# EDGAR Filing Document

**Accession Number:** 0000350698
**File Stem:** 0000350698-23-000026
**Filing Date:** 2023-2
**Character Count:** 595115
**Document Hash:** 98ab272036a318dcff7459d0fef6eea2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000350698-23-000026.hdr.sgml**: 20230217

**ACCESSION NUMBER**: 0000350698-23-000026

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 130

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230217

**DATE AS OF CHANGE**: 20230217

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AUTONATION, INC.
- **CENTRAL INDEX KEY:** 0000350698
- **STANDARD INDUSTRIAL CLASSIFICATION:** RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500]
- **IRS NUMBER:** 731105145
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-13107
- **FILM NUMBER:** 23643300

**BUSINESS ADDRESS:**
- **STREET 1:** 200 SW 1ST AVE
- **STREET 2:** SUITE 1600
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33301
- **BUSINESS PHONE:** 9547696000

**MAIL ADDRESS:**
- **STREET 1:** 200 SW 1ST AVE
- **STREET 2:** SUITE 1600
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33301

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AUTONATION, INC. /FL
- **DATE OF NAME CHANGE:** 20090827

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AutoNation, Inc. /FL
- **DATE OF NAME CHANGE:** 20090827

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AUTONATION INC /FL
- **DATE OF NAME CHANGE:** 19990407

?xml version="1.0" ? an-20221231

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K** 

(Mark One)

---

| | |
|:---|:---|
| ☑ | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**&nbsp;&nbsp;&nbsp;&nbsp;**For the fiscal year ended **December 31, 2022**

or

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

&nbsp;&nbsp;&nbsp;&nbsp;For the transition period from ________ to ________ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Commission File Number:**1-13107** 

**AUTONATION, INC.** 

(Exact name of registrant as specified in its charter)

---

| | | | |
|:---|:---|:---|:---|
| **Delaware** | **Delaware** | **Delaware** | **73-1105145** |
| (State or other jurisdiction of<br>incorporation or organization) | (State or other jurisdiction of<br>incorporation or organization) | (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer Identification No.) |
| **200 SW 1st Ave** | **200 SW 1st Ave** | **200 SW 1st Ave** | |
| **Fort Lauderdale** | , | **Florida** | **33301** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |

---

(**954) 769-6000** 

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, Par Value $0.01 Per Share | AN | New York Stock Exchange |

---

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 🗹&nbsp;&nbsp;&nbsp;&nbsp;No ◻

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.&nbsp;&nbsp;&nbsp;&nbsp;Yes ◻ No 🗹

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.&nbsp;&nbsp;&nbsp;&nbsp;Yes 🗹&nbsp;&nbsp;&nbsp;&nbsp;No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the new registrant was required to submit such files).&nbsp;&nbsp;&nbsp;&nbsp;Yes 🗹&nbsp;&nbsp;&nbsp;&nbsp;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 filer | 🗹 | Accelerated filer | **☐** |
| Non-accelerated filer | **☐** | Smaller reporting company | **☐** |
| | | Emerging growth company | **☐** |

---

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ◻

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes **☐**&nbsp;&nbsp;&nbsp;&nbsp;No 🗹

As of June 30, 2022, the last trading day of the registrant's most recently completed fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $4.3 billion based on the closing price of the common stock on the New York Stock Exchange on such date (for the purpose of this calculation, the registrant assumed that each of its directors, executive officers, and greater than 10% stockholders was an affiliate of the registrant as of June 30, 2022).

As of February 15, 2023, the registrant had 46,896,689 shares of common stock outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

Portions of the registrant's Proxy Statement relating to its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022 are incorporated herein by reference in Part III.

