Lithia wants to hit revenue of $25 billion from acquisitions, up by $5 billion

Lithia’s focus areas for U.S. acquisitions, DeBoer said, are in what the company refers to as Regions 4 and 6, the Southeast and South Central, as well as Region 3, its North Central region, or the Upper Midwest.

“Those are the areas that we don’t have good saturation of our network,” DeBoer said.

All pending acquisitions are located in those three regions, DeBoer said.

In January, DeBoer said Lithia would need to acquire 100 to 150 U.S. stores to achieve its 2025 revenue goal. He reiterated those figures but added it may be as many as 200 stores.

Lithia has 281 U.S. dealerships, including a half-dozen Airstream stores that it bought in October.

The company retailed 271,596 new vehicles last year, up 4.2 percent. That amounts to over 40,000 more vehicles than its rival and the longtime No. 1 seller, AutoNation Inc., retailed in 2022.

While Lithia is a veteran player in the buy-sell arena, Driveway is a relatively new endeavor for the company, launching in 2020.

As part of the updated 2025 plan, Driveway now has a $3 billion revenue target instead of an $8 billion one, DeBoer said. When Lithia unveiled the 2025 plan, Driveway’s revenue target was $9 billion.

“That hurt,” DeBoer said of the recent strategic shift, pointing to Driveway’s broad reach, which he said can touch anywhere in the country since a large part of the business is shipping used vehicles nationwide.

“It was hard to cut that back, but the burn rate on it is pretty high, meaning the cash losses,” DeBoer said. “We thought it was more important, at this state, to show that we can get into profitability than it was to grow the business. Even $3 billion — it’s quite a sizable, valuable business.”

Also this year, Lithia lowered the forecast for its captive finance company, Driveway Finance Corp., for the next three years and expects a $40 million loss for the business in 2023.

Lithia said its goals for 2025 assume a return to a 17 million seasonally adjusted annual rate of sales for the U.S. industry.