016 annual goodwill impairment assessment, we chose to make a qualitative evaluation about the likelihood of goodwill impairment and determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts.
Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred. We elected to perform quantitative franchise rights impairment tests as of April 30, 2017, and no impairment charges resulted from the impairment tests.
The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using Level 3 inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable. The development of the assumptions used in our annual impairment tests are coordinated by our financial planning and analysis group, and the assumptions are reviewed by management.
For our April 30, 2016 annual franchise rights impairment assessment, we chose to make a qualitative evaluation about the likelihood of franchise rights impairment to determine whether it was necessary to perform a quantitative test. Based on our qualitative assessment of potential franchise rights impairment, we determined that we should perform a quantitative test for certain franchise rights, and no impairment charges resulted from these quantitative tests.
Long-Lived Assets
The fair value measurement valuation process for our long-lived assets is established by our corporate real estate services group. Fair value measurements, which are based on Level 3 inputs, and changes in fair value measurements are reviewed and assessed each quarter for properties classified as held for sale, or when an indicator of impairment exists for properties classified as held and used, by the corporate real estate services group. Our corporate real estate services group utilizes its knowledge of the automotive industry and historical experience in real estate markets and transactions in establishing the valuation process, which is generally based on a combination of the market and replacement cost approaches.
In a market approach, the corporate real estate services group uses transaction prices for comparable properties that have recently been sold. These transaction prices are adjusted for factors related to a specific property. The corporate real estate services group also evaluates changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace a specific long-lived asset is considered, which is adjusted for depreciation from physical deterioration, as well as functional and economic obsolescence, if present and measurable.
To validate the fair values determined under the valuation process noted above, our corporate real estate services group also obtains independent third-party appraisals for our properties and/or third-party brokers’ opinions of value, which are generally developed using the same valuation approaches described above, and evaluates any recent negotiations or discussions with third-party real estate brokers related to a specific long-lived asset or market. 


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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

As of September 30, 2017, we had long-lived assets held for sale of $23.8 million in continuing operations and $13.8 million in discontinued operations. As of December 31, 2016, we had long-lived assets held for sale of $41.4 million in continuing operations and $15.7 million in discontinued operations. Long-lived assets held for sale are included in Other Current Assets in our Unaudited Condensed Consolidated Balance Sheets. The following table presents long-lived assets measured and recorded at fair value on a nonrecurring basis during the nine months ended September 30, 2017 and 2016:
  2017 2016
Description Fair Value
Measurements Using
Significant
Unobservable Inputs
(Level 3)		 Gain/(Loss) Fair Value
Measurements Using
Significant
Unobservable Inputs
(Level 3)		 Gain/(Loss)
Long-lived assets held and used $—
 $(0.2) $5.9
 $(1.9)
Long-lived assets held for sale:        
Continuing operations $2.9
 $0.2
 $19.4
 $(12.1)
Discontinued operations —
 —
 12.7
 (0.7)
Total long-lived assets held for sale $2.9
 $0.2
 $32.1
 $(12.8)
Long-Lived Assets Held and Used in Continuing Operations
The non-cash impairment charges recorded during the nine months ended September 30, 2017 and 2016, are included in Other Income, Net (within Operating Income) in our Unaudited Condensed Consolidated Statements of Income and are reported in the “Corporate and other” category of our segment information.
Long-Lived Assets Held for Sale in Continuing Operations
The net adjustments recorded to long-lived assets held for sale during the nine months ended September 30, 2017, and non-cash impairment charges recorded during the nine months ended September 30, 2016, are included in Other Income, Net (within Operating Income) in our Unaudited Condensed Consolidated Statements of Income and are reported in the “Corporate and other” category of our segment information.
Long-Lived Assets Held for Sale in Discontinued Operations
The non-cash impairment charges recorded during the nine months ended September 30, 2016, are included in Loss from Discontinued Operations in our Unaudited Condensed Consolidated Statements of Income.

16.CASH FLOW INFORMATION
We had non-cash investing and financing activities of $3.3 million related to capital leases and deferred purchase price commitments associated with our 2017 acquisitions for the nine months ended September 30, 2017. We also had non-cash investing and financing activities related to increases in property acquired under capital leases of $7.7 million during the nine months ended September 30, 2017. We had non-cash investing and financing activities of $36.3 million related to increases in property acquired under capital leases during the nine months ended September 30, 2016. In addition, we had accrued purchases of property and equipment of $22.7 million at September 30, 2017 and $14.5 million at September 30, 2016.
We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $148.6 million during the nine months ended September 30, 2017, and $133.0 million during the nine months ended September 30, 2016. We made income tax payments, net of income tax refunds, of $126.3 million during the nine months ended September 30, 2017, and $193.3 million during the nine months ended September 30, 2016.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K.
Overview
AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailerretailers in the United States. As of September 30, 2017,2023, we owned and operated 361354 new vehicle franchises from 254253 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well known in our key markets, sell 3334 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 93%88% of the new vehicles that we sold during the nine months ended September 30, 2017,2023, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, FCA US,BMW, Mercedes-Benz, Nissan, BMW,Stellantis, and Volkswagen (including Audi and Porsche). WeAs of September 30, 2023, we also ownowned and operate 73operated 53 AutoNation-branded collision centers, 17 AutoNation branded collision centers.USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company.
We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service,”service” (also referred to as “After-Sales”), which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products (also referred to as “Customer Financial Services”), which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. We also offer indirect financing on certain vehicles we sell through our captive finance company. We believe that the significant scale of our operations and the quality of our managerial talent allow us to achieve efficiencies in our key markets by, among other things, leveraging the AutoNation retail brand and advertising, implementing standardized processes, and increasing productivity across all of our stores.
At September 30, 2017,2023, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and FCA US.Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Audi.Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
For the nine months ended September 30, 2017,2023, new vehicle sales accounted for approximately 56%47% of our total revenue and approximately 17%21% of our total gross profit. Used vehicle sales accounted for approximately 23%31% of our total revenue and approximately 10%11% of our total gross profit. Our parts and service and finance and insurance operations, while comprising approximately 21%17% of our total revenue, for the nine months ended September 30, 2017, contributed approximately 73%41% of our total gross profit for the same period.profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 27% of our total gross profit.

Market Conditions
In the third quarter of 2017, despite increases in manufacturer incentives and retail inventory levels,2023, U.S. industry retail new vehicle unit sales were relatively flatincreased approximately 12% as compared to the third quarter of 2016. Market conditions were particularly challenging2022. Although new vehicle inventory levels for certain manufacturers and models increased during the third quarter of 2023, there continues to be a shortage of available new vehicles for sale as compared to historical inventory levels for certain manufacturers and models, driven largely by disruptions in Florida, where industry retailthe manufacturers’ supply chains. The decline in new vehicle unit sales decreased 7%, duevolume in part torecent years has adversely impacted the impact from Hurricane Irma.Florida currently represents approximately 22%availability of our total retail vehicle unit sales. Based on industry data, vehicle leasing and manufacturer incentives remain at historically-high levels. To the extent that vehicle manufacturers reduce their support for these programs, U.S. industry and ournearly new vehicle unit retail sales could be adversely impacted. In addition,inventory, which has had an increase in off-lease supply of late-model used vehicles could benefit retailadverse impact on our used vehicle unit volume butsales volume. Additionally, worsening economic conditions, including rising interest rates, could adversely impact retail new vehicle unit volume.consumer demand for vehicles.
The number of recent-model-year vehicles in operation is growing due to the increases in the annual rate of new vehicle sales inOn September 15, 2023, the United States since 2009. The growth in that portionAuto Workers launched strikes against Ford, General Motors (“GM”), and Stellantis (the parent company of our service base, together with our customer retention efforts, has benefited the customer-pay serviceChrysler). We have 34 Ford stores, 32 GM stores, and warranty components of our parts and service business. While the number of older vehicles in operation has declined, we believe that overall our parts and service business will benefit from the mix shift24 Chrysler stores in our service base toward newer vehiclesportfolio. There were no material impacts to our results during 2017.the third quarter of 2023. However, if the strikes continue for a prolonged period of time, it could adversely impact parts inventory supply and the availability of certain vehicle models.

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Results of Operations
During the three months ended September 30, 2017,2023, we had net income from continuing operations of $97.6$243.7 million or $1.00and diluted earnings per share on a diluted basis,of $5.54, as compared to net income from continuing operations of $107.8$352.6 million or $1.05and diluted earnings per share on a diluted basis,of $6.31 during the same period in 2016. During the nine months ended September 30, 2017, we had net income from2022.


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continuing operations of $283.5 million, or $2.83 per share on a diluted basis, as compared to net income from continuing operations of $316.1 million, or $3.02 per share on a diluted basis,Our total gross profit decreased 1.4% during the same period in 2016.
During the third quarter of 2017, our Texas and Florida markets were impacted by Hurricanes Harvey and Irma, respectively. The hurricanes resulted in temporary store closures, with business disruption lasting up2023 compared to a week in certain parts of Texas and Florida. The majority of damage from Hurricane Harvey was flood-related, and as a result, our sales in September in certain of our Texas markets were favorably impacted following the storm by customers needing to replace their damaged vehicles. Our unrecovered property losses as a result of Hurricane Harvey were not material. We estimate that the impact of store closures and unrecovered property losses as a result of Hurricane Irma negatively impacted our third quarter of 2017 net income from continuing operations2022, driven by approximately $8 million after-tax, or $0.08 per share. 
Our retaildecreases in new vehicle unit sales decreased 2% in the third quartergross profit of 2017,24.0% and used vehicle gross profit of 10.0%, each as compared to the third quarter of 2016, largely due to declines in our Florida markets, due in part to the store closures as a result of Hurricane Irma, and competitive market conditions in a plateauing new vehicle sales environment. Our new vehicle unit volume and new2022. New vehicle gross profit onwas adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) basis were alsoresulting from increasing supply and availability of new vehicle inventory, which has resulted in moderation of pricing and margins. Used vehicle gross profit was adversely impacted primarily by certain manufacturers’ disruptive marketing and sales incentive programs, particularlya decrease in our Domestic segment. Our used vehicle unit volume due in part to lower availability and levels of nearly new vehicle inventory as a result of the decline in new vehicle unit volume in recent years. The decreases in gross profit were partially offset by an increase in parts and service gross profit of 14.0%, as compared to the third quarter of 2022. Parts and service results benefited primarily from a growing supplyincreases in gross profit from customer-pay service, the preparation of off-lease vehicles for sale, and lower used vehicle pricing.warranty service.
SG&A expenses increased largely due to acquisitions and newly opened stores and expenditures associated with investments in technology and strategic initiatives. Floorplan interest expense increased due to higher average interest rates and higher average floorplan balances. Other interest expense increased due to higher average interest rates and higher average debt balances.
Net income from continuing operations benefited from after-tax gains of $8.7 million and $7.3 million related to store/property divestitures during the three months ended September 30, 20172022, benefited from after-tax gains related to store/property divestitures of $12.1 million and 2016, respectively.
Strategic Initiatives
We continue to implement our comprehensive, customer-focused brand extension strategy, which includes AutoNation branded parts and accessories, the expansiona legal settlement of AutoNation branded collision centers and AutoNation branded automotive auctions, and AutoNation USA stand-alone used vehicle sales and service centers. During the nine months ended September 30, 2017, we opened two AutoNation branded automotive auctions and two AutoNation USA stores, and we acquired four collision centers. In connection with our brand extension strategy, we also launched our One Price used vehicle centralized pricing and appraisal strategy, with implementation completed in all of our stores as of the end of the first quarter of 2017. We expect that these initiatives will expand and strengthen the AutoNation retail brand, improve the customer experience, provide new growth opportunities, and enable us to expand our footprint in our core and other markets.
In the fourth quarter of 2017, we announced that we have partnered with Waymo, the self-driving technology company of Alphabet Inc., in a multi-year agreement to support Waymo’s autonomous vehicle program. Our franchised stores, AutoNation USA stores, and other AutoNation locations will provide vehicle maintenance and repairs for Waymo’s self-driving hybrid vehicle fleet, beginning with Chrysler Pacificas in the Phoenix area, with the potential to expand to other markets and brands. We do not expect this agreement to have a material effect on our financial results during the early stages of this strategic partnership.$4.9 million.
Inventory Management
Our new and used vehicle inventories are stated at the lower of cost or market onnet realizable value in our consolidated balance sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends. Our new vehicle inventory units at September 30, 2023 and 2022, were 27,544 and 13,303, respectively. While our new vehicle inventory units have increased compared to the prior year, by historical standards, our inventory unit levels are significantly lower driven largely by disruptions in the manufacturers’ supply chains. Inadequate levels of new vehicle availability could adversely affect our financial results.
We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We closely monitor our new vehicle inventory values as compared to market values, and as a result, ournet realizable values. Our new vehicle inventory balance was net of cumulative write-downs of $0.4$0.9 million at September 30, 2017.2023. We had no new vehicle inventory write-downs at December 31, 2022.
We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $3.8$7.0 million at September 30, 2017,2023, and $5.9$7.4 million at December 31, 2016.2022.
Parts, accessories, and other inventory are carried at the lower of acquisition cost or market.net realizable value. We estimate the amount of potentialpotentially damaged and/or excess and obsolete inventory based upon pasthistorical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $4.8$7.3 million at September 30, 2017,2023, and $3.9$7.4 million at December 31, 2016.2022.



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Critical Accounting Policies and Estimates
We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles generally accepted in the United States,(“GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Unaudited Condensed Consolidated Financial Statements. For additional discussion of our critical accounting policies and estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K.

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Goodwill
Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. We may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. When assessing goodwill for impairment, may have occurred. We electedour decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, macroeconomic conditions, automotive industry and market conditions, and our operating performance.
Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment testfor our annual impairment testing as of April 30, 2017,2023, and no impairment charges resulted fromwe determined that it was not more likely than not that the impairment test.
The quantitative goodwill impairment test is dependent on many variables used to determine the fair value of our reporting units. See Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on how the fair values and carrying values of our reporting units are derived for the quantitative impairment test.were less than their carrying amounts.
As of September 30, 2017,2023, we have $241.3$234.6 million of goodwill related to the Domestic reporting unit, $546.7$526.6 million related to the Import reporting unit, $712.1$482.1 million related to the Premium Luxury reporting unit, and $29.7$129.4 million related to “Corporatethe Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and other.” The fair values of each of$4.6 million related to the Collision Centers reporting units were substantially in excess of their carrying values as of April 30, 2017, the date of our quantitative goodwill impairment test.unit.
Other Intangible Assets
Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred.
Our We may first perform a qualitative assessment to determine whether it is more likely than not that a franchise right asset is impaired. The quantitative impairment test for franchise rights whichrequires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using unobservable (Level 3) inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to 73 storesgrowth rates, margins, working capital requirements, capital expenditures, and totaled $589.4 million at April 30, 2017, are evaluatedcost of capital, for impairment on a franchise-by-franchise basis annually. which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.
We elected to perform quantitative tests for our annual franchise rights impairment teststesting as of April 30, 2017,2023, and no impairment charges resulted from the impairmentthese quantitative tests.
If hypothetically, the fair value of each of theour franchise rights quantitatively tested had been determined to be a hypothetical 10% lower as of the valuation date noof April 30, 2023, the resulting impairment chargescharge would have resulted. The quantitative franchise rights impairment test is dependent on many variables used to determine the fair value of each store’s franchise rights. See Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing.been less than $0.5 million. The effect of a hypothetical 10% decrease in fair value estimates is not intended to provide a sensitivity analysis of every potential outcome.
Long-Lived Assets
We estimate the depreciable lives of our property and equipment, including leasehold improvements, and review them for impairment when events or changes in circumstances indicate that their carrying amounts may be impaired. Such events or changes may include a significant decrease in market value, a significant change in the business climate in a particular market, a current expectation that more-likely-than-not a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, or a current-period operating or cash flow loss combined with historical losses or projected future losses.
When property and equipment is identified as held for sale, we reclassify the held for sale assets to Other Current Assets and cease recording depreciation. We measure each long-lived asset or disposal group at the lower of its carrying amount or fair value less cost to sell and recognize a loss for any initial adjustment of the long-lived asset’s or disposal group’s carrying amount to fair value less cost to sell in the period the “held for sale” criteria are met. We periodically evaluate the carrying value of assets held for sale to determine if, based on market conditions, the values of these assets should be adjusted. As of September 30, 2017, we had long-lived assets held for sale of $23.8 million in continuing operations and $13.8 million in discontinued operations.
The fair value measurements for our property and equipment and assets held for sale are based on Level 3 inputs, which considered information from third-party real estate valuation sources, or, in certain cases, pending agreements to sell the related




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assets. See Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our fair value measurement valuation process and valuation adjustments and impairment charges that were recorded during the nine months ended September 30, 2017 and 2016. Although we believe our property and equipment and assets held for sale are appropriately valued, assumptions, estimates, and economic conditions may change and we may be required to record impairment charges to reduce the value of these assets.