------

**AUTONATION, INC.**

**FORM 10-K**

**FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022** 

**INDEX**

---

| | | |
|:---|:---|:---|
| **<u>[PART I](#ia1a238a5878f4714ab09adbe7f58fb49_10)</u>** | **<u>[PART I](#ia1a238a5878f4714ab09adbe7f58fb49_10)</u>** | **<u>[PART I](#ia1a238a5878f4714ab09adbe7f58fb49_10)</u>** |
|  |  | Page |
| Item 1. | <u>[Business](#ia1a238a5878f4714ab09adbe7f58fb49_13)</u> | <u>[1](#ia1a238a5878f4714ab09adbe7f58fb49_13)</u> |
| Item 1A. | <u>[Risk Factors](#ia1a238a5878f4714ab09adbe7f58fb49_16)</u> | <u>[16](#ia1a238a5878f4714ab09adbe7f58fb49_16)</u> |
| Item 1B. | <u>[Unresolved Staff Comments](#ia1a238a5878f4714ab09adbe7f58fb49_19)</u> | <u>[25](#ia1a238a5878f4714ab09adbe7f58fb49_19)</u> |
| Item 2. | <u>[Properties](#ia1a238a5878f4714ab09adbe7f58fb49_22)</u> | <u>[25](#ia1a238a5878f4714ab09adbe7f58fb49_22)</u> |
| Item 3. | <u>[Legal Proceedings](#ia1a238a5878f4714ab09adbe7f58fb49_25)</u> | <u>[25](#ia1a238a5878f4714ab09adbe7f58fb49_25)</u> |
| Item 4. | <u>[Mine Safety Disclosures](#ia1a238a5878f4714ab09adbe7f58fb49_28)</u> | <u>[25](#ia1a238a5878f4714ab09adbe7f58fb49_28)</u> |
| **<u>[PART II](#ia1a238a5878f4714ab09adbe7f58fb49_31)</u>** | **<u>[PART II](#ia1a238a5878f4714ab09adbe7f58fb49_31)</u>** | **<u>[PART II](#ia1a238a5878f4714ab09adbe7f58fb49_31)</u>** |
| Item 5. | <u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ia1a238a5878f4714ab09adbe7f58fb49_34)</u> | <u>[26](#ia1a238a5878f4714ab09adbe7f58fb49_34)</u> |
| Item 7. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#ia1a238a5878f4714ab09adbe7f58fb49_37)</u> | <u>[28](#ia1a238a5878f4714ab09adbe7f58fb49_37)</u> |
| Item 7A. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#ia1a238a5878f4714ab09adbe7f58fb49_91)</u> | <u>[56](#ia1a238a5878f4714ab09adbe7f58fb49_91)</u> |
| Item 8. | <u>[Financial Statements](#ia1a238a5878f4714ab09adbe7f58fb49_94)</u> | <u>[57](#ia1a238a5878f4714ab09adbe7f58fb49_94)</u> |
| Item 9. | <u>[Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ia1a238a5878f4714ab09adbe7f58fb49_199)</u> | <u>[107](#ia1a238a5878f4714ab09adbe7f58fb49_199)</u> |
| Item 9A. | <u>[Controls and Procedures](#ia1a238a5878f4714ab09adbe7f58fb49_202)</u> | <u>[107](#ia1a238a5878f4714ab09adbe7f58fb49_202)</u> |
| Item 9B. | <u>[Other Information](#ia1a238a5878f4714ab09adbe7f58fb49_205)</u> | <u>[107](#ia1a238a5878f4714ab09adbe7f58fb49_205)</u> |
| Item 9C. | <u>[Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ia1a238a5878f4714ab09adbe7f58fb49_208)</u> | <u>[107](#ia1a238a5878f4714ab09adbe7f58fb49_208)</u> |
| **<u>[PART III](#ia1a238a5878f4714ab09adbe7f58fb49_211)</u>** | **<u>[PART III](#ia1a238a5878f4714ab09adbe7f58fb49_211)</u>** | **<u>[PART III](#ia1a238a5878f4714ab09adbe7f58fb49_211)</u>** |
| Item 10. | <u>[Directors, Executive Officers and Corporate Governance](#ia1a238a5878f4714ab09adbe7f58fb49_214)</u> | <u>[108](#ia1a238a5878f4714ab09adbe7f58fb49_214)</u> |
| Item 11. | <u>[Executive Compensation](#ia1a238a5878f4714ab09adbe7f58fb49_217)</u> | <u>[108](#ia1a238a5878f4714ab09adbe7f58fb49_217)</u> |
| Item 12. | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ia1a238a5878f4714ab09adbe7f58fb49_220)</u> | <u>[108](#ia1a238a5878f4714ab09adbe7f58fb49_220)</u> |
| Item 13. | <u>[Certain Relationships and Related Transactions, and Director Independence](#ia1a238a5878f4714ab09adbe7f58fb49_223)</u> | <u>[109](#ia1a238a5878f4714ab09adbe7f58fb49_223)</u> |
| Item 14. | <u>[Principal Accounting Fees and Services](#ia1a238a5878f4714ab09adbe7f58fb49_226)</u> | <u>[109](#ia1a238a5878f4714ab09adbe7f58fb49_226)</u> |
| **<u>[PART IV](#ia1a238a5878f4714ab09adbe7f58fb49_229)</u>** | **<u>[PART IV](#ia1a238a5878f4714ab09adbe7f58fb49_229)</u>** | **<u>[PART IV](#ia1a238a5878f4714ab09adbe7f58fb49_229)</u>** |
| Item 15. | <u>[Exhibits, Financial Statement Schedules](#ia1a238a5878f4714ab09adbe7f58fb49_232)</u> | <u>[110](#ia1a238a5878f4714ab09adbe7f58fb49_232)</u> |
| Item 16. | <u>[Form 10-K Summary](#ia1a238a5878f4714ab09adbe7f58fb49_235)</u> | <u>[110](#ia1a238a5878f4714ab09adbe7f58fb49_235)</u> |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**PART I**

