Company: GPI
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0001031203-25-000061
Chunk: 31

Company: GROUP 1 AUTOMOTIVE INC
Filing Date: 2025-10-28
Form: 10-Q
Item: Part I, Item 1
Chunk 31
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.S. and 113 dealerships in the U.K.

Recent Events

The U.K. economy continues to face challenges, including persistent inflation, elevated interest rates, rising energy costs and a slowdown in consumer spending. These factors have contributed to margin compression and increased operating expenses within the automotive retail industry. These economic challenges in the U.K., coupled with the voluntary termination of certain franchise agreements, caused a triggering event for the U.K. reporting unit requiring further assessment of our goodwill and intangible franchise rights. Based on our quantitative assessment, we recorded goodwill and franchise rights intangible asset impairments of $93.0 million and $23.5 million, respectively, in the U.K. reporting unit in the Current Quarter. Refer to Note 4. Intangible Franchise Rights and Goodwill within our Notes to Condensed Consolidated Financial Statements for further information. 

We will continue to monitor the challenging macroeconomic and industry conditions in the U.K. as outlined above. Further erosion in the macroeconomic environment, additional margin compression, or increases to our operating costs in the U.K. may require us to re-assess the value of our goodwill and intangible franchise rights associated with our U.K. reporting unit, which could result in additional material impairment charges in future periods.

On October 17, 2025, President Donald Trump issued a proclamation under Section 232 imposing 25% tariffs on imported medium- and heavy-duty trucks and parts, effective November 1, 2025. The order also grants a 3.75% production credit through 2030 for vehicles and engines assembled in the U.S. The measure is expected to affect vehicle costs, sourcing and production decisions across the automotive industry, particularly for companies involved in the distribution and sale of medium- and heavy-duty vehicles. The impact of these measures on our results of operations cannot be predicted at this time.

On September 18, 2025, the U.S. Federal Reserve lowered interest rates by 25 basis points in an effort to stimulate the labor market and economic activity. On August 7, 2025, the Bank of England lowered interest rates by 25 basis points, following earlier reductions in February and May 2025. These interest rate cuts may improve vehicle affordability for consumers, however, the impact on our results of operations cannot be predicted with certainty at this time.

On September 16, 2025, a fire at a major U.S. aluminum production facility caused significant damage and is expected to keep the plant offline until early 2026