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Reported Operating Data
Historical operating results include the results of acquired businesses from the date of acquisition.
($ in millions, except per vehicle data)Three Months Ended September 30, Nine Months Ended September 30,($ in millions, except per vehicle data)Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:               Revenue:
New vehicle$3,108.4
 $3,195.9
 $(87.5) (2.7) $8,835.5
 $9,068.0
 $(232.5) (2.6)New vehicle$3,187.6 $2,863.9 $323.7 11.3 $9,400.5 $8,606.9 $793.6 9.2 
Retail used vehicle1,151.5
 1,127.9
 23.6
 2.1
 3,438.7
 3,370.4
 68.3
 2.0
Retail used vehicle2,025.1 2,253.1 (228.0)(10.1)5,858.4 7,007.5 (1,149.1)(16.4)
Wholesale76.8
 148.9
 (72.1) (48.4) 231.6
 407.4
 (175.8) (43.2)Wholesale147.0 148.6 (1.6)(1.1)434.3 487.0 (52.7)(10.8)
Used vehicle1,228.3
 1,276.8
 (48.5) (3.8) 3,670.3
 3,777.8
 (107.5) (2.8)Used vehicle2,172.1 2,401.7 (229.6)(9.6)6,292.7 7,494.5 (1,201.8)(16.0)
Finance and insurance, net241.6
 229.6
 12.0
 5.2
 692.0
 678.1
 13.9
 2.0
Finance and insurance, net369.5 360.7 8.8 2.4 1,071.4 1,092.2 (20.8)(1.9)
Total variable operations(1)
4,578.3
 4,702.3
 (124.0) (2.6) 13,197.8
 13,523.9
 (326.1) (2.4)
Total variable operations(1)
5,729.2 5,626.3 102.9 1.8 16,764.6 17,193.6 (429.0)(2.5)
Parts and service841.6
 843.8
 (2.2) (0.3) 2,544.2
 2,498.9
 45.3
 1.8
Parts and service1,157.4 1,032.1 125.3 12.1 3,392.5 3,072.3 320.2 10.4 
Other12.5
 21.4
 (8.9)   109.1
 105.7
 3.4
  Other6.1 7.6 (1.5)24.4 22.1 2.3 
Total revenue$5,432.4
 $5,567.5
 $(135.1) (2.4) $15,851.1
 $16,128.5
 $(277.4) (1.7)Total revenue$6,892.7 $6,666.0 $226.7 3.4 $20,181.5 $20,288.0 $(106.5)(0.5)
Gross profit:               Gross profit:
New vehicle$144.8
 $158.2
 $(13.4) (8.5) $427.3
 $470.2
 $(42.9) (9.1)New vehicle$250.7 $329.7 $(79.0)(24.0)$825.3 $1,028.2 $(202.9)(19.7)
Retail used vehicle83.9
 84.7
 (0.8) (0.9) 232.8
 265.1
 (32.3) (12.2)Retail used vehicle126.6 140.9 (14.3)(10.1)398.3 413.4 (15.1)(3.7)
Wholesale1.8
 (7.5) 9.3
   4.4
 (12.9) 17.3
  Wholesale1.2 1.1 0.1 18.2 21.7 (3.5)
Used vehicle85.7
 77.2
 8.5
 11.0
 237.2
 252.2
 (15.0) (5.9)Used vehicle127.8 142.0 (14.2)(10.0)416.5 435.1 (18.6)(4.3)
Finance and insurance241.6
 229.6
 12.0
 5.2
 692.0
 678.1
 13.9
 2.0
Finance and insurance369.5 360.7 8.8 2.4 1,071.4 1,092.2 (20.8)(1.9)
Total variable operations(1)
472.1
 465.0
 7.1
 1.5
 1,356.5
 1,400.5
 (44.0) (3.1)
Total variable operations(1)
748.0 832.4 (84.4)(10.1)2,313.2 2,555.5 (242.3)(9.5)
Parts and service367.4
 363.8
 3.6
 1.0
 1,116.0
 1,080.1
 35.9
 3.3
Parts and service545.8 478.6 67.2 14.0 1,599.4 1,421.4 178.0 12.5 
Other6.4
 7.6
 (1.2)   19.3
 23.5
 (4.2)  Other0.8 1.8 (1.0)3.7 6.5 (2.8)
Total gross profit845.9
 836.4
 9.5
 1.1
 2,491.8
 2,504.1
 (12.3) (0.5)Total gross profit1,294.6 1,312.8 (18.2)(1.4)3,916.3 3,983.4 (67.1)(1.7)
Selling, general, and administrative expenses607.5
 591.3
 (16.2) (2.7) 1,814.1
 1,765.2
 (48.9) (2.8)Selling, general, and administrative expenses819.3 763.2 (56.1)(7.4)2,444.9 2,259.4 (185.5)(8.2)
Depreciation and amortization41.4
 36.3
 (5.1)   118.0
 107.0
 (11.0)  Depreciation and amortization55.7 50.1 (5.6)163.1 148.9 (14.2)
Other income, net(14.2) (10.2) 4.0
   (54.4) (21.0) 33.4
  
Other (income) expense, netOther (income) expense, net0.1 (23.0)(23.1)6.3 (24.5)(30.8)
Operating income211.2
 219.0
 (7.8) (3.6) 614.1
 652.9
 (38.8) (5.9)Operating income419.5 522.5 (103.0)(19.7)1,302.0 1,599.6 (297.6)(18.6)
Non-operating income (expense) items:               Non-operating income (expense) items:
Floorplan interest expense(25.1) (18.2) (6.9)   (70.7) (56.4) (14.3)  Floorplan interest expense(38.3)(10.7)(27.6)(98.2)(21.7)(76.5)
Other interest expense(30.0) (28.9) (1.1)   (88.0) (85.9) (2.1)  Other interest expense(48.8)(33.7)(15.1)(135.9)(97.4)(38.5)
Interest income0.2
 0.3
 (0.1)   0.8
 0.8
 —
  
Other income, net1.6
 2.6
 (1.0)   6.4
 3.4
 3.0
  
Other income (loss), netOther income (loss), net(5.0)(4.6)(0.4)4.6 (24.7)29.3 
Income from continuing operations before income taxes$157.9
 $174.8
 $(16.9) (9.7) $462.6
 $514.8
 $(52.2) (10.1)Income from continuing operations before income taxes$327.4 $473.5 $(146.1)(30.9)$1,072.5 $1,455.8 $(383.3)(26.3)
Retail vehicle unit sales:               Retail vehicle unit sales:
New vehicle86,192
 88,322
 (2,130) (2.4) 241,882
 253,000
 (11,118) (4.4)New vehicle62,289 55,565 6,724 12.1 179,798 169,897 9,901 5.8 
Used vehicle59,330
 55,760
 3,570
 6.4
 178,204
 170,500
 7,704
 4.5
Used vehicle72,517 75,355 (2,838)(3.8)208,868 232,198 (23,330)(10.0)
145,522
 144,082
 1,440
 1.0
 420,086
 423,500
 (3,414) (0.8)134,806 130,920 3,886 3.0 388,666 402,095 (13,429)(3.3)
Revenue per vehicle retailed:               Revenue per vehicle retailed:
New vehicle$36,064
 $36,185
 $(121) (0.3) $36,528
 $35,842
 $686
 1.9
New vehicle$51,174 $51,541 $(367)(0.7)$52,284 $50,660 $1,624 3.2 
Used vehicle$19,408
 $20,228
 $(820) (4.1) $19,296
 $19,768
 $(472) (2.4)Used vehicle$27,926 $29,900 $(1,974)(6.6)$28,048 $30,179 $(2,131)(7.1)
Gross profit per vehicle retailed:               Gross profit per vehicle retailed:
New vehicle$1,680
 $1,791
 $(111) (6.2) $1,767
 $1,858
 $(91) (4.9)New vehicle$4,025 $5,934 $(1,909)(32.2)$4,590 $6,052 $(1,462)(24.2)
Used vehicle$1,414
 $1,519
 $(105) (6.9) $1,306
 $1,555
 $(249) (16.0)Used vehicle$1,746 $1,870 $(124)(6.6)$1,907 $1,780 $127 7.1 
Finance and insurance$1,660
 $1,594
 $66
 4.1
 $1,647
 $1,601
 $46
 2.9
Finance and insurance$2,741 $2,755 $(14)(0.5)$2,757 $2,716 $41 1.5 
Total variable operations(2)
$3,232
 $3,279
 $(47) (1.4) $3,219
 $3,337
 $(118) (3.5)
Total variable operations(2)
$5,540 $6,350 $(810)(12.8)$5,905 $6,301 $(396)(6.3)
               
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.


2529
Table of Contents

Three Months EndedNine Months Ended
 September 30,September 30,
 2023 (%)2022 (%)2023 (%)2022 (%)
Revenue mix percentages:
New vehicle46.2 43.0 46.6 42.4 
Used vehicle31.5 36.0 31.2 36.9 
Parts and service16.8 15.5 16.8 15.1 
Finance and insurance, net5.4 5.4 5.3 5.4 
Other0.1 0.1 0.1 0.2 
Total100.0 100.0 100.0 100.0 
Gross profit mix percentages:
New vehicle19.4 25.1 21.1 25.8 
Used vehicle9.9 10.8 10.6 10.9 
Parts and service42.2 36.5 40.8 35.7 
Finance and insurance28.5 27.5 27.4 27.4 
Other— 0.1 0.1 0.2 
Total100.0 100.0 100.0 100.0 
Operating items as a percentage of revenue:
Gross profit:
New vehicle7.9 11.5 8.8 11.9 
Used vehicle - retail6.3 6.3 6.8 5.9 
Parts and service47.2 46.4 47.1 46.3 
Total18.8 19.7 19.4 19.6 
Selling, general, and administrative expenses11.9 11.4 12.1 11.1 
Operating income6.1 7.8 6.5 7.9 
Other operating items as a percentage of total gross profit:
Selling, general, and administrative expenses63.3 58.1 62.4 56.7 
Operating income32.4 39.8 33.2 40.2 
September 30,
20232022
Inventory days supply:
New vehicle (industry standard of selling days)31 days15 days
Used vehicle (trailing calendar month days)33 days34 days


30
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 (%) 2016 (%) 2017 (%) 2016 (%)
Revenue mix percentages:       
New vehicle57.2 57.4 55.7 56.2
Used vehicle22.6 22.9 23.2 23.4
Parts and service15.5 15.2 16.1 15.5
Finance and insurance, net4.4 4.1 4.4 4.2
Other0.3 0.4 0.6 0.7
Total100.0 100.0 100.0 100.0
Gross profit mix percentages:       
New vehicle17.1 18.9 17.1 18.8
Used vehicle10.1 9.2 9.5 10.1
Parts and service43.4 43.5 44.8 43.1
Finance and insurance28.6 27.5 27.8 27.1
Other0.8 0.9 0.8 0.9
Total100.0 100.0 100.0 100.0
Operating items as a percentage of revenue:       
Gross profit:       
New vehicle4.7 5.0 4.8 5.2
Used vehicle - retail7.3 7.5 6.8 7.9
Parts and service43.7 43.1 43.9 43.2
Total15.6 15.0 15.7 15.5
Selling, general, and administrative expenses11.2 10.6 11.4 10.9
Operating income3.9 3.9 3.9 4.0
Operating items as a percentage of total gross profit:       
Selling, general, and administrative expenses71.8 70.7 72.8 70.5
Operating income25.0 26.2 24.6 26.1
      
 September 30,  
 2017 2016    
Inventory days supply:       
New vehicle (industry standard of selling days)59 days 62 days    
Used vehicle (trailing calendar month days)38 days 44 days    
        



26
Table of Contents

Same Store Operating Data
We have presented below our operating results on a same store basis whichto reflect our internal performance. The “Same Store” amounts presented below include the results of our stores for the identical months in each period presented in the comparison, commencing with the first full month in which the store was owned by us. Results from divested stores are excluded from both current and prior periods. Therefore, the amounts presented in the 20162022 columns may differ from the same store amounts presented for 20162022 in the prior year. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.

 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
New vehicle$3,117.8 $2,856.9 $260.9 9.1 $9,273.4 $8,572.1 $701.3 8.2 
Retail used vehicle1,955.5 2,248.4 (292.9)(13.0)5,685.7 6,976.6 (1,290.9)(18.5)
Wholesale142.6 147.7 (5.1)(3.5)424.8 484.3 (59.5)(12.3)
Used vehicle2,098.1 2,396.1 (298.0)(12.4)6,110.5 7,460.9 (1,350.4)(18.1)
Finance and insurance, net359.7 360.1 (0.4)(0.1)1,047.8 1,088.5 (40.7)(3.7)
Total variable operations(1)
5,575.6 5,613.1 (37.5)(0.7)16,431.7 17,121.5 (689.8)(4.0)
Parts and service1,127.3 1,027.6 99.7 9.7 3,321.6 3,052.7 268.9 8.8 
Other5.9 7.6 (1.7)24.1 22.1 2.0 
Total revenue$6,708.8 $6,648.3 $60.5 0.9 $19,777.4 $20,196.3 $(418.9)(2.1)
Gross profit:
New vehicle$245.7 $328.9 $(83.2)(25.3)$815.2 $1,024.4 $(209.2)(20.4)
Retail used vehicle121.8 140.9 (19.1)(13.6)386.5 412.5 (26.0)(6.3)
Wholesale1.6 1.2 0.4 18.8 21.9 (3.1)
Used vehicle123.4 142.1 (18.7)(13.2)405.3 434.4 (29.1)(6.7)
Finance and insurance359.7 360.1 (0.4)(0.1)1,047.8 1,088.5 (40.7)(3.7)
Total variable operations(1)
728.8 831.1 (102.3)(12.3)2,268.3 2,547.3 (279.0)(11.0)
Parts and service534.1 475.2 58.9 12.4 1,568.7 1,408.9 159.8 11.3 
Other0.6 1.7 (1.1)3.5 6.4 (2.9)
Total gross profit$1,263.5 $1,308.0 $(44.5)(3.4)$3,840.5 $3,962.6 $(122.1)(3.1)
Retail vehicle unit sales:
New vehicle60,690 55,464 5,226 9.4 177,094 169,391 7,703 4.5 
Used vehicle69,670 75,235 (5,565)(7.4)201,875 231,367 (29,492)(12.7)
130,360 130,699 (339)(0.3)378,969 400,758 (21,789)(5.4)
Revenue per vehicle retailed:
New vehicle$51,373 $51,509 $(136)(0.3)$52,364 $50,605 $1,759 3.5 
Used vehicle$28,068 $29,885 $(1,817)(6.1)$28,164 $30,154 $(1,990)(6.6)
Gross profit per vehicle retailed:
New vehicle$4,048 $5,930 $(1,882)(31.7)$4,603 $6,048 $(1,445)(23.9)
Used vehicle$1,748 $1,873 $(125)(6.7)$1,915 $1,783 $132 7.4 
Finance and insurance$2,759 $2,755 $4 0.1 $2,765 $2,716 $49 1.8 
Total variable operations(2)
$5,578 $6,350 $(772)(12.2)$5,936 $6,302 $(366)(5.8)
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.