**ITEM 1. *BUSINESS***

**General**

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of December 31, 2022, we owned and operated 343 new vehicle franchises from 247 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 33 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 89% of the new vehicles that we sold in 2022, are manufactured by Toyota (including Lexus), Honda, BMW, Ford, Mercedes-Benz, General Motors, Stellantis, and Volkswagen (including Audi and Porsche). As of December 31, 2022, we also owned and operated 55 AutoNation-branded collision centers, 13 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, and an auto finance company.

We offer a diversified range of automotive products and services, including new vehicles, used vehicles, "parts and 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, as well as on installment contracts acquired by our captive finance company through third-party independent dealers. The following charts present the contribution to total revenue and gross profit by each of new vehicle, used vehicle, parts and service, and finance and insurance sales in 2022.

![an-20221231_g1.jpg](an-20221231_g1.jpg)

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 store operations are conducted by our subsidiaries.

**Reportable Segments**

As of December 31, 2022, we had three reportable segments: Domestic, Import, and Premium Luxury. These segments are comprised of retail automotive franchises that sell the following new vehicle brands:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Domestic** | **Domestic** | **Import** | **Import** | **Premium Luxury** | **Premium Luxury** |
| Buick | Ford | Acura | Nissan | Alfa Romeo | Lexus |
| Cadillac | GMC | Fiat | Subaru | Audi | Maserati |
| Chevrolet | Jeep | Genesis | Toyota | Bentley | Mercedes-Benz |
| Chrysler | Lincoln | Honda | Volkswagen | BMW | MINI |
| Dodge | Ram | Hyundai | Volvo | Jaguar | Porsche |
| | | Infiniti | | Land Rover | Sprinter |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

The following table sets forth information regarding our new vehicle revenues and retail new vehicle unit sales for the year ended, and the number of franchises owned as of, December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **New Vehicle<br>Revenues<br>(in millions)** | **Retail<br>New Vehicle<br>Unit Sales** | **% of Total<br> Retail New <br>Vehicle<br>Units Sold** | **Franchises Owned** |
| Domestic: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Ford, Lincoln | $1236.1 | 24048 | 10.5 | 35 |
| &nbsp;&nbsp;&nbsp;Chevrolet, Buick, Cadillac, GMC | 1124.7 | 23377 | 10.2 | 40 |
| &nbsp;&nbsp;&nbsp;Chrysler, Dodge, Jeep, Ram | 1048.3 | 18950 | 8.2 | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Domestic Total | 3409.1 | 66375 | 28.9 | 155 |
| Import: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Toyota | 1734.2 | 47487 | 20.6 | 19 |
| &nbsp;&nbsp;&nbsp;Honda | 795.7 | 22824 | 9.9 | 24 |
| &nbsp;&nbsp;&nbsp;Nissan | 154.7 | 4751 | 2.1 | 7 |
| &nbsp;&nbsp;&nbsp;Hyundai | 247.5 | 7399 | 3.2 | 9 |
| &nbsp;&nbsp;&nbsp;Subaru | 240.4 | 6935 | 3.0 | 7 |
| &nbsp;&nbsp;&nbsp;Other Import | 300.5 | 6490 | 2.9 | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Import Total | 3473.0 | 95886 | 41.7 | 85 |
| Premium Luxury: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Mercedes-Benz | 1786.4 | 23878 | 10.4 | 38 |
| &nbsp;&nbsp;&nbsp;BMW | 1565.6 | 22803 | 9.9 | 17 |
| &nbsp;&nbsp;&nbsp;Lexus | 330.7 | 6249 | 2.7 | 3 |
| &nbsp;&nbsp;&nbsp;Audi | 375.7 | 5973 | 2.6 | 9 |
| &nbsp;&nbsp;&nbsp;Jaguar Land Rover | 361.2 | 4103 | 1.8 | 21 |
| &nbsp;&nbsp;&nbsp;Other Premium Luxury | 452.7 | 4704 | 2.0 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Premium Luxury Total | 4872.3 | 67710 | 29.4 | 103 |
|  | $11754.4 | 229971 | 100.0 | 343 |

---

The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products. For the year ended December 31, 2022, Premium Luxury revenue represented 38% of total revenue, Domestic revenue represented 30% of total revenue, and Import revenue represented 28% of total revenue. For additional financial information regarding our three reportable segments, refer to Note 23 of the Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this Form 10-K.

Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, the description of our business in this report is presented on a consolidated basis.

**Business Strategy**

We seek to create long-term value for our stockholders and to be the best-run, most profitable automotive retailer and provider of personalized transportation services in the United States. We believe that the significant scale of our operations, our digital customer experience, and the quality of our managerial talent allow us to achieve efficiencies in our key markets. To achieve and sustain operational excellence, we are pursuing the following strategies:

&nbsp;&nbsp;&nbsp;&nbsp;• *We strive to be the nation's most comprehensive provider of transportation solutions to meet the mobility needs of our current and future customers through a comprehensive, unique suite of transportation solutions.* 

We seek to maximize the performance and utilization of our assets through operational excellence and expand through the development and/or acquisition of key capabilities, products, and resources. We achieve this by both optimizing our existing business and capturing new and developing opportunities. We continue to invest in strategic partnerships and broaden our offerings to evolve with the changing automotive retail industry and to

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

widen our access to new and expanding sales channels for vehicles, parts and service, financing, and personal transportation services.

During 2022, we acquired CIG Financial, an auto finance company engaged in indirect lending. Through this acquisition, we will further extend our relationship with our customers beyond the car-buying experience, particularly for our used vehicle business.

In January 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance that offers customers the convenience of services and repairs at their home, workplace, or on-site for fleet vehicles. RepairSmith expands AutoNation's ability to penetrate the extensive After-Sales service market and conveniently responds to our customers' needs by broadening the reach of our existing After-Sales network. AutoNation will also utilize RepairSmith as a resource for reconditioning and internal services to increase our speed to frontline readiness and expedite vehicle delivery to customers.

We also recently acquired a minority ownership stake in TrueCar, Inc., a leading automotive digital marketplace that lets auto buyers and sellers connect to its nationwide network of certified dealers. Our investment in TrueCar signals our continued commitment to emerging technologies and our constant focus on providing peerless customer experiences. We also have a minority ownership stake in Waymo, the self-driving technology company of Alphabet Inc., with whom we have also partnered to support Waymo's autonomous vehicle program by providing vehicle maintenance and repairs on certain fleets in certain markets.

Additionally, we are investing in the development of mobility solutions to expand our customer offerings. We expect that these partnerships, initiatives, and offerings will continue to 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.

&nbsp;&nbsp;&nbsp;&nbsp;*• Hire, train, and retain the best talent available to build dynamic teams to serve our customers.* 

At AutoNation, nothing drives our success more than how we hire, train, and retain great people. We value the dignity of all employees and are committed to maintaining a work environment where all associates are valued and treated with respect. Our associates are at the core of our performance, by driving innovation and meeting the needs of our more than 11 million customers while protecting and enhancing AutoNation's brand and reputation. See "Human Capital Resources" and "Corporate Social Responsibility – Our Workplace" below for more information about how we invest in our associates to help us prepare leaders with the vision, integrity, and expertise that enhance our operational excellence every day, drive store profitability, and create both positive employee and customer experiences.

&nbsp;&nbsp;&nbsp;&nbsp;• *Continue to provide an industry-leading automotive retail customer* ex*perience in our stores and through our digital channels*.

We seek to deliver a consistently superior customer experience by offering a broad selection of inventory, customer-friendly, transparent sales and service processes, and competitive pricing. We believe that this will benefit us by increasing customer loyalty and will encourage our customers to bring their vehicles to our stores for all of their vehicle service, maintenance, and collision repair needs and also by driving repeat and referral vehicle sales business.

We continue to make significant investments to provide a seamless, end-to-end customer experience in our stores and through our digital channels, and to improve our ability to generate business through those channels. We have enhanced the AutoNation Express experience - our integrated retailing solution that provides customers with a seamless and intuitive omnichannel vehicle shopping and purchase experience - by continuing to build omnichannel digital capabilities that provide a personalized digital customer experience online and in-store. Our customers are able to complete key automotive retail- and service-related transactions online through our digital channels such as selecting a vehicle with a guaranteed price, scheduling a test drive, calculating payment options, receiving a certified trade-in or purchase offer for a vehicle that a customer wants to sell, applying for financing, selecting vehicle protection products, scheduling in-store pick up or home delivery, arranging service appointments, receiving service updates, paying for maintenance and repair services, and signing paperwork

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

electronically. We also utilize proprietary tools that leverage real-time customer data to guide and personalize the customer experience.

&nbsp;&nbsp;&nbsp;&nbsp;*• Continue to invest in the AutoNation retail brand to enhance our strong customer satisfaction and expand our market share.* 

AutoNation is a brand that connects people and places. We continue to invest in the AutoNation retail brand, promoting personal transportation for America's drivers, leading the charge to make transformational change in the automotive industry, and driving out cancer coast to coast. We are committed to delivering easy, transparent, and customer-centric services for our customers' personal transportation needs.

The AutoNation retail brand includes our AutoNation USA used vehicle stores. We continue to expand our AutoNation USA used vehicle store footprint throughout the country. 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. AutoNation USA stores continue to leverage the AutoNation brand, scale, exceptional used vehicle sourcing capabilities, and proven customer-centric processes to differentiate our Company and capture a larger share of the used vehicle market. Beginning in the fourth quarter of 2022, we began offering indirect vehicle financing in our AutoNation USA stores.

The AutoNation retail brand extends to other products and services, as well. We offer AutoNation-branded Customer Financial Services products (including extended service and maintenance contracts and other vehicle protection products), AutoNation-branded parts and accessories, collision repair services at AutoNation-branded collision centers, and auction services at AutoNation-branded automotive auctions, as well as our One Price used vehicle centralized pricing and appraisal strategy, and our "We'll Buy Your Car" program under which customers receive a guaranteed trade-in offer honored for 7 days or 500 miles at any of our locations.

&nbsp;&nbsp;&nbsp;&nbsp;*• Leverage our significant scale and cost structure to improve our operating efficiency*.

As one of the largest automotive retailers in the United States, we are uniquely positioned to leverage our significant scale so that we are able to achieve competitive operating margins by centralizing and streamlining various business processes. We strive to manage our new and used vehicle inventories so that our stores' supply and mix of vehicles are in line with seasonal sales trends and also minimize our carrying costs. We are able to self-source a significant portion of our used vehicle inventory through our "We'll Buy Your Car" program, and quickly make available such used vehicles through optimization of our reconditioning capabilities at our parts and service departments. Additionally, we are able to improve financial controls and lower servicing costs by maintaining many key store-level accounting and administrative activities in our shared service center located in Irving, Texas. We also leverage our digital capabilities to drive cost reductions and increased efficiency for the long-term success of our business. Finally, we leverage our scale to reduce costs related to purchasing certain equipment, supplies, and services through national vendor relationships.

Our business benefits from a well-diversified portfolio of automotive retail franchises. In 2022, approximately 43% of our segment income for reportable segments was generated by Premium Luxury franchises, approximately 32% by Import franchises, and approximately 25% by Domestic franchises. We believe that our business also benefits from diverse revenue streams generated by our new and used vehicle sales, parts and service business, and finance and insurance sales. Our higher-margin parts and service business has historically been less sensitive to macroeconomic conditions as compared to new and used vehicle sales. In addition, we have been able to increase our finance and insurance gross profit per vehicle retailed as we have increased the penetration of products sold per vehicle.

Our capital allocation strategy is focused on 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. 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. Our capital allocation decisions are 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 structure, our ability to complete acquisitions that meet our market and vehicle brand criteria and/or return on investment threshold, and limitations set forth in our debt agreements. For additional information regarding our capital allocation, refer to "Liquidity and Capital Resources – Capital Allocation" in Part II, Item 7 of this Form 10-K.

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**Operations**

Each of our stores acquires new vehicles for retail sale either directly from the applicable automotive manufacturer or distributor or through dealer trades with other stores of the same brand franchise. We generally acquire used vehicles from customers, primarily through trade-ins and our "We'll Buy Your Car" program, as well as through auctions, lease terminations, and other sources, and we generally recondition used vehicles acquired for retail sale in our parts and service departments. Used vehicles that we do not sell at our stores generally are sold at wholesale prices through auctions. See also "Inventory Management" in Part II, Item 7 of this Form 10-K.

Our stores provide a wide range of vehicle maintenance, repair, and collision repair services, including manufacturer recall repairs and other warranty work that can be performed only at franchised dealerships and customer-pay service work. Our parts and service departments also recondition used vehicles acquired by our used vehicle departments and perform preparatory work and accessory installation on new vehicles acquired by our new vehicle departments. In addition to our retail business, we also have wholesale parts operations, which sell automotive parts to both collision repair shops and independent vehicle repair providers. We also offer AutoNation PrecisionParts and AutoNation AutoGear, product and accessory lines that are integrated into our parts and service operations.

We offer a wide variety of automotive finance and insurance products to our customers. We primarily arrange for our customers to finance vehicles through installment loans or leases with third-party lenders, including the vehicle manufacturers' and distributors' captive finance subsidiaries, and receive a commission payable to us from the lender. Our exposure to loss in connection with financing arrangements with third-party lenders generally is limited to the commissions that we receive. Following the acquisition of CIG Financial in the fourth quarter of 2022, we also started to originate and service consumer auto finance loans.

We also offer our customers various vehicle protection products, including extended service contracts, maintenance programs, guaranteed auto protection (known as "GAP," this protection covers the shortfall between a customer's loan balance and insurance payoff in the event of a casualty), "tire and wheel" protection, and theft protection products, many of which are AutoNation-branded. These products are underwritten and administered by independent third parties, including the vehicle manufacturers' and distributors' captive finance subsidiaries. We sell the products on a commission basis, and we also participate in future underwriting profit for certain products pursuant to retrospective commission arrangements with the issuers of those products.

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As of December 31, 2022, we operated stores in the following states:

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| | | | | |
|:---|:---|:---|:---|:---|
| **<u>State</u>** | **Number of**<br>**Retail Stores** <sup>(1)</sup> | **Number of<br>Franchises** | **Number of Other** <br>**Locations** <sup>(2)</sup> | **% of Total<br>&nbsp;&nbsp;&nbsp;&nbsp; Revenue** |
| &nbsp;&nbsp;Florida | 48 | 59 | 20 | 25 |
| &nbsp;&nbsp;Texas | 44 | 62 | 17 | 20 |
| &nbsp;&nbsp;California | 37 | 50 | 3 | 18 |
| &nbsp;&nbsp;Arizona | 16 | 18 | 4 | 6 |
| &nbsp;&nbsp;Colorado | 19 | 31 | 1 | 6 |
| &nbsp;&nbsp;Washington | 14 | 19 | 3 | 5 |
| &nbsp;&nbsp;Georgia | 17 | 24 | 4 | 4 |
| &nbsp;&nbsp;Nevada | 12 | 13 | 1 | 4 |
| &nbsp;&nbsp;Maryland | 14 | 16 | 3 | 3 |
| &nbsp;&nbsp;Illinois | 7 | 8 | 1 | 2 |
| &nbsp;&nbsp;Tennessee | 8 | 12 | 1 | 2 |
| &nbsp;&nbsp;South Carolina | 9 | 13 | 1 | 1 |
| &nbsp;&nbsp;Ohio | 4 | 4 | 3 | 1 |
| &nbsp;&nbsp;North Carolina | 1 |  |  | 1 |
| &nbsp;&nbsp;Virginia | 2 | 2 |  | 1 |
| &nbsp;&nbsp;Alabama | 3 | 6 |  | 1 |
| &nbsp;&nbsp;Minnesota | