Asbury Automotive Group (ABG -3.59%), one of the largest auto dealership operators in the United States, reported Q2 2025 results on July 29, 2025. The standout news: adjusted earnings per share was $7.43, beating Wall Street’s expected $6.87 non-GAAP EPS by a healthy margin. GAAP net income also showed solid year-over-year growth. However, GAAP revenue was $4.4 billion, just under analyst estimates of $4.45 billion. The quarter saw Asbury integrating a landmark acquisition and delivering improved adjusted operating margins, even as some segments experienced flat or declining sales. Overall, the company turned in a quarter of robust profitability and notable capital allocation moves amid a mixed sales backdrop.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $7.43 | $6.87 | $6.40 | 16.1 % |
| Revenue (GAAP) | $4.37 billion | $4.45 billion | $4.25 billion | 2.8 % |
| Net Income (Non-GAAP) | $146 million | $129 million | 13.2 % | |
| Gross Profit (GAAP) | $752 million | $731 million | 2.9 % | |
| Operating Margin (Non-GAAP) | 5.8 % | 5.6 % | 0.2 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Asbury’s Business and Strategic Focus
Asbury operates 146 new vehicle dealerships across the country
retailing new and used vehicles, aftermarket parts and services, and finance and insurance (F&I) products. Its business model mixes high-volume vehicle sales with higher-margin service operations and in-house F&I offerings.
Recently, Asbury has focused on scaling through acquisitions and deepening digital capabilities. Success for Asbury hinges on integrating acquired dealerships efficiently, driving cost savings, capitalizing on its omni-channel platform for seamless customer experience, and growing high-margin F&I and service businesses. The company also places emphasis on regulatory compliance and talent retention, with about 15,000 employees nationwide.
Quarter Highlights: Margin Expansion, Acquisition, and Segment Performance
The latest quarter saw adjusted (non-GAAP) EPS outperform by 8.2%, coming in at $7.43 versus the expected $6.87. This earnings strength was driven by expense control and margin gains. The company’s adjusted selling, general, and administrative expense ratio dropped to 63.6% of gross profit, a 119 basis point reduction versus the prior year period.
Cost discipline and digital investments helped deliver higher operating margins, with the non-GAAP figure rising to 5.8% from 5.6% in the prior year.
Non-GAAP net income reached $146 million, a 13% increase from the prior year. On a reported (GAAP) basis, net income of $153 million was sharply higher due to the absence of prior impairment charges. Gross profit hit $752 million, supported by record performance in parts and service, which contributed 47.2% of total company gross profit for Q2 2025.
Segment performance was mixed. In new vehicles, unit volume increased 4%. with total average gross profit per vehicle holding steady. The luxury segment stood out with a 6% rise in per-unit profit, though import and domestic vehicles experienced declines. The gross margin on new vehicles slipped slightly to 6.9%.
Used vehicle retail unit volume fell 6%, but gross profit per unit improved 18% to $1,720. Retail revenue from used vehicles declined 3%, partially offset by improvements in same-store margins.
Parts and service generated $601.5 million in revenue, up 4%, and delivered an all-time record parts and service gross profit of $355 million. The segment’s gross profit now accounts for 47.2% of the company total, reinforcing its defensive and high-margin profile. Performance in service tracked just below some industry peers.
The F&I business, which provides financing and insurance products for customers, saw per-vehicle profit fall 3% to $2,084. F&I’s gross profit share slipped to 22.4% from 23.9% in the prior year.
On the strategic front, Asbury completed the acquisition of the Herb Chambers Automotive Group on July 21, 2025. This $1.34 billion purchase brings approximately $3 billion in annual revenue based on 2024 results and expands Asbury’s reach into New England. At the same time, Asbury divested nine stores between April and July, generating $250–$270 million in proceeds from divestitures as part of ongoing capital allocation and portfolio optimization efforts.
These moves reflect a drive to optimize the dealership portfolio and reduce leverage. As of quarter-end, transaction-adjusted net leverage dropped to 2.46 times, in line with company targets even after major acquisition activity.
Throughout the period, the company continued the rollout of its Techion dealership management software, aiming to complete integration across its network by 2026 or early 2027. Early signs point to improved productivity, cost savings, and a better guest experience. The company also advanced the rollout of Total Care Auto (TCA), its in-house F&I product suite, with integration into newly acquired dealerships scheduled for early Q4 2025.
Looking Forward: Integration, Growth, and Risks
Management did not provide formal revenue or earnings guidance for the remainder of fiscal 2025. However, leadership reaffirmed a long-term ambition to achieve $30 billion in annual revenue by 2030, supported by continued acquisition, integration, and digital expansion. The near-term strategic focus is on smooth integration of the recent Herb Chambers acquisition and reducing leverage over the next 18 to 24 months.
Investors should monitor integration progress, as back-to-back large acquisitions present risks around systems, processes, and employee alignment. The company also flagged regulatory risks, especially changes in state franchise laws and tariffs, as well as the potential for higher operating costs if auto sales soften. Cost-saving levers and margin discipline remain central to management’s operating playbook moving forward.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