 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions, except per vehicle data)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Revenue:               
New vehicle$3,061.2
 $3,135.1
 $(73.9) (2.4) $8,594.4
 $8,829.4
 $(235.0) (2.7)
Retail used vehicle1,124.9
 1,106.1
 18.8
 1.7
 3,340.2
 3,272.1
 68.1
 2.1
Wholesale73.3
 145.8
 (72.5) (49.7) 221.8
 395.0
 (173.2) (43.8)
Used vehicle1,198.2
 1,251.9
 (53.7) (4.3) 3,562.0
 3,667.1
 (105.1) (2.9)
Finance and insurance, net238.8
 226.3
 12.5
 5.5
 679.3
 662.6
 16.7
 2.5
Total variable operations(1)
4,498.2
 4,613.3
 (115.1) (2.5) 12,835.7
 13,159.1
 (323.4) (2.5)
Parts and service828.6
 827.8
 0.8
 0.1
 2,480.4
 2,428.3
 52.1
 2.1
Other12.6
 21.5
 (8.9)   108.9
 105.5
 3.4
  
Total revenue$5,339.4
 $5,462.6
 $(123.2) (2.3) $15,425.0
 $15,692.9
 $(267.9) (1.7)
Gross profit:               
New vehicle$142.2
 $155.9
 $(13.7) (8.8) $414.3
 $462.5
 $(48.2) (10.4)
Retail used vehicle83.3
 83.0
 0.3
 0.4
 228.5
 257.8
 (29.3) (11.4)
Wholesale(0.6) (7.1) 6.5
   —
 (11.8) 11.8
  
Used vehicle82.7
 75.9
 6.8
 9.0
 228.5
 246.0
 (17.5) (7.1)
Finance and insurance238.8
 226.3
 12.5
 5.5
 679.3
 662.6
 16.7
 2.5
Total variable operations(1)
463.7
 458.1
 5.6
 1.2
 1,322.1
 1,371.1
 (49.0) (3.6)
Parts and service361.7
 356.5
 5.2
 1.5
 1,088.5
 1,048.7
 39.8
 3.8
Other6.4
 7.6
 (1.2)   19.0
 23.2
 (4.2)  
Total gross profit$831.8
 $822.2
 $9.6
 1.2
 $2,429.6
 $2,443.0
 $(13.4) (0.5)
Retail vehicle unit sales:               
New vehicle85,186
 86,389
 (1,203) (1.4) 236,374
 245,114
 (8,740) (3.6)
Used vehicle57,984
 54,394
 3,590
 6.6
 173,128
 164,180
 8,948
 5.5
 143,170
 140,783
 2,387
 1.7
 409,502
 409,294
 208
 0.1
Revenue per vehicle retailed:               
New vehicle$35,935
 $36,290
 $(355) (1.0) $36,359
 $36,022
 $337
 0.9
Used vehicle$19,400
 $20,335
 $(935) (4.6) $19,293
 $19,930
 $(637) (3.2)
Gross profit per vehicle retailed:               
New vehicle$1,669
 $1,805
 $(136) (7.5) $1,753
 $1,887
 $(134) (7.1)
Used vehicle$1,437
 $1,526
 $(89) (5.8) $1,320
 $1,570
 $(250) (15.9)
Finance and insurance$1,668
 $1,607
 $61
 3.8
 $1,659
 $1,619
 $40
 2.5
Total variable operations(2)
$3,243
 $3,304
 $(61) (1.8) $3,229
 $3,379
 $(150) (4.4)
                
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
31



27
Table of Contents

Three Months EndedNine Months Ended
 September 30,September 30,
 2023 (%)2022 (%)2023 (%)2022 (%)
Revenue mix percentages:
New vehicle46.5 43.0 46.9 42.4 
Used vehicle31.3 36.0 30.9 36.9 
Parts and service16.8 15.5 16.8 15.1 
Finance and insurance, net5.4 5.4 5.3 5.4 
Other— 0.1 0.1 0.2 
Total100.0 100.0 100.0 100.0 
Gross profit mix percentages:
New vehicle19.4 25.1 21.2 25.9 
Used vehicle9.8 10.9 10.6 11.0 
Parts and service42.3 36.3 40.8 35.6 
Finance and insurance28.5 27.5 27.3 27.5 
Other— 0.2 0.1 — 
Total100.0 100.0 100.0 100.0 
Operating items as a percentage of revenue:
Gross profit:
New vehicle7.9 11.5 8.8 12.0 
Used vehicle - retail6.2 6.3 6.8 5.9 
Parts and service47.4 46.2 47.2 46.2 
Total18.8 19.7 19.4 19.6 


32
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 (%) 2016 (%) 2017 (%) 2016 (%)
Revenue mix percentages:       
New vehicle57.3 57.4 55.7 56.3
Used vehicle22.4 22.9 23.1 23.4
Parts and service15.5 15.2 16.1 15.5
Finance and insurance, net4.5 4.1 4.4 4.2
Other0.3 0.4 0.7 0.6
Total100.0 100.0 100.0 100.0
Gross profit mix percentages:       
New vehicle17.1 19.0 17.1 18.9
Used vehicle9.9 9.2 9.4 10.1
Parts and service43.5 43.4 44.8 42.9
Finance and insurance28.7 27.5 28.0 27.1
Other0.8 0.9 0.7 1.0
Total100.0 100.0 100.0 100.0
Operating items as a percentage of revenue:       
Gross profit:       
New vehicle4.6 5.0 4.8 5.2
Used vehicle - retail7.4 7.5 6.8 7.9
Parts and service43.7 43.1 43.9 43.2
Total15.6 15.1 15.8 15.6



28
Table of Contents

New Vehicle
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Reported:
Revenue$3,187.6 $2,863.9 $323.7 11.3 $9,400.5 $8,606.9 $793.6 9.2 
Gross profit$250.7 $329.7 $(79.0)(24.0)$825.3 $1,028.2 $(202.9)(19.7)
Retail vehicle unit sales62,289 55,565 6,724 12.1 179,798 169,897 9,901 5.8 
Revenue per vehicle retailed$51,174 $51,541 $(367)(0.7)$52,284 $50,660 $1,624 3.2 
Gross profit per vehicle retailed$4,025 $5,934 $(1,909)(32.2)$4,590 $6,052 $(1,462)(24.2)
Gross profit as a percentage of revenue7.9%11.5%8.8%11.9%
Inventory days supply (industry standard of selling days)31 days15 days
 Three Months Ended September 30,Nine Months Ended September 30,
20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Same Store:
Revenue$3,117.8 $2,856.9 $260.9 9.1 $9,273.4 $8,572.1 $701.3 8.2 
Gross profit$245.7 $328.9 $(83.2)(25.3)$815.2 $1,024.4 $(209.2)(20.4)
Retail vehicle unit sales60,690 55,464 5,226 9.4 177,094 169,391 7,703 4.5 
Revenue per vehicle retailed$51,373 $51,509 $(136)(0.3)$52,364 $50,605 $1,759 3.5 
Gross profit per vehicle retailed$4,048 $5,930 $(1,882)(31.7)$4,603 $6,048 $(1,445)(23.9)
Gross profit as a percentage of revenue7.9%11.5%8.8%12.0%
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions, except per vehicle data)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Reported:               
Revenue$3,108.4
 $3,195.9
 $(87.5) (2.7) $8,835.5
 $9,068.0
 $(232.5) (2.6)
Gross profit$144.8
 $158.2
 $(13.4) (8.5) $427.3
 $470.2
 $(42.9) (9.1)
Retail vehicle unit sales86,192
 88,322
 (2,130) (2.4) 241,882
 253,000
 (11,118) (4.4)
Revenue per vehicle retailed$36,064
 $36,185
 $(121) (0.3) $36,528
 $35,842
 $686
 1.9
Gross profit per vehicle retailed$1,680
 $1,791
 $(111) (6.2) $1,767
 $1,858
 $(91) (4.9)
Gross profit as a percentage of revenue4.7% 5.0%     4.8% 5.2%    
Inventory days supply (industry standard of selling days)59 days
 62 days
            
                
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Same Store:               
Revenue$3,061.2
 $3,135.1
 $(73.9) (2.4) $8,594.4
 $8,829.4
 $(235.0) (2.7)
Gross profit$142.2
 $155.9
 $(13.7) (8.8) $414.3
 $462.5
 $(48.2) (10.4)
Retail vehicle unit sales85,186
 86,389
 (1,203) (1.4) 236,374
 245,114
 (8,740) (3.6)
Revenue per vehicle retailed$35,935
 $36,290
 $(355) (1.0) $36,359
 $36,022
 $337
 0.9
Gross profit per vehicle retailed$1,669
 $1,805
 $(136) (7.5) $1,753
 $1,887
 $(134) (7.1)
Gross profit as a percentage of revenue4.6% 5.0%     4.8% 5.2%    

The following discussion of new vehiclesvehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $47.2$69.8 million and $60.8$7.0 million in new vehicle revenue and $2.6$5.0 million and $2.3$0.8 million in new vehicle gross profit for the three months ended September 30, 20172023 and 2016,2022, respectively, and $241.1$127.1 million and $238.6$34.8 million in new vehicle revenue and $13.0$10.1 million and $7.7$3.8 million in new vehicle gross profit for the nine months ended September 30, 20172023 and 2016,2022, respectively, is related to acquisition and divestiture activity.

Third Quarter 20172023 compared to Third Quarter 20162022
Same store new vehicle revenue decreasedincreased during the three months ended September 30, 2017,2023, as compared to the same period in 2016, as a result of a decrease2022, due to an increase in same store unit volume, and a decrease in revenue PVR. The decrease in same store unit volume was primarily due to declines in our Florida markets, due in part to temporary store closures as a resultwhich benefited from increasing supply of Hurricane Irma, and overallcompetitive market conditions in a plateauing new vehicle sales environment, as well as certain manufacturers’ disruptive marketinginventory, particularly for Import manufacturers, and sales incentive programs.sustained consumer demand.
Same store revenue PVR was relatively flat during the three months ended September 30, 2017, decreased due2023, as compared to the same period in 2022. Same store revenue PVR was adversely impacted by a shift in mix towardto Import vehicles, which have relatively lower average selling prices. ThisThe decrease in revenue PVR was partially offset by increases in the average sellingmanufacturers’ suggested retail prices, particularly for Domestic and Import vehicles, due in part to sustained low average fuel prices, which caused a shift in mix toward trucks and sport utility vehicles that have relatively higher average selling prices.Premium Luxury vehicles.
Same store gross profit PVR decreased during the three months ended September 30, 2017, primarily2023, as compared to the same period in 2022. The prior year was impacted by a shortage of new vehicles available for sale due to a decreasedisruptions in the manufacturers’ supply chains, which resulted in higher levels of profitability for new vehicle sales due to the demand and supply imbalance. In 2023, the increasing supply and availability of new vehicle inventory has resulted in moderation of pricing and margins. In addition, same store gross profit PVR for Domesticwas adversely impacted by the shift in mix to Import vehicles, resulting fromwhich have a competitive sales environment, elevated inventory levels, and certain manufacturers’ disruptive manufacturer marketing and sales incentive programs.relatively lower average gross profit PVR.
First Nine Months 20172023 compared to First Nine Months 20162022
Same store new vehicle revenue decreasedincreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016, as a result of a decrease2022, due to increases in same store unit volume partially offset by an increase inand same store revenue PVR. The decrease in sameSame store unit volume was primarily due to declines in our Florida and Texas markets and overall competitive market conditions in a plateauingbenefited from increasing supply of new vehicle sales environment, as well as certain manufacturers’ disruptive marketinginventory, particularly for Import manufacturers, and sales incentive programs.


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sustained consumer demand.
Same store revenue PVR increased during the nine months ended September 30, 2017, benefited from2023, as compared to the same period in 2022, primarily due to increases in the average sellingmanufacturers’ suggested retail prices, particularly for vehicles in all three segments. These increases were due in part to sustained low average fuel prices, which caused a shift in mix toward trucks and sport utility vehicles, which have relatively higher average selling prices. These increases were partially offset by a shift in mix toward Import vehicles, which have relatively lower average selling prices.Premium Luxury vehicles.

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Same store gross profit PVR decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2022, primarily due to a decreaseincreasing supply and availability of new vehicle inventory, which has resulted in gross profit PVR for Domestic vehicles resulting from a competitive sales environment, elevated inventory levels,moderation of pricing and certain manufacturers’ disruptive manufacturer marketing and sales incentive programs. Same store gross profit PVR was also adversely impacted by the shift in mix toward Import vehicles, which have a relatively lower gross profit PVR.margins.
Net New Vehicle Inventory Carrying Benefit (Expense)
The following table details net new vehicle inventory carrying benefit (expense), consisting of new vehicle floorplan interest expense, net of floorplan assistance earned (amounts received from manufacturers specifically to support store financing of new vehicle inventory), as reported.. Floorplan assistance is accounted for as a component of new vehicle gross profit in accordance with generally accepted accounting principles.GAAP.
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance20232022Variance
Floorplan assistance$31.5 $26.3 $5.2 $92.1 $81.1 $11.0 
New vehicle floorplan interest expense(35.1)(9.4)(25.7)(89.1)(18.2)(70.9)
Net new vehicle inventory carrying benefit (expense)$(3.6)$16.9 $(20.5)$3.0 $62.9 $(59.9)
 Three Months Ended September 30, Nine Months Ended September 30,
(In millions)2017 2016 Variance 2017 2016 Variance
Floorplan assistance$31.1
 $31.8
 $(0.7) $88.7
 $92.4
 $(3.7)
New vehicle floorplan interest expense(23.4) (16.9) (6.5) (66.2) (52.9) (13.3)
Net new vehicle inventory carrying benefit$7.7
 $14.9
 $(7.2) $22.5
 $39.5
 $(17.0)
Third Quarter 20172023 compared to Third Quarter 20162022
TheDuring the three months ended September 30, 2023, we had a net new vehicle inventory carrying expense of $3.6 million compared to a net new vehicle inventory carrying benefit decreased duringof $16.9 million for the same period in 2022. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Up until the third quarter of 2023, since the first quarter of 2020, when the Federal Reserve cut interest rates to near 0%, we have had a net new vehicle inventory carrying benefit. Additionally, over this same period, our average floorplan balances have been significantly lower than historical standards due to manufacturers’ new vehicle inventory supply constraints. Increases to floorplan interest expense were partially offset by an increase in floorplan assistance due to an increase in unit volume and an increase in the average floorplan assistance rate per unit. With the increases in interest rates and new vehicle inventory supply, floorplan interest expense has increased, resulting in a net new vehicle inventory carrying expense for the three months ended September 30, 2017, as compared2023. If interest rates continue to the same period in 2016, primarily due to anincrease without a corresponding increase in floorplan interest expense andassistance or a decrease in floorplan assistance. Floorplan interest expense increased primarily dueaverage new vehicle inventory levels, we would expect that we will continue to higher average interest rates. Floorplan assistance decreased primarily due toincur a decrease in unit volume.net new vehicle inventory carrying expense.
First Nine Months 20172023 compared to First Nine Months 20162022
The net new vehicle inventory carrying benefit decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to an increase in floorplan interest expense, and a decreasepartially offset by an increase in floorplan assistance. Floorplan interest expense increased due to higher average interest rates partially offset by lowerand higher average vehicle floorplan payable balances during the year.balances. Floorplan assistance decreased primarilyincreased due to an increase in the average floorplan assistance rate per unit and an increase in unit volume. As noted above, floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. If interest rates continue to increase without a corresponding increase in floorplan assistance or a decrease in unit volume.



average new vehicle inventory levels, we would expect that we will incur a net new vehicle inventory carrying expense.


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Used Vehicle
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Reported:
Retail revenue$2,025.1 $2,253.1 $(228.0)(10.1)$5,858.4 $7,007.5 $(1,149.1)(16.4)
Wholesale revenue147.0 148.6 (1.6)(1.1)434.3 487.0 (52.7)(10.8)
Total revenue$2,172.1 $2,401.7 $(229.6)(9.6)$6,292.7 $7,494.5 $(1,201.8)(16.0)
Retail gross profit$126.6 $140.9 $(14.3)(10.1)$398.3 $413.4 $(15.1)(3.7)
Wholesale gross profit1.2 1.1 0.1 18.2 21.7 (3.5)
Total gross profit$127.8 $142.0 $(14.2)(10.0)$416.5 $435.1 $(18.6)(4.3)
Retail vehicle unit sales72,517 75,355 (2,838)(3.8)208,868 232,198 (23,330)(10.0)
Revenue per vehicle retailed$27,926 $29,900 $(1,974)(6.6)$28,048 $30,179 $(2,131)(7.1)
Gross profit per vehicle retailed$1,746 $1,870 $(124)(6.6)$1,907 $1,780 $127 7.1 
Retail gross profit as a percentage of retail revenue6.3%6.3%6.8%5.9%
Inventory days supply (trailing calendar month days)33 days34 days
 Three Months Ended September 30,Nine Months Ended September 30,
20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Same Store:
Retail revenue$1,955.5 $2,248.4 $(292.9)(13.0)$5,685.7 $6,976.6 $(1,290.9)(18.5)
Wholesale revenue142.6 147.7 (5.1)(3.5)424.8 484.3 (59.5)(12.3)
Total revenue$2,098.1 $2,396.1 $(298.0)(12.4)$6,110.5 $7,460.9 $(1,350.4)(18.1)
Retail gross profit$121.8 $140.9 $(19.1)(13.6)$386.5 $412.5 $(26.0)(6.3)
Wholesale gross profit1.6 1.2 0.4 18.8 21.9 (3.1)
Total gross profit$123.4 $142.1 $(18.7)(13.2)$405.3 $434.4 $(29.1)(6.7)
Retail vehicle unit sales69,670 75,235 (5,565)(7.4)201,875 231,367 (29,492)(12.7)
Revenue per vehicle retailed$28,068 $29,885 $(1,817)(6.1)$28,164 $30,154 $(1,990)(6.6)
Gross profit per vehicle retailed$1,748 $1,873 $(125)(6.7)$1,915 $1,783 $132 7.4 
Retail gross profit as a percentage of retail revenue6.2%6.3%6.8%5.9%
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions, except per vehicle data)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Reported:               
Retail revenue$1,151.5
 $1,127.9
 $23.6
 2.1
 $3,438.7
 $3,370.4
 $68.3
 2.0
Wholesale revenue76.8
 148.9
 (72.1) (48.4) 231.6
 407.4
 (175.8) (43.2)
Total revenue$1,228.3
 $1,276.8
 $(48.5) (3.8) $3,670.3
 $3,777.8
 $(107.5) (2.8)
Retail gross profit$83.9
 $84.7
 $(0.8) (0.9) $232.8
 $265.1
 $(32.3) (12.2)
Wholesale gross profit (loss)1.8
 (7.5) 9.3
   4.4
 (12.9) 17.3
  
Total gross profit$85.7
 $77.2
 $8.5
 11.0
 $237.2
 $252.2
 $(15.0) (5.9)
Retail vehicle unit sales59,330
 55,760
 3,570
 6.4
 178,204
 170,500
 7,704
 4.5
Revenue per vehicle retailed$19,408
 $20,228
 $(820) (4.1) $19,296
 $19,768
 $(472) (2.4)
Gross profit per vehicle retailed$1,414
 $1,519
 $(105) (6.9) $1,306
 $1,555
 $(249) (16.0)
Gross profit as a percentage of revenue7.3% 7.5%     6.8% 7.9%    
Inventory days supply (trailing calendar month days)38 days
 44 days
            
          
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Same Store:               
Retail revenue$1,124.9
 $1,106.1
 $18.8
 1.7
 $3,340.2
 $3,272.1
 $68.1
 2.1
Wholesale revenue73.3
 145.8
 (72.5) (49.7) 221.8
 395.0
 (173.2) (43.8)
Total revenue$1,198.2
 $1,251.9
 $(53.7) (4.3) $3,562.0
 $3,667.1
 $(105.1) (2.9)
Retail gross profit$83.3
 $83.0
 $0.3
 0.4
 $228.5
 $257.8
 $(29.3) (11.4)
Wholesale gross profit (loss)(0.6) (7.1) 6.5
   —
 (11.8) 11.8
  
Total gross profit$82.7
 $75.9
 $6.8
 9.0
 $228.5
 $246.0
 $(17.5) (7.1)
Retail vehicle unit sales57,984
 54,394
 3,590
 6.6
 173,128
 164,180
 8,948
 5.5
Revenue per vehicle retailed$19,400
 $20,335
 $(935) (4.6) $19,293
 $19,930
 $(637) (3.2)
Gross profit per vehicle retailed$1,437
 $1,526
 $(89) (5.8) $1,320
 $1,570
 $(250) (15.9)
Gross profit as a percentage of revenue7.4% 7.5%     6.8% 7.9%    
The following discussion of used vehiclesvehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $26.6$74.0 million and $21.8$5.6 million in retailtotal used vehicle revenue and $0.6$4.4 million and $1.7$0.1 million in retailtotal used vehicle gross profit for the three months ended September 30, 20172023 and 2016,2022, respectively, and $98.5$182.2 million and $98.3$33.6 million in retailtotal used vehicle revenue and $4.3$11.2 million and $7.3$0.7 million in retailtotal used vehicle gross profit for the nine months ended September 30, 20172023 and 2016,2022, respectively, is related to acquisition and divestiture activity.activity, as well as the opening of AutoNation USA stores.
Third Quarter 20172023 compared to Third Quarter 20162022
Same store retail used vehicle revenue increaseddecreased during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to lower availability and levels of nearly new vehicle inventory as a result of an increasethe decline in same store retail unit volume, partially offset by a decrease in revenue PVR. Unit volume increased due to the growing supply of off-lease vehicles and lower used vehicle pricing. Additionally, prior year retail usednew vehicle unit volume was adversely impacted by manufacturer safety recalls, which benefited prior year wholesale unit volume. The increases in retail unit volume were partially offset by declinesrecent years. Additionally, increasing supply of new vehicle inventory resulted in our Florida markets, duea shift in partmix from used vehicles to temporary store closures as a result of Hurricane Irma.new vehicles.
Same store revenue PVR was adversely impacted by a decrease in the average selling price for used vehicles in all three segments, primarily due to an increase in supply in the industry, which has driven down the wholesale values of used vehicles. Same store revenue PVR was also adversely impacted by a shift in mix away from certified pre-owned vehicles, which have relatively higher average selling prices.
Same store gross profit increaseddecreased during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Same store gross profit PVR decreased during the three months ended September 30, 2023, as compared to the same period in 2022 due to a shift in mix towards lower-priced entry-level vehicles, which have a lower average gross profit PVR.

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First Nine Months 2023 compared to First Nine Months 2022
Same store retail used vehicle revenue decreased during the nine months ended September 30, 2023, as compared to the same period in 2022, due to a decrease in wholesale lossessame store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to lower availability and levels of nearly new vehicle inventory as a result of a decreasethe decline in wholesale unit volume. Manufacturer safety recalls benefited wholesale unit volume and adversely impacted retail usednew vehicle unit volume in recent years. Additionally, increasing supply of new vehicle inventory resulted in a shift in mix from used vehicles to new vehicles.
Same store revenue PVR decreased during the prior year. The increasenine months ended September 30, 2023, as compared to the same period in 2022, primarily due to a shift in mix towards lower-priced entry-level vehicles.


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inSame store gross profit was partially offset by decreases in gross profit PVRs for used vehicles in all three segments, particularly in our Domestic segment.     
First Nine Months 2017 compared to First Nine Months 2016
Same store retail used vehicle revenuePVR increased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016, as a result of an increase in same store unit volume, partially offset by a decrease in revenue PVR. Unit volume increased2022, primarily due to the growing supplya disciplined sourcing and pricing strategy as we focused on efficient internal sourcing of off-lease vehicles and lowerour used vehicle pricing. Additionally, prior year retail used vehicle unit volume was adversely impacted by manufacturer safety recalls, which benefited prior year wholesaleinventory and balancing gross profit PVR and unit volume. The increase in unit volumegross profit PVR was partially offset by declines in our Florida markets, due in part to temporary store closures as a result of Hurricane Irma.
Same store revenue PVR was adversely impacted by a decrease in the average selling price of used vehicles for all three segments, primarily due to an increase in supply in the industry, which has driven down the wholesale values of used vehicles. Same store revenue PVR was also adversely impacted by a shift in mix away from certified pre-ownedtowards lower-priced entry-level vehicles, which have relatively highera lower average selling prices.
Same store gross profit decreased during the nine months ended September 30, 2017, as compared to the same period in 2016, due to decreases in the gross profit PVR of used vehicles for all three segments, particularly in our Domestic segment. In addition, gross profit PVR decreased due to implementation challenges we experienced in the first half of the year with One Price, our centralized pricing and appraisal strategy. Decreases in gross profit were partially offset by a decrease in wholesale losses due to a decrease in wholesale unit volume. Manufacturer safety recalls benefited wholesale unit volume and adversely impacted retail used vehicle unit volume in the prior year.
See “Strategic Initiatives” above for a discussion of our brand extension strategy, which includes the launch of AutoNation USA stand-alone used vehicle sales and service centers and our One Price used vehicle centralized pricing and appraisal strategy.


PVR.


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Parts and Service
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Reported:              Reported:
Revenue$841.6
 $843.8
 $(2.2) (0.3) $2,544.2
 $2,498.9
 $45.3
 1.8Revenue$1,157.4 $1,032.1 $125.3 12.1 $3,392.5 $3,072.3 $320.2 10.4 
Gross Profit$367.4
 $363.8
 $3.6
 1.0
 $1,116.0
 $1,080.1
 $35.9
 3.3Gross Profit$545.8 $478.6 $67.2 14.0 $1,599.4 $1,421.4 $178.0 12.5 
Gross profit as a percentage of revenue43.7% 43.1%     43.9% 43.2%   Gross profit as a percentage of revenue47.2%46.4%47.1%46.3%
Same Store:              Same Store:
Revenue$828.6
 $827.8
 $0.8
 0.1
 $2,480.4
 $2,428.3
 $52.1
 2.1Revenue$1,127.3 $1,027.6 $99.7 9.7 $3,321.6 $3,052.7 $268.9 8.8 
Gross Profit$361.7
 $356.5
 $5.2
 1.5
 $1,088.5
 $1,048.7
 $39.8
 3.8Gross Profit$534.1 $475.2 $58.9 12.4 $1,568.7 $1,408.9 $159.8 11.3 
Gross profit as a percentage of revenue43.7% 43.1%     43.9% 43.2%   Gross profit as a percentage of revenue47.4%46.2%47.2%46.2%
Parts and service revenue is primarily derived from vehicle repairs paid directly by customers or via reimbursement from manufacturers and others under warranty programs, as well as from wholesale parts sales, collision services, and collision businesses.the preparation of vehicles for sale.
The following discussion of parts and service results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $13.0$30.1 million and $16.0$4.5 million in parts and service revenue and $5.7$11.7 million and $7.3$3.4 million in parts and service gross profit for the three months ended September 30, 20172023 and 2016,2022, respectively, and $63.8$70.9 million and $70.6$19.6 million in parts and service revenue and $27.5$30.7 million and $31.4$12.5 million in parts and service gross profit for the nine months ended September 30, 20172023 and 2016,2022, respectively, is related to acquisition and divestiture activity.activity, as well as the opening of AutoNation USA stores.
Third Quarter 20172023 compared to Third Quarter 20162022
During the three months ended September 30, 2017,2023, same store parts and service gross profit revenue increased as compared to the same period in 2016,2022, primarily due to an increaseincreases in gross profitrevenue associated with customer-pay service of $6.9$40.5 million, partially offset by a decrease in gross profit associated with wholesalethe preparation of vehicles for sale of $27.1 million, and retail counter parts saleswarranty service of $1.5$16.2 million.
Customer-pay service gross profit benefited from improved margin performance primarily from price increases, AutoNation’s parts initiatives, and a mix shift toward higher margin service work. Parts and service gross profit, including gross profit associated with wholesale and retail counter parts sales, was adversely impacted by the temporary store closures in Texas and Florida resulting from Hurricanes Harvey and Irma.
First Nine Months 2017 compared to First Nine Months 2016
During the ninethree months ended September 30, 2017,2023, same store parts and service gross profit increased as compared to the same period in 2016,2022, primarily due to increases in gross profit associated with warranty of $19.1 million and customer-pay service of $18.8$25.4 million, the preparation of vehicles for sale of $13.8 million, and warranty service of $12.6 million.
Revenue and gross profit associated with customer-pay service and the preparation of vehicles for sale benefited from higher value repair orders and an increase in repair order volume. Warranty service revenue and gross profit benefited from higher value repair orders and improved margin performance largelyparts and labor rates.
First Nine Months 2023 compared to First Nine Months 2022
During the nine months ended September 30, 2023, same store parts and service revenue increased compared to the same period in 2022, primarily due to an increaseincreases in revenue associated with customer-pay service of $127.3 million, warranty service of $51.5 million, and the preparation of vehicles for sale of $50.2 million. During the nine months ended September 30, 2023, same store parts and service gross profit increased compared to the same period in 2022, primarily due to increases in gross profit associated with customer-pay service of $76.2 million, warranty service of $37.3 million, and the preparation of vehicles for sale of $22.0 million. Revenue and gross profit associated with customer-pay service benefited from higher value recall workrepair orders. Warranty service revenue and more favorable negotiated labor rates with certain manufacturers. Customer-pay service gross profit benefited from improved margin performance primarily from price increases, AutoNation’s parts initiatives,higher value repair orders and a mix shift toward higher margin service work.
See “Strategic Initiatives” above for a discussion of our brand extension strategy, which includes the launch of AutoNation USA stand-alone used vehicles sales and service centers, the launch of AutoNation brandedimproved parts and accessories,labor rates. Revenue and gross profit associated with the expansionpreparation of AutoNation branded collision centers.






vehicles for sale benefited from higher value repair orders and an increase in repair order volume.


3337
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Finance and Insurance
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
($ in millions, except per vehicle data)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Reported:            Reported:
Revenue and gross profit$241.6
 $229.6
 $12.0
 5.2 $692.0
 $678.1
 $13.9
 2.0Revenue and gross profit$369.5 $360.7 $8.8 2.4 $1,071.4 $1,092.2 $(20.8)(1.9)
Gross profit per vehicle retailed$1,660
 $1,594
 $66
 4.1 $1,647
 $1,601
 $46
 2.9Gross profit per vehicle retailed$2,741 $2,755 $(14)(0.5)$2,757 $2,716 $41 1.5 
Same Store:            Same Store:
Revenue and gross profit$238.8
 $226.3
 $12.5
 5.5 $679.3
 $662.6
 $16.7
 2.5Revenue and gross profit$359.7 $360.1 $(0.4)(0.1)$1,047.8 $1,088.5 $(40.7)(3.7)
Gross profit per vehicle retailed$1,668
 $1,607
 $61
 3.8 $1,659
 $1,619
 $40
 2.5Gross profit per vehicle retailed$2,759 $2,755 $4 0.1 $2,765 $2,716 $49 1.8 
Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with financial institutions in connection with customer vehicle purchases financed, (ii) vehicle service contracts with third-party providers, and (iii) other vehicle protection products with third-party providers. We primarily sell these products on a straight commission basis; however, in certain cases,basis, and we also participate in the future underwriting profit on certain extended service contractsproducts pursuant to retrospective commission arrangements with the issuers of those contracts, which is recognized as earned.products.

The following discussion of finance and insurance results is on a same store basis. The difference between reported amounts and same store amounts in finance and insurance revenue and gross profit in the above tables of $2.8$9.8 million and $3.3$0.6 million for the three months ended September 30, 20172023 and 2016,2022, respectively, and $12.7$23.6 million and $15.5$3.7 million for the nine months ended September 30, 20172023 and 2016,2022, respectively, is related to acquisition and divestiture activity.activity, as well as the opening of AutoNation USA stores.

Third Quarter 20172023 compared to Third Quarter 20162022
Same store finance and insurance revenue and gross profit increaseddecreased slightly during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, due to a decrease in used vehicle unit volume, largely offset by increases in new vehicle unit volume and finance and insurance gross profit PVR. Finance and insurance gross profit PVR benefited from an increase in product penetration on vehicle protection products, as well as a shift in mix from used vehicles to new vehicles, which typically generate a higher average finance and insurance gross profit PVR. The increases in finance and insurance gross profit PVR were largely offset by a decrease in gross profit associated with arranging customer financing.
First Nine Months 2023 compared to First Nine Months 2022
Same store finance and an increaseinsurance revenue and gross profit decreased during the nine months ended September 30, 2023, as compared to the same period in 2022, due to a decrease in used vehicle unit volume.volume, partially offset by increases in new vehicle unit volume and finance and insurance gross profit PVR. The increase in finance and insurance gross profit PVR was primarily due to an increase in profitproduct penetration and higher realized margins on vehicle service contracts,protection products, as well as an increasea shift in retrospective commissions resultingmix from the sale in our Domestic and Import stores of the AutoNation Vehicle Protection Plan.

First Nine Months 2017 comparedused vehicles to First Nine Months 2016
Same storenew vehicles, which typically generate a higher average finance and insurance revenue and gross profit increased during the nine months ended September 30, 2017, as compared to the same period in 2016, due to an increasePVR. The increases in finance and insurance gross profit PVR and an increase in used vehicle unit volume. The increase in gross profit PVR was primarily due to an increase in profit on vehicle service contracts, an increase in retrospective commissions resulting from the sale in our Domestic and Import stores of the AutoNation Vehicle Protection Plan, as well as improved chargeback experience. These increases were partially offset by a decrease in gross profit as a result of fewer customers financing vehicles through the dealerships and a decrease in gross profit per transaction associated with arranging customer financing.





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Table of Contents

Segment Results
In the following table of financial data, revenue and segment income of our reportable segments are reconciled to consolidated revenue and consolidated operating income, respectively. The following discussions of segment results are on a reported basis.
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
Domestic$1,983.9 $2,032.8 $(48.9)(2.4)$5,770.5 $6,108.1 $(337.6)(5.5)
Import2,077.2 1,875.2 202.0 10.8 5,864.2 5,799.0 65.2 1.1 
Premium Luxury2,516.1 2,506.4 9.7 0.4 7,621.5 7,601.7 19.8 0.3 
Total6,577.2 6,414.4 162.8 2.5 19,256.2 19,508.8 (252.6)(1.3)
Corporate and other315.5 251.6 63.9 25.4 925.3 779.2 146.1 18.8 
Total consolidated revenue$6,892.7 $6,666.0 $226.7 3.4 $20,181.5 $20,288.0 $(106.5)(0.5)
Segment income(1):
Domestic$107.2 $142.7 $(35.5)(24.9)$341.5 $445.2 $(103.7)(23.3)
Import164.7 180.3 (15.6)(8.7)498.1 559.0 (60.9)(10.9)
Premium Luxury192.9 235.2 (42.3)(18.0)641.2 722.2 (81.0)(11.2)
Total464.8 558.2 (93.4)(16.7)1,480.8 1,726.4 (245.6)(14.2)
Corporate and other(83.6)(46.4)(37.2)(277.0)(148.5)(128.5)
Floorplan interest expense38.3 10.7 (27.6)98.2 21.7 (76.5)
Operating income$419.5 $522.5 $(103.0)(19.7)$1,302.0 $1,599.6 $(297.6)(18.6)
Retail new vehicle unit sales:
Domestic17,766 16,859 907 5.4 51,110 49,984 1,126 2.3 
Import28,232 22,309 5,923 26.5 78,502 70,457 8,045 11.4 
Premium Luxury16,291 16,397 (106)(0.6)50,186 49,456 730 1.5 
62,289 55,565 6,724 12.1 179,798 169,897 9,901 5.8 
Retail used vehicle unit sales:
Domestic22,406 24,827 (2,421)(9.8)64,914 76,603 (11,689)(15.3)
Import24,548 25,416 (868)(3.4)69,241 77,731 (8,490)(10.9)
Premium Luxury19,710 20,677 (967)(4.7)57,409 64,007 (6,598)(10.3)
66,664 70,920 (4,256)(6.0)191,564 218,341 (26,777)(12.3)
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.





39
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Revenue:               
Domestic$1,912.4
 $2,044.9
 $(132.5) (6.5) $5,557.7
 $5,888.2
 $(330.5) (5.6)
Import1,789.7
 1,779.0
 10.7
 0.6
 5,123.5
 5,202.1
 (78.6) (1.5)
Premium Luxury1,634.3
 1,680.6
 (46.3) (2.8) 4,894.9
 4,865.6
 29.3
 0.6
Total5,336.4
 5,504.5
 (168.1) (3.1) 15,576.1
 15,955.9
 (379.8) (2.4)
Corporate and other96.0
 63.0
 33.0
 52.4
 275.0
 172.6
 102.4
 59.3
Total consolidated revenue$5,432.4
 $5,567.5
 $(135.1) (2.4) $15,851.1
 $16,128.5
 $(277.4) (1.7)
Segment income(1):
               
Domestic$69.0
 $83.9
 $(14.9) (17.8) $190.5
 $246.9
 $(56.4) (22.8)
Import81.0
 79.3
 1.7
 2.1
 227.9
 230.0
 (2.1) (0.9)
Premium Luxury78.8
 80.9
 (2.1) (2.6) 243.3
 256.8
 (13.5) (5.3)
Total228.8
 244.1
 (15.3) (6.3) 661.7
 733.7
 (72.0) (9.8)
Corporate and other(42.7) (43.3) 0.6
   (118.3) (137.2) 18.9
  
Floorplan interest expense25.1
 18.2
 (6.9)   70.7
 56.4
 (14.3)  
Operating income$211.2
 $219.0
 $(7.8) (3.6) $614.1
 $652.9
 $(38.8) (5.9)
                
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
 
Retail new vehicle unit sales:
Domestic29,618
 31,749
 (2,131) (6.7) 82,765
 90,156
 (7,391) (8.2)
Import40,442
 39,390
 1,052
 2.7
 111,781
 113,517
 (1,736) (1.5)
Premium Luxury16,132
 17,183
 (1,051) (6.1) 47,336
 49,327
 (1,991) (4.0)
 86,192
 88,322
 (2,130) (2.4) 241,882
 253,000
 (11,118) (4.4)





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Table of Contents

Domestic
The Domestic segment operating results included the following:
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
New vehicle$916.1 $875.0 $41.1 4.7 $2,667.1 $2,555.6 $111.5 4.4 
Used vehicle649.1 764.3 (115.2)(15.1)1,880.4 2,374.2 (493.8)(20.8)
Parts and service301.7 275.8 25.9 9.4 888.0 820.0 68.0 8.3 
Finance and insurance, net115.6 117.1 (1.5)(1.3)332.2 355.7 (23.5)(6.6)
Other1.4 0.6 0.8 2.8 2.6 0.2 
Total Revenue$1,983.9 $2,032.8 $(48.9)(2.4)$5,770.5 $6,108.1 $(337.6)(5.5)
Segment income$107.2 $142.7 $(35.5)(24.9)$341.5 $445.2 $(103.7)(23.3)
Retail new vehicle unit sales17,766 16,859 907 5.4 51,110 49,984 1,126 2.3 
Retail used vehicle unit sales22,406 24,827 (2,421)(9.8)64,914 76,603 (11,689)(15.3)
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Revenue$1,912.4
 $2,044.9
 $(132.5) (6.5) $5,557.7
 $5,888.2
 $(330.5) (5.6)
Segment income$69.0
 $83.9
 $(14.9) (17.8) $190.5
 $246.9
 $(56.4) (22.8)
Retail new vehicle unit sales29,618
 31,749
 (2,131) (6.7) 82,765
 90,156
 (7,391) (8.2)
Third Quarter 20172023 compared to Third Quarter 20162022
Domestic revenue decreased during the three months ended September 30, 20172023, as compared to the same period in 2016,2022, primarily due to decreases in used vehicle unit volume and used vehicle revenue PVR. The decrease in used vehicle unit volume is due in part to lower availability and levels of nearly new vehicle inventory. The decrease in used vehicle revenue PVR is primarily due to a shift in mix towards lower-priced entry-level vehicles. Decreases in Domestic revenue were partially offset by an increase in new vehicle unit volume due to increasing supply of new vehicle inventory and sustained consumer demand, as well as increases in parts and service revenue associated with customer-pay service and warranty service. Domestic revenue also benefited from the acquisitions we completed in 2022 and 2023.
Domestic segment income decreased during the three months ended September 30, 2023, as compared to the same period in 2022, primarily due to decreases in new and used vehicle unit volumegross profit and wholesale unit volume.an increase in floorplan interest expense. New vehicle unit volumegross profit was adversely impacted by declines in our Florida markets, due in part to temporary store closures as a resultcontinued moderation of Hurricane Irma,pricing and margins resulting from the competitive sales environment, and certain manufacturers’ disruptive marketing and sales incentive programs. Manufacturer safety recallsincreasing supply of new vehicle inventory. Used vehicle gross profit was adversely impacted retailby a shift in mix towards lower-priced entry-level vehicles. Decreases in Domestic segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and warranty service.
First Nine Months 2023 compared to First Nine Months 2022
Domestic revenue decreased during the nine months ended September 30, 2023, as compared to the same period in 2022, primarily due to decreases in used vehicle unit volume and benefited wholesaleused vehicle revenue PVR. The decrease in used vehicle unit volume is due in the prior year. Domesticpart to lower availability and levels of nearly new vehicle inventory. The decrease in used vehicle revenue also decreasedPVR is primarily due to the divestitures we completed subsequent to the third quarter of 2016.a shift in mix towards lower-priced entry-level vehicles. Decreases in Domestic revenue were partially offset by an increase in new vehicle revenue PVR due to sustained low average fuelincreases in manufacturers’ suggested retail prices, which caused a shift in mix toward trucks and sport utility vehicles that have relatively higher average selling prices.
Domestic segment income decreased during the three months ended September 30, 2017, as compared to the same period in 2016, primarily due to decreases in new vehicle gross profit PVR and new vehicle unit volume, as well as a decrease in parts and service gross profit. New vehicle gross profit PVR decreased primarily due to a competitive sales environment, elevated inventory levels, and certain manufacturers’ disruptive manufacturer marketing and sales incentive programs. Decreases in Domestic segment income were partially offset by a decrease in SG&A expenses and a decrease in wholesale losses.
First Nine Months 2017 compared to First Nine Months 2016
Domestic revenue decreased during the nine months ended September 30, 2017 as compared to the same period in 2016, primarily due to decreasesan increase in new vehicle unit volume and wholesale unit volume. New vehicle unit volume was impacted by declines in our Florida and Texas markets, the competitive sales environment, and certain manufacturers’ disruptive marketing and sales incentive programs. Manufacturer safety recalls adversely impacted retail used vehicle unit volume and benefited wholesale unit volume in the prior year. Domestic revenue also decreased due to the divestitures we completed subsequent to the third quarterincreasing supply of 2016. Decreases in Domestic revenue were partially offset bynew vehicle inventory and sustained consumer demand, and an increase in new vehicleparts and service revenue PVR due to sustained low average fuel prices, which caused a shiftassociated with customer-pay service and warranty service. Additionally, Domestic revenue benefited from the acquisitions we completed in mix toward trucks2022 and sport utility vehicles that have relatively higher average selling prices.2023.
Domestic segment income decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to decreases in new and used vehicle gross profit PVR and new vehicle unit volume, as well as a decrease in partsfinance and serviceinsurance gross profit. New vehicle gross profit PVR decreased primarily due to a competitive sales environment, elevated inventory levels,was adversely impacted by continued moderation of pricing and certain manufacturers’ disruptive manufacturer marketingmargins resulting from the increasing supply of new vehicle inventory. Finance and sales incentive programs. Used vehicleinsurance gross profit PVR decreased due to implementation challenges we experiencedwas adversely impacted by the decrease in the first half of the year with One Price, our centralized pricing and appraisal strategy. These decreasesused vehicle unit volume. Domestic segment income was also adversely impacted by an increase in Domesticfloorplan interest expense. Decreases in segment income were partially offset by a decreaseincreases in SG&A expenses.



parts and service gross profit associated with customer-pay service and warranty service.


3640
Table of Contents

Import
The Import segment operating results included the following:
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
New vehicle$1,042.5 $814.1 $228.4 28.1 $2,910.1 $2,548.1 $362.0 14.2 
Used vehicle602.4 667.4 (65.0)(9.7)1,707.7 2,074.6 (366.9)(17.7)
Parts and service299.6 266.2 33.4 12.5 859.3 788.0 71.3 9.0 
Finance and insurance, net129.1 123.1 6.0 4.9 369.5 375.2 (5.7)(1.5)
Other3.6 4.4 (0.8)17.6 13.1 4.5 
Total Revenue$2,077.2 $1,875.2 $202.0 10.8 $5,864.2 $5,799.0 $65.2 1.1 
Segment income$164.7 $180.3 $(15.6)(8.7)$498.1 $559.0 $(60.9)(10.9)
Retail new vehicle unit sales28,232 22,309 5,923 26.5 78,502 70,457 8,045 11.4 
Retail used vehicle unit sales24,548 25,416 (868)(3.4)69,241 77,731 (8,490)(10.9)
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Revenue$1,789.7
 $1,779.0
 $10.7
 0.6 $5,123.5
 $5,202.1
 $(78.6) (1.5)
Segment income$81.0
 $79.3
 $1.7
 2.1 $227.9
 $230.0
 $(2.1) (0.9)
Retail new vehicle unit sales40,442
 39,390
 1,052
 2.7 111,781
 113,517
 (1,736) (1.5)
Third Quarter 20172023 compared to Third Quarter 20162022
Import revenue increased during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to increasesan increase in new vehicle unit volume due to the increasing supply of new vehicle inventory and sustained consumer demand. Increases in Import revenue were partially offset by a decrease in used vehicle revenue PVR, primarily due to a shift in mix towards lower-priced entry-level vehicles, and a decrease in used vehicle unit volume due in part to lower availability and levels of nearly new vehicle inventory. Import revenue also benefited from the acquisitions we completed in 2022 and 2023.
Import segment income decreased during the three months ended September 30, 2023, as compared to the same period in 2022, primarily due to an increase in SG&A expenses, largely driven by the acquisitions we completed in 2022 and 2023, and a decrease in new vehicle gross profit PVR, which was adversely impacted by continued moderation of pricing and margins resulting from the increasing supply of new vehicle inventory. Import segment income was also adversely impacted by a decrease in used vehicle gross profit due to the decrease in used vehicle unit volume and a shift in mix towards lower-priced entry-level vehicles. Decreases in Import segment income were partially offset by the increase in new vehicle unit volume and increases in parts and service gross profit associated with customer-pay service and the preparation of vehicles for sale.
First Nine Months 2023 compared to First Nine Months 2022
Import revenue PVR. Theseincreased during the nine months ended September 30, 2023, as compared to the same period in 2022, primarily due to an increase in new vehicle unit volume due to the increasing supply of new vehicle inventory and sustained consumer demand, as well as an increase in new vehicle revenue PVR, which benefited from increases in manufacturers’ suggested retail prices. Import revenue also benefited from an increase in parts and service revenue associated with customer-pay service and the preparation of vehicles for sale, as well as the acquisitions we completed in 2022 and 2023. Increases in Import revenue were partially offset by decreases in used vehicle revenueunit volume, due in part to lower availability and partslevels of nearly new vehicle inventory, and service revenue, largely due to the divestitures we completed subsequent to the third quarter of 2016, as well as a decrease in wholesale unit volume. Manufacturer safety recalls adversely impacted retail used vehicle unit volume and benefited wholesale unit volume in the prior year.
Import segment income increased during the three months ended September 30, 2017, as compared to the same period in 2016, primarily due an increase in finance and insurance gross profit and new vehicle gross profit, both of which benefited from higher vehicle unit volume, and a decrease in wholesale losses. Import segment income was adversely impacted by an increase in SG&A expenses and a decrease in parts and service gross profit.
First Nine Months 2017 compared to First Nine Months 2016
Import revenue decreased during the nine months ended September 30, 2017, as compared to the same period in 2016,PVR, primarily due to decreasesa shift in used vehicle revenue and parts and service revenue, due to the divestitures we completed subsequent to the third quarter of 2016, as well as a decrease in wholesale unit volume. Manufacturer safety recalls adversely impacted retail used vehicle unit volume and benefited wholesale unit volume in the prior year.mix towards lower-priced entry-level vehicles.
Import segment income decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to decreases in new vehicle unit volume, used vehicle gross profit PVR, which was adversely impacted by continued moderation of pricing and parts and service gross profit. The decrease inmargins resulting from the increasing supply of new vehicle unit volume was primarily due to declines in our Florida and Texas markets and the competitive sales environment, as well as certain manufacturers’ disruptive marketing and sales incentive programs. Used vehicle gross profit PVR decreased due to implementation challenges in the first half of the year with One Price, our centralized pricing and appraisal strategy. The decreases ininventory. Import segment income were partially offsetwas also adversely impacted by a decreasean increase in SG&A expenses.




37
Table of Contents

Premium Luxury
The Premium Luxuryexpenses, largely driven by the acquisitions we completed in 2022 and 2023, and an increase in floorplan interest expense. Decreases in segment operating results included the following:
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Revenue$1,634.3
 $1,680.6
 $(46.3) (2.8) $4,894.9
 $4,865.6
 $29.3
 0.6
Segment income$78.8
 $80.9
 $(2.1) (2.6) $243.3
 $256.8
 $(13.5) (5.3)
Retail new vehicle unit sales16,132
 17,183
 (1,051) (6.1) 47,336
 49,327
 (1,991) (4.0)
Third Quarter 2017 compared to Third Quarter 2016
Premium Luxury revenue decreased during the three months ended September 30, 2017, as compared to the same period in 2016, primarily due to decreases in new vehicle unit volume and wholesale unit volume,income were partially offset by an increase in parts and service gross profit associated with customer-pay service and the preparation of vehicles for sale.

41
Table of Contents
Premium Luxury
The Premium Luxury segment operating results included the following:
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
New vehicle$1,229.0 $1,174.8 $54.2 4.6 $3,823.3 $3,503.2 $320.1 9.1 
Used vehicle773.1 853.0 (79.9)(9.4)2,275.8 2,673.7 (397.9)(14.9)
Parts and service402.4 364.5 37.9 10.4 1188.9 1083.4 105.5 9.7 
Finance and insurance, net111.5 112.5 (1.0)(0.9)332.3 338.1 (5.8)(1.7)
Other0.1 1.6 (1.5)1.2 3.3 (2.1)
Total Revenue$2,516.1 $2,506.4 $9.7 0.4 $7,621.5 $7,601.7 $19.8 0.3 
Segment income$192.9 $235.2 $(42.3)(18.0)$641.2 $722.2 $(81.0)(11.2)
Retail new vehicle unit sales16,291 16,397 (106)(0.6)50,186 49,456 730 1.5 
Retail used vehicle unit sales19,710 20,677 (967)(4.7)57,409 64,007 (6,598)(10.3)
Third Quarter 2023 compared to Third Quarter 2022
Premium Luxury revenue increased slightly during the three months ended September 30, 2023, as compared to the same period in 2022, primarily due to an increase in new vehicle revenue PVR, which benefited from increases in manufacturers’ suggested retail prices, and retailan increase in parts and service revenue associated with customer-pay service and the preparation of vehicles for sale. Increases in Premium Luxury revenue were partially offset by a decrease in used vehicle unit volume. New vehicle unit volume, was impacted by declines in our Florida markets, due in part to temporary store closures aslower availability and levels of nearly new vehicle inventory, and a result of Hurricane Irma, as well as the competitive sales environment and certain manufacturers’ disruptive marketing and sales incentive programs. Manufacturer safety recalls adversely impacted retaildecrease in used vehicle unit volume and benefited wholesale unit volumerevenue PVR, primarily due to a shift in the prior year. Premium Luxury revenue benefited from the acquisitions we completed subsequent to the third quarter of 2016.mix towards lower-priced entry-level vehicles.
Premium Luxury segment income decreased during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to a decrease in new vehicle gross profit, which was adversely impacted by continued moderation of pricing and margins resulting from the increasing supply of new vehicle inventory, as well as an increase in SG&A and floorplan interest expenses,expense. Decreases in Premium Luxury segment income were partially offset by an increaseincreases in totalparts and service gross profit all of which were largely due to the acquisitions we completed subsequent to the third quarter of 2016.associated with customer-pay service and warranty service.
First Nine Months 20172023 compared to First Nine Months 20162022
Premium Luxury revenue increased slightly during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to an increase in new vehicle revenue PVR, which benefited from increases in manufacturers’ suggested retail prices, and an increase in parts and service revenue associated with customer-pay service and retail used vehicle revenue due to the acquisitions we completed subsequent to the third quarter of 2016, as well as an increase in fleet revenue. The increaseswarranty service. Increases in Premium Luxury revenue were partially offset by a decrease in wholesale revenue and new vehicle unit volume. Manufacturer safety recalls adversely impacted retail used vehicle unit volume, due in part to lower availability and benefited wholesale unit volumelevels of nearly new vehicle inventory, a decrease in the prior year. Newused vehicle unit volume was impacted by declinesrevenue PVR, primarily in our Florida markets, the competitive sales environment, and certain manufacturers’ disruptive marketing and sales incentive programs. New vehicle unit volume in our Florida markets was particularly impacted in September due to temporary store closures as a result of Hurricane Irma.shift in mix towards lower-priced entry-level vehicles, and a decrease in used vehicle wholesale revenue.
Premium Luxury segment income decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to a decrease in new vehicle gross profit, which was adversely impacted by continued moderation of pricing and margins resulting from the increasing supply of new vehicle inventory, as well as increases in floorplan interest and SG&A expenses. Decreases in Premium Luxury segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and warranty service.

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Corporate and other
Corporate and other results included the following:
 Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Revenue:
Used vehicle$147.5 $117.0 $30.5 26.1 $428.8 $372.0 $56.8 15.3 
Parts and service153.7 125.6 28.1 22.4 456.3 380.9 75.4 19.8 
Finance and insurance, net13.3 8.0 5.3 66.3 37.4 23.2 14.2 61.2 
Other1.0 1.0 — 2.8 3.1 (0.3)
Revenue$315.5 $251.6 $63.9 25.4 $925.3 $779.2 $146.1 18.8 
Income (loss)$(83.6)$(46.4)$(37.2)$(277.0)$(148.5)$(128.5)
“Corporate and other” is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and our mobile automotive repair and maintenance business, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as the results of our auto finance company, unallocated corporate overhead expenses, and other income items. As of September 30, 2023, we had 53 AutoNation-branded collision centers, 17 AutoNation USA stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company, referred to as AutoNation Finance.
Revenue from “Corporate and other” increased for the three and nine months ended September 30, 2023, as compared to the same periods in 2022, primarily due to increases in revenue from AutoNation USA stores, collision centers, and our mobile automotive repair and maintenance business.
The loss from “Corporate and other” increased for the three and nine months ended September 30, 2023, as compared to the same periods in 2022, primarily due to expenditures associated with acquisitions, newly opened AutoNation USA stores, and investments in technology and strategic initiatives, an increase in SG&A, floorplan interest,self-insurance losses related to hailstorms and depreciation expenses,other natural catastrophes, and a decrease in gains from business/property divestitures, partially offset by increases in gross profit from AutoNation USA stores, collision centers, and our mobile automotive repair and maintenance business. The loss from “Corporate and other” for the nine months ended September 30, 2023, as compared to the same period in 2022, was also adversely impacted by an increase in totaldeferred compensation obligations as a result of changes in market performance of the underlying investments.
AutoNation USA Stores
During the nine months ended September 30, 2023, we opened four AutoNation USA used vehicle stores and currently have over 20 stores under development. These stores play an integral part of both our long-term growth plans and the achievement of scale, scope, and density in markets to better serve and meet the needs of customers. A number of variables may impact the implementation of our expansion plans, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.
Mobile Automotive Repair and Maintenance
In the first quarter of 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance services. Revenue and gross profit allfrom this business are included within “parts and service.”
AutoNation Finance
AutoNation Finance, our captive auto finance company, provides financing to qualified retail customers on certain vehicles we sell. AutoNation Finance operating results include the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated credit losses on the auto loans receivable originated or acquired, direct expenses, and gains or losses on the sale of which were largely due toloans receivable. Interest income on auto loans receivable is recognized over the acquisitions we completed subsequent tocontractual term of the third quarter of 2016.





related loans.


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In September 2023, we discontinued acquiring installment contracts from third-party independent dealers. We plan to continue to increase finance penetration rates for retail vehicle sales through our stores, which we expect will favorably impact the operating results of our auto finance business over time. AutoNation Finance results are included in Other (Income) Expense, Net in our Unaudited Condensed Consolidated Statements of Income. See Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on auto loans receivable, the related allowance for credit losses, and the related debt of our auto finance company.
Selling, General, and Administrative Expenses
Our Selling, General, and Administrative (“SG&A”) expenses consist primarily of compensation, including store and corporate salaries, commissions, and incentive-based compensation, as well as advertising (net of reimbursement-based manufacturer advertising rebates), and store and corporate overhead expenses, which include occupancy costs, outside service costs, information technology expenses, service loaner and rental inventory expenses, legal, accounting, and professional services, and general corporate expenses. The following table presents the major components of our SG&A expenses.
Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)		%
Variance		20232022Variance
Favorable /
(Unfavorable)		%
Variance
Reported:
Compensation$532.8 $514.6 $(18.2)(3.5)$1,603.8 $1,553.9 $(49.9)(3.2)
Advertising64.1 49.1 (15.0)(30.5)178.2 133.5 (44.7)(33.5)
Store and corporate overhead222.4 199.5 (22.9)(11.5)662.9 572.0 (90.9)(15.9)
Total$819.3 $763.2 $(56.1)(7.4)$2,444.9 $2,259.4 $(185.5)(8.2)
SG&A as a % of total gross profit:
Compensation41.2 39.2 (200)bps41.0 39.0 (200)bps
Advertising5.0 3.7 (130)bps4.6 3.4 (120)bps
Store and corporate overhead17.1 15.2 (190)bps16.8 14.3 (250)bps
Total63.3 58.1 (520)bps62.4 56.7 (570)bps
 Three Months Ended September 30, Nine Months Ended September 30,
($ in millions)2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
 2017 2016 
Variance
Favorable /
(Unfavorable)
 
%
Variance
Reported:               
Compensation$382.9
 $367.1
 $(15.8) (4.3) $1,145.0
 $1,105.6
 $(39.4) (3.6)
Advertising50.6
 51.2
 0.6
 1.2
 144.3
 145.9
 1.6
 1.1
Store and corporate overhead174.0
 173.0
 (1.0) (0.6) 524.8
 513.7
 (11.1) (2.2)
Total$607.5
 $591.3
 $(16.2) (2.7) $1,814.1
 $1,765.2
 $(48.9) (2.8)
                
SG&A as a % of total gross profit:               
Compensation45.3
 43.9
 (140) bps 46.0
 44.2
 (180) bps
Advertising6.0
 6.1
 10
 bps 5.8
 5.8
 —
 bps
Store and corporate overhead20.5
 20.7
 20
 bps 21.0
 20.5
 (50) bps
Total71.8
 70.7
 (110) bps 72.8
 70.5
 (230) bps
Third Quarter 20172023 compared to Third Quarter 20162022
SG&A expenses increased during the three months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to increases in compensation expense. Compensation expense increased due in part to acquisitions and changesnewly opened stores, expenditures associated with investments in certaintechnology and strategic initiatives, an increase in advertising expenses to support our used vehicle sales associate compensation plans. SG&A expenses were also impacted by unrecovered hurricane-relatedinternal sourcing strategy, and self-insurance losses of approximately $3$5.0 million we incurred during the third quarter of 2017.related to hailstorms and other natural catastrophes, partially offset by a decrease in performance-driven compensation expense. As a percentage of total gross profit, SG&A expenses increased to 71.8%63.3% during the three months ended September 30, 2017,2023, from 70.7%58.1% in the same period in 2016,2022, primarily due to gross profitmargin pressure and an increase in our new vehicle businessSG&A expenses related to newly acquired and opened stores and investments related to our brand extension strategy.in technology and strategic initiatives.
First Nine Months 20172023 compared to First Nine Months 20162022
SG&A expenses increased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016, primarily due to increases in compensation expense and store and corporate overhead expenses. Compensation expense increased due in part to acquisitions and changes in certain vehicle sales associate compensation plans. Store and corporate overhead expenses increased2022, primarily due to acquisitions and newly opened stores, expenditures associated with investments in technology and strategic initiatives, an increase in advertising expenses to support our brand extensionused vehicle internal sourcing strategy, an increase in deferred compensation obligations of $31.3 million as well as unrecovered hurricane-relateda result of changes in market performance of the underlying investments, and self-insurance losses of approximately $3$21.5 million we incurred during the third quarter of 2017.related to hailstorms and other natural catastrophes. Increases in SG&A expenses were partially offset by a decrease in performance-driven compensation expense. As a percentage of total gross profit, SG&A expenses increased to 72.8%62.4% during the nine months ended September 30, 2017,2023, from 70.5%56.7% in the same period in 2016,2022, primarily due to gross profitmargin pressure and an increase in our new and used vehicle businesses and investmentsSG&A expenses related to our brand extension strategy.newly acquired and opened stores, investments in technology and strategic initiatives, an increase in deferred compensation obligations, and hail-related losses.
Other Income,(Income) Expense, Net (included in Operating Income)(Operating)
Other (Income) Expense, Net includes the gains or losses associated with business/property divestitures, legal settlements, and asset impairments, among other items, and for the three and nine months ended September 30, 2023, the results of our recently acquired auto finance company, including net interest margin, the provision for expected credit losses, direct expenses,

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and gains or losses on the sale of loans receivable. See “Segment Results - Corporate and other” above and Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information about our auto finance company.
During the third quarter of 2017,2022, we recognized gainsa net gain of $9.3$16.1 million related to storebusiness/property divestitures and $4.7 million related to a property disposition. During the second quarter of 2017, we recognized net gains largely related to store divestitures of $19.8 million. During the first quarter of 2017, we recognized a gain of $9.8 million in connection with payments we received from manufacturers related toon a legal settlement and for the waiver of certain franchise protest rights, a gain of $5.6 million related to a property disposition, and a gain of $4.3 million related to a store divestiture.
During the third quarter of 2016, we recognized net gains related to store divestitures of $11.8 million and payments we received to waive certain franchise protest rights of $5.5 million, partially offset by non-cash property impairments of $6.4$6.3 million. During the second quarter of 2016, we recognized net gains related to store divestitures of $11.5 million, partially offset by non-cash property impairments of $6.7 million. During the first quarter of 2016, we recognized gains related to store divestitures of $6.2 million, partially offset by non-cash property impairments of $0.9 million.


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Non-Operating Income (Expense)
Floorplan Interest Expense
Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates.
Third Quarter 20172023 compared to Third Quarter 20162022
Floorplan interest expense was $25.1$38.3 million for the three months ended September 30, 2017,2023, compared to $18.2$10.7 million for the same period in 2016.2022. The increase in floorplan interest expense of $6.9$27.6 million iswas the result of higher average interest rates.rates and higher average floorplan balances.
First Nine Months 20172023 compared to First Nine Months 20162022
Floorplan interest expense was $70.7$98.2 million for the nine months ended September 30, 2017,2023, compared to $56.4$21.7 million for the same period in 2016.2022. The increase in floorplan interest expense of $14.3$76.5 million iswas the result of higher average interest rates partially offset by lowerand higher average vehicle floorplan balances during the year.balances.
Other Interest Expense
Third Quarter 20172023 compared to Third Quarter 20162022
Other interest expense of $30.0was $48.8 million for the three months ended September 30, 2017, increased $1.1 million as2023, compared to $28.9$33.7 million for the same period in 2016, primarily due to2022. The increase in interest expense of $15.1 million was driven by higher average debt balances and higher average interest rates and an increase in capital leases due to acquisitions.rates.
First Nine Months 20172023 compared to First Nine Months 20162022
Other interest expense of $88.0was $135.9 million for the nine months ended September 30, 2017, increased $2.1 million as2023, compared to $85.9$97.4 million for the same period in 2016, primarily due to2022. The increase in interest expense of $38.5 million was driven by higher average interest rates and higher average debt balances.
Other Income (Loss), Net
We recognized a net loss of $4.2 million and $5.2 million for the three months ended September 30, 2023 and 2022, respectively, and a net gain of $4.9 million and a net loss of $26.0 million for the nine months ended September 30, 2023 and 2022, respectively, related to changes in the cash surrender value of corporate-owned life insurance (“COLI”) for deferred compensation plan participants as a result of changes in market performance of the underlying investments. Gains and losses related to the COLI are substantially offset by corresponding increases and decreases, respectively, in the deferred compensation obligations, which are reflected in SG&A expenses.
We recorded an increaseunrealized loss of $1.0 million for the three months ended September 30, 2023, and an unrealized loss of $2.3 million during the nine months ended September 30, 2023, related to the change in capital leases duefair value of the underlying securities of our minority equity investments. During the period that we hold our minority equity investments, unrealized gains and losses will be recorded as the fair market values of securities with readily determinable fair values change over time, or as observable price changes are identified for securities without readily determinable fair values. See Note 13 of the Notes to acquisitions.Unaudited Condensed Consolidated Financial Statements for more information.
Provision for Income TaxesTax Provision
Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates adjusted, as necessary, for any otherdiscrete tax matters occurring during the period. As we operate in various states, our effective tax rate is also impacted bydependent upon our geographic incomerevenue mix.

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Our effective income tax rate was 38.2%25.6% for the three months ended September 30, 2017,2023, and 38.3%25.5% for the three months ended September 30, 2016.
2022. Our effective income tax rate was 38.7%25.0% for the nine months ended September 30, 2017,2023, and 38.6%25.0% for the nine months ended September 30, 2016.2022.
Discontinued Operations
Discontinued operations are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income taxes, were primarily related to carrying costs fora gain on the sale of real estate we have not yet soldin the first quarter of 2023 associated with storesa store that werewas closed prior to January 1, 2014.


Liquidity and Capital Resources
We manage our liquidity to ensure access to sufficient funding at acceptable costs to fund our ongoing operating requirements and future capital expenditures while continuing to meet our financial obligations. We believe that our cash and cash equivalents, funds generated through future operations, and amounts available under our revolving credit facility, commercial paper program, and secured used vehicle floorplan facilities will be sufficient to fund our working capital requirements, service our debt, pay our tax obligations and commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future.
Debt Refinancing Transaction
On October 19, 2017, Depending on market conditions, we amended and restatedmay from time to time issue debt, including in private or public offerings, to augment our existing unsecured credit agreementliquidity, to among other things, (1) extend the stated termination date to October 19, 2022, (2) modify the maximum leverage ratioreduce our cost of 3.75x to allowcapital, or for an increase in the maximum leverage ratio to 4.25x following the closing date of the amended credit agreement, subject to step-downs back to 3.75x over time, and (3) modify the guarantor requirement to allow the release of all of the guarantors under our credit agreement at such time and for so long as such guarantors cease to guarantee other certain material indebtedness. See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our credit agreement.


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general corporate purposes.
Available Liquidity Resources
We had the following sources of liquidity available:
(In millions)September 30,
2023		December 31,
2022
Cash and cash equivalents$64.0 $72.6 
Revolving credit facility$1,899.2 (1)$1,799.6 
Secured used vehicle floorplan facilities (2)
$0.3 $0.3 
(In millions)September 30,
2017		 December 31,
2016
Cash and cash equivalents$53.3
 $64.8
Revolving credit facility (1)
$679.0
(2) 
$1,058.7
Secured used vehicle floorplan facilities (3)
$0.5
 $0.3
(1)At September 30, 2023, we had $0.8 million of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under our commercial paper program. We had $350.0 million of commercial paper notes outstanding at September 30, 2023. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
(2)    Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
(1)
As limited by the maximum consolidated leverage ratio contained in our credit agreement in effect as of September 30, 2017 and December 31, 2016.
(2)
At September 30, 2017, we had $49.0 million of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under our commercial paper program. We had $995.0 million of commercial paper notes outstanding at September 30, 2017, which in effect reduced the available liquidity under our revolving credit facility to $674.0 million at September 30, 2017. See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
(3)
Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance primarily relating to insurance matters. At September 30, 2017,2023, surety bonds, letters of credit, and cash deposits totaled $107.2$111.5 million,, of which $49.0$0.8 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit.
In February 2016,2022, we filed an automatic shelf registration statement with the SEC that enables us to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, warrants, subscription rights, depositary shares, stock purchase contracts, units, and guaranteesunits.
On July 18, 2023, we amended and restated our unsecured credit agreement to, among other things, (1) increase the revolving credit facility (the “facility”) commitment from $1.8 billion to $1.9 billion, (2) extend the maturity date of debt securities. Subjectthe facility to market conditions,July 18, 2028, (3) allow for the maximum leverage ratio covenant to increase from 3.75x to 4.25x for four fiscal quarters in the event that we expect to have access to capital markets in order to refinance debt obligations that become due, ifcomplete a material acquisition, and as needed.(4) replace the maximum capitalization ratio covenant with a minimum interest coverage ratio covenant.
Capital Allocation
Our capital allocation strategy is focused on maximizing stockholder returns.growing long-term value per share. We invest capital in our business to maintain and upgrade our existing facilities and to build new facilities for existing franchises and new AutoNation USA used vehicle stores, as well as for other strategic and technology initiatives, including our brand extension strategy discussed above under “Strategic Initiatives.”initiatives. We also deploy capital opportunistically to complete acquisitions or investments, build facilities for newly awarded franchises, and/or repurchase our common stock and/or debt or to complete dealership acquisitions and/or build facilities for newly awarded franchises.debt. Our capital allocation decisions will beare based on factors such as the expected rate of return on our investment, the market price of our common stock versus our view of its intrinsic value, the market price of our debt, the potential impact on our capital

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structure, our ability to complete dealership acquisitions that meet our market and vehicle brand criteria andand/or return on investment threshold, and limitations set forth in our debt agreements.
Share Repurchases
Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
 Three Months EndedNine Months Ended
September 30,September 30,
(In millions, except per share data)2023202220232022
Shares repurchased1.3 3.8 5.3 10.9 
Aggregate purchase price (1)
$200.0 $428.2 $712.4 $1,213.1 
Average purchase price per share$155.91 $113.51 $135.38 $110.96 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.0 million and $6.6 million for the three and nine months ended September 30, 2023, respectively.
 Three Months Ended Nine Months Ended
 September 30, September 30,
(In millions, except per share data)2017 2016 2017 2016
Shares repurchased9.2
 1.0
 10.1
 9.9
Aggregate purchase price$400.0
 $50.0
 $434.9
 $470.6
Average purchase price per share$43.28
 $48.62
 $42.99
 $47.48
As of October 25, 2023, $439.4 million remained available for share repurchases under the program. The decision to repurchase shares at any given point in time is based on factors such as the market price of our common stock versus our view of its intrinsic value, the potential impact on our capital structure (including compliance with our maximum leverage ratio and other financial covenants in our debt agreements as well as our available liquidity), and the


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expected return on competing uses of capital such as dealership acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.
In August 2017, our Board of Directors authorized the repurchase of an additional $250 million of shares of our common stock. As of September 30, 2017, $113.7 million remained available for share repurchases under the program.
Capital Expenditures
The following table sets forth information regarding our capital expenditures:
Three Months EndedNine Months Ended
 September 30,September 30,
(In millions)2023202220232022
Purchases of property and equipment, including operating lease buy-outs$87.0 $75.9 $286.0 $236.2 
 Three Months Ended Nine Months Ended
 September 30, September 30,
(In millions)2017 2016 2017 2016
Purchases of property and equipment, including operating lease buy-outs (1)
$55.9
 $69.3
 $224.6
 $181.7
At September 30, 2023, we owned approximately 79% of our new vehicle franchise store locations with a net book value of $2.4 billion, as well as other properties associated with our collision centers, AutoNation USA used vehicle stores, parts distribution centers, auction operations, and other excess properties with a net book value of $733.0 million. None of these properties are mortgaged or encumbered.
(1)
We continue to expand our AutoNation USA used vehicle stores. The planned expansion may be impacted by a number of variables, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.
Includes accrued construction in progress and excludes property associated with capital leases entered into during the year.
Acquisitions and Divestitures
The following table sets forth information regarding cash used in business acquisitions, net of cash acquired, and cash received from business divestitures, net of cash relinquished:
 Three Months Ended Nine Months Ended
 September 30, September 30,
(In millions)2017 2016 2017 2016
Cash received from (used in) business acquisitions, net(1)
$(4.0) $(99.6) $(56.9) $(362.5)
Cash received from (used in) business divestitures, net$13.2
 $37.5
 $47.8
 $87.5
(1)
Excludes capital leases and deferred purchase price commitments.
During the nine months ended September 30, 2017,2023, we purchased four collision centers located in Texas, Florida, Washington,acquired a mobile solution for automotive repair and California. Wemaintenance, and we also purchased one store located in Florida.seven stores. We purchased 18did not purchase any stores during the nine months ended September 30, 2016.
During2022. We did not divest any stores during the nine months ended September 30, 2017, we2023. We divested three Import stores and one Domestic store. Duringduring the nine months ended September 30, 2016, we divested two Domestic stores and nine Import stores. We regularly review our store portfolio and may divest stores opportunistically. 2022.
Cash Dividends
Three Months EndedNine Months Ended
 September 30,September 30,
(In millions)2023202220232022
Cash used in business acquisitions, net$(2.2)$— $(271.1)$— 
Cash received from business divestitures, net$— $55.2 $— $55.2 
We have not declared or paid any cash dividends on our common stock during our two most recent fiscal years. We do not currently anticipate paying cash dividends for the foreseeable future.




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Debt
Long-Term Debt and Commercial Paper
The following table sets forth our non-vehicle long-term debt, net of debt issuance costs, as of September 30, 2017,2023, and December 31, 2016.2022.
Debt DescriptionMaturity DateInterest PayableSeptember 30,
2023		December 31,
2022
3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 
2.40% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 700.0 
Revolving credit facilityJuly 18, 2028Monthly— — 
Finance leases and other debtVarious dates through 2041365.3 375.5 
3,615.3 3,625.5 
Less: unamortized debt discounts and debt issuance costs(22.9)(26.0)
Less: current maturities(12.8)(12.6)
Long-term debt, net of current maturities$3,579.6 $3,586.9 
(In millions)September 30,
2017		 December 31,
2016
6.75% Senior Notes due 2018$400.0
 $400.0
5.5% Senior Notes due 2020350.0
 350.0
3.35% Senior Notes due 2021300.0
 300.0
4.5% Senior Notes due 2025450.0
 450.0
Revolving credit facility (1)
82.0
 —
Mortgage facility (2)
145.7
 153.2
Capital leases and other debt143.7
 136.2
 1,871.4
 1,789.4
Less: unamortized debt discounts and debt issuance costs(8.8) (10.8)
Less: current maturities(566.9) (167.5)
Long-term debt, net of current maturities$1,295.7
 $1,611.1
    
(1) In October 2017, we amended our existing unsecured credit agreement and extended the stated termination date to October 19, 2022.
(2) The mortgage facility requires monthly principal and interest payments of $1.6 million based on a fixed amortization schedule with a balloon payment of $143.9 million due November 2017.
Our 6.75% Senior Notes due 2018 will mature on April 15, 2018, and were therefore reclassified to current maturities during the second quarter of 2017.
At September 30, 2017, weWe had $995.0 million of commercial paper notes outstanding with a weighted-average annualof $350.0 million at September 30, 2023, and $50.0 million at December 31, 2022. On August 16, 2023, we increased the maximum aggregate principal amount that may be outstanding at any time under the commercial paper program from $1.0 billion to $1.9 billion.
We had non-recourse debt under our warehouse facilities of $189.0 million at September 30, 2023, and $181.8 million at December 31, 2022, and non-recourse debt under term securitizations of consolidated variable interest entities (“VIEs”) of $59.2 million at September 30, 2023, and $146.9 million at December 31, 2022.
A downgrade in our credit ratings could negatively impact the interest rate of 1.80%payable on our 3.5% Senior Notes, 4.5% Senior Notes, 3.8% Senior Notes, and a weighted-average remaining term of 14 days. At December 31, 2016, we had $942.0 million of4.75% Senior Notes and could negatively impact our ability to issue, or the interest rates for, commercial paper notes outstanding with a weighted-average annualnotes. Additionally, an increase in our leverage ratio could negatively impact the interest rate of 1.26% and a weighted-average remaining term of 24 days.rates charged for borrowings under our revolving credit facility.
See Note 58 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and commercial paper.non-recourse debt.
Restrictions and Covenants
Our amended and restated credit agreement and the indentures for our senior unsecured notes and our vehicle floorplan and mortgage facilities contain numerous customary financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness or prepay existingguarantee other indebtedness, to create liens or other encumbrances, to engage in sale and leaseback transactions, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities. Our failure to comply with the covenants contained in our amended and restated credit agreement and the indentures for our senior unsecured notes could result in the acceleration of other indebtedness of AutoNation.
Under our amended and restated credit agreement, we are required to remain in compliance with a maximum leverage ratio and maximum capitalizationa minimum interest coverage ratio. The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a contractually defined measure of earnings with certain adjustments.earnings. The capitalizationinterest coverage ratio is a contractually defined amount reflecting a measure of earnings divided by certain interest expense principally reflectingassociated with vehicle floorplan payable and non-vehicle debt divided by our total capitalization including vehicle floorplan payable.debt. The specific terms of these covenantsthe leverage and interest coverage ratios can be found in our amended and restated credit agreement, which weis filed with our CurrentQuarterly Report on Form 8-K on October 24, 2017.
The indentures10-Q for our senior unsecured notes contain certain limited covenants, including limitations on liens and sale and leaseback transactions. Our mortgage facility contains covenants regarding maximum cash flow leverage and minimum interest coverage.
Our failure to comply with the covenants contained in our debt agreements could result in the acceleration of all of our indebtedness. Our debt agreements have cross-default provisions that trigger a default in the event of an uncured default under other material indebtedness of AutoNation.

quarter ended June 30, 2023.


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As of September 30, 2017,2023, we were in compliance with the requirements of the financial covenants under our debt agreements. Under the terms of our credit agreement in effect at and the indentures for our senior unsecured notes. At September 30, 2017,2023, our leverage ratio and capitalization ratiointerest coverage ratios were as follows:
September 30, 20172023
RequirementActual
Leverage ratio≤ 3.75x3.03x2.02x
CapitalizationInterest coverage ratio≤ 70.0%≥ 3.00x63.4%7.15x
Vehicle Floorplan Payable
The components of vehicle floorplan payable are as follows:
(In millions)September 30,
2023		December 31,
2022
Vehicle floorplan payable - trade$1,358.7 $946.6 
Vehicle floorplan payable - non-trade1,456.1 1,162.7 
Vehicle floorplan payable$2,814.8 $2,109.3 
 September 30,
2017		 December 31,
2016
Vehicle floorplan payable - trade$2,069.3
 $2,308.8
Vehicle floorplan payable - non-trade1,561.2
 1,540.4
Vehicle floorplan payable$3,630.5
 $3,849.2
Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related vehicles are sold. Vehicle floorplan facilities are primarily collateralized by vehicle inventories and related receivables. See Note 36 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our vehicle floorplan payable.
Cash Flows
The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities:
Nine Months EndedNine Months Ended
September 30, September 30,
(In millions)2017 2016(In millions)20232022
Net cash provided by operating activities$457.0
 $478.8
Net cash provided by operating activities$762.6 $1,443.3 
Net cash used in investing activities$(206.2) $(456.8)Net cash used in investing activities$(497.0)$(247.3)
Net cash used in financing activities$(262.3) $(33.9)Net cash used in financing activities$(282.6)$(813.6)
Cash Flows from Operating Activities
Our primary sources of operating cash flows result from the sale of vehicles, and finance and insurance products, collections from customers for the sale ofand parts and automotive repair and maintenance services, and proceeds from vehicle floorplan payable-trade.payable-trade, and collections on auto loans receivable for vehicles sold through our stores. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of parts inventory, personnel relatedpersonnel-related expenditures, originations of loans receivable for vehicles sold through our stores, and payments related to taxes and leased properties.
Net cash provided by operating activities decreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to an increase in working capital requirements, a decrease in earnings, partially offset by a decreaseand an increase in working capital requirements.originations of loans receivable for vehicles sold through our stores.
Cash Flows from Investing Activities
Net cash flows from investing activities consist primarily of cash used in capital additions and activity from business acquisitions, business divestitures, property dispositions, originations of and collections on auto loans receivable acquired through third-party dealers, and other transactions.
We will make facility and infrastructure upgrades and improvements from time to time as we identify projects that are required to maintain our current business or that we expect to provide us with acceptable rates of return.
Net cash used in investing activities decreasedincreased during the nine months ended September 30, 2017,2023, as compared to the same period in 2016,2022, primarily due to an increase in cash used in acquisitions, a decrease in cash used inreceived from business acquisitions, net

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divestitures, and an increase in proceeds from assets held for sale, partially offset by an increase in purchases of property and equipment, and a decreasepartially offset by an increase in cash receivedproceeds from business divestitures, netthe sale of cash relinquished.auto loans receivable.
Cash Flows from Financing Activities
Net cash flows from financing activities primarily include repurchases of common stock, debt activity, and changes in vehicle floorplan payable-non-trade.


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During the nine months ended September 30, 2017,2023, we repurchased 10.15.3 million shares of common stock for an aggregate purchase price of $434.9$712.4 million (average purchase price per share of $42.99)$135.38), excluding the 1% excise tax imposed under the Inflation Reduction Act. During the nine months ended September 30, 2022, we repurchased 10.9 million shares of common stock for an aggregate purchase price of $1.2 billion (average purchase price per share of $110.96), including repurchases for which settlement occurred subsequent to September 30, 2017. In addition, during the nine months ended September 30, 2017, 26,061 shares were surrendered to us to satisfy tax withholding obligations in connection with the vesting of restricted stock.
During the nine months ended September 30, 2016, we repurchased 9.9 million shares of common stock for an aggregate purchase price of $470.6 million (average purchase price per share of $47.48), including repurchases for which settlement occurred subsequent to September 30, 2016. In addition, during the nine months ended September 30, 2016, 37,673 shares were surrendered to us to satisfy tax withholding obligations in connection with the vesting of restricted stock.2022.
Cash flows from financing activities include changes in commercial paper notes outstanding totaling net proceeds of $53.0$300.0 million and net payments of $340.0 million during the nine months ended September 30, 20172023 and 2022, respectively, and vehicle floorplan payable-non-trade totaling net proceeds of $375.5$260.4 million and $46.4 million during the nine months ended September 30, 2016.2023 and 2022, respectively.
During the nine months ended September 30, 2017,2023, we borrowed $907.0$151.6 million and repaid $825.0$232.1 million under our revolving credit facility, for net borrowings of $82.0 million. non-recourse debt facilities.
During the nine months ended September 30, 2016, we borrowed $1.1 billion and repaid $1.1 billion under our revolving credit facility.
Cash flows from financing activities also include changes in vehicle floorplan payable-non-trade totaling net proceeds of $15.4 million for the nine months ended September 30, 2017, and net proceeds2022, we issued $700.0 million aggregate principal amount of $78.7 million for the nine months ended September 30, 2016.
During the nine months ended September 30, 2017, cash flows from financing activities were also impacted by an increase in proceeds from the exercise of stock options as compared to the same period in 2016.
Recent Accounting Pronouncements
See Note 1 of the3.85% Senior Notes to Unaudited Condensed Consolidated Financial Statements.due 2032.
Forward-Looking Statements
Our business, financial condition, results of operations, cash flows, and prospects, and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our brand extension strategy, pendingstrategic acquisitions, initiatives, partnerships, or planned acquisitions, strategic initiatives, expected futureinvestments, including AutoNation USA, AutoNation Finance, and our mobile automotive repair and maintenance business; our investments in our business,digital and online capabilities and mobility solutions; our expectations for the future performance of our business (including with respect to sales of used vehicles and parts and accessories) and the automotive retail industry,industry; as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf that describe our objectives, goals, or plans constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact, including statements that describe our objectives, plans or goals are, or may be deemed to be, forward-looking statements. Words such as “anticipate,” “expect,” “intend,” “goal,” “target,” “project,” “plan,” “believe,” “continue,” “may,” “will,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these statements. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances. The risks, uncertainties, and other factors that our stockholders and prospective investors should consider include, but are not limited to, the following:
•The automotive retail industry is sensitive to changing economic conditions and various other factors.factors, including, but not limited to, unemployment levels, consumer confidence, fuel prices, interest rates, and tariffs. Our business and results of operations are substantially dependent on new and used vehicle sales levels in the United States and in our particular geographic markets, andas well as the level of gross profit margins that we can achieve on our sales of new vehicles, all of which are very difficult to predict.
•Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers.
•We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises. On September 15, 2023, the United Auto Workers launched strikes against Ford, General Motors, and Stellantis. If the strikes continue for a prolonged period of time, it could adversely impact our business and results of operations.

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•We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores.
•We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA stores, our AutoNation Finance business, and our mobile automotive repair and maintenance business, and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.
•If we are not able to maintain and enhance our retail brands and reputation or to attract consumers to our own digital channels, or if events occur that damage our retail brands, reputation, or sales channels, our business and financial results may be harmed.
•We are investing significantly in the next phasesubject to various risks associated with originating and servicing auto finance loans through indirect lending to customers, any of which could have an adverse effect on our brand extension strategy, and if ourbusiness.


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strategic initiatives are not successful, we will have incurred significant expenses without the benefit of improved financial results.
•New laws, regulations, or governmental policies regardingin response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, may affect vehicle manufacturers’ ability to produce cost-effective vehicles or vehicles that consumers demand, which could adversely impact our business, results of operations, financial condition, cash flow, and prospects.
Natural disasters and adverse weather events can disrupt our business.
We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores.
•We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects.
•Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer.
•A failure of our information systems or any security breach or unauthorized disclosure of confidential information could have a material adverse effect on our business.
•Our debt agreements contain certain financial ratios and other restrictions on our ability to conduct our business, and our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations.
•We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, and commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability.
•Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our goodwill and other intangible assets for impairment at least annually, which could result in a material, non-cash write-down of goodwill or franchise rights and could have a material adverse impact on our results of operations and shareholders’ equity.
•Our minority equity investments with readily determinable fair values are required to be measured at fair value each reporting period, which could adversely impact our results of operations and financial condition. The carrying value of our minority equity investment that does not have a readily determinable fair value is required to be adjusted for observable price changes or impairments, both of which could adversely impact our results of operations and financial condition.
•Our largest stockholders, as a result of their ownership stakes in us, may have the ability to exert substantial influence over actions to be taken or approved by our stockholders or Board of Directors.stockholders. In addition, future share repurchases and fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our common stock.
•Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business.
Please refer to our most recent Annual Report on Form 10-K for additional discussion of the foregoing risks. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.
Additional Information
Investors and others should note that we announce material financial information using our company website (www.autonation.com), our investor relations website (investors.autonation.com), SEC filings, press releases, public conference calls, and webcasts. Information about AutoNation, its business, and its results of operations may also be announced by posts on the following social media channels:
AutoNation’s Twitter feed, (www.twitter.com/autonation)
.
Mike Jackson’s Twitter feed (www.twitter.com/CEOMikeJackson)

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AutoNation’s Facebook page (www.facebook.com/autonation)
Mike Jackson’s Facebook page (www.facebook.com/CEOMikeJackson)Table of Contents
The information that we post on theseour websites and social media channels could be deemed to be material information. As a result, we encourage investors, the media, and others interested in AutoNation to review the information that we post on thesethose websites and social


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media channels. TheseOur social media channels may be updated from time to time on AutoNation’sour investor relations website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our primaryWe have market risk exposure is changing LIBOR-basedon various instruments that are based on variable interest rates. Interest rate derivatives may be used to hedge a portion of our variable rate debt, when appropriate, based on market conditions.
We had $3.6$2.8 billion of variable rate vehicle floorplan payable at September 30, 2017,2023, and $3.8$2.1 billion at December 31, 2016.2022. Based on these amounts, a 100 basis point change in interest rates would result in an approximate change to our annual floorplan interest expense of $36.3$28.1 million at September 30, 2017,2023, and $38.5$21.1 million at December 31, 2016.2022. Our exposure to changes in interest rates with respect to total vehicle floorplan payable is partially mitigated by manufacturers’ floorplan assistance, which in some cases is based on variable interest rates.
We had $995.0$350.0 million of commercial paper notes outstanding at September 30, 2017,2023, and $942.0$50.0 million at December 31, 2016.2022. Based on the amountsamount outstanding, a 100 basis point change in interest rates would result in an approximate change to our annual interest expense of $10.0$3.5 million at September 30, 20172023, and $9.4$0.5 million at December 31, 2016.2022.
Our fixed rate long-term debt, primarily consisting of amounts outstanding under our senior unsecured notes and mortgages, totaled $1.8 billion and had a fair value of $1.9 billion as of September 30, 2017, and totaled $1.8$3.2 billion and had a fair value of $1.9$2.8 billion as of September 30, 2023, and totaled $3.2 billion and had a fair value of $2.8 billion as of December 31, 2016.2022.

As of September 30, 2023, all auto loans receivable outstanding were fixed-rate installment contracts. Financing for these receivables was achieved through both variable- and fixed-rate non-recourse debt. Non-recourse debt includes warehouse facilities and asset-backed term securitizations. Borrowings under the warehouse facilities are variable-rate debt and are secured by the related auto loans receivable. Certain auto loans receivable were funded through term securitizations, which issued notes payable that accrue interest at fixed rates, and are also secured by the related auto loans receivable.
Equity Price Risk
We are subject to equity price risk with respect to minority equity investments. Certain of our equity investments have readily determinable fair values. During the period that we hold these equity investments, unrealized gains and losses will be recorded as the fair market value of the securities change over time. The fair value of these equity investments was $13.3 million at September 30, 2023. A hypothetical 10% change in the equity prices of these securities with readily determinable fair values would result in an approximate change to gain or loss of $1.3 million. We also have a minority equity investment without a readily determinable fair value. This equity investment is measured using a measurement alternative as permitted by accounting standards and was initially recorded at cost, to be subsequently adjusted for observable price changes. During the period that we hold this investment, unrealized gains and losses may be recorded if we identify observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at September 30, 2023. A hypothetical 10% observable price change for this equity investment would result in an approximate change to gain or loss of $5.7 million. The selected 10% hypothetical change in equity prices is not intended to reflect a best or worst case scenario, as equity price changes could be smaller or larger due to the nature of equity markets.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

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Changes in Internal Control over Financial Reporting
There waswere no changechanges in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION


ITEM 1A. RISK FACTORS
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition, or future results.



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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information with respect to shares of common stock repurchased by AutoNation, Inc. during the three months ended September 30, 2017.2023.

Period
Total Number of
Shares Purchased (1)
 
Avg. Price
Paid Per
Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Approximate Dollar Value of
Shares That May Yet Be
Purchased Under The
Programs (in millions)(1)
July 1, 2017 - July 31, 2017—
 $—
 —
 $263.7
August 1, 2017 - August 31, 20175,900,704
 $41.35
 5,900,704
 $269.7
September 1, 2017 - September 30, 20173,341,429
 $46.70
 3,341,288
 $113.7
Total9,242,133
   9,241,992
  
Period
Total Number of
Shares Purchased (1)
Avg. Price
Paid Per
Share		Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar 
Value of Shares 
That May Yet Be
Purchased Under 
The Plans or
Programs (in millions)(1)
July 1, 2023 - July 31, 2023729,113 $154.20 729,113 $559.5 
August 1, 2023 - August 31, 2023553,704 $158.16 553,704 $472.0 
September 1, 2023 - September 30, 2023— $— — $472.0 
Total1,282,817 1,282,817 
 
(1)
Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. In August 2017, our Board of Directors authorized the repurchase of an additional $250 million of shares of our common stock. As of September 30, 2017, $113.7 million remained available under our stock repurchase authorization limit. The Board’s authorization has no expiration date. During the third quarter of 2017, all of the shares reflected in the table above were repurchased under our stock repurchase program, except for 141 shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock.

(1)Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. As of October 25, 2023, $439.4 million remained available under our stock repurchase limit. Our stock repurchase program does not have an expiration date.

ITEM 5. OTHER INFORMATION
During the fiscal quarter ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS
Exhibit No.Description
3.1Description
4.110.1†
4.210.2
4.310.3*
4.431.1*
31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
31.231.2*
32.132.1**
32.232.2**
101.INS101*Inline XBRL Instance Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
101.SCH104*Inline XBRL Taxonomy Extension Schemafor the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document Set.

†    Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish copies of any of the omitted schedules to the SEC or its staff upon request.

*    Filed herewith.
**    Furnished herewith.


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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.
 
AUTONATION, INC.
Date:October 27, 2023AUTONATION, INC.By:/s/ Kimberly R. Dees
Date:November 2, 2017By:/s/ Christopher Cade
Christopher Cade
Kimberly R. Dees
Senior Vice President and Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)





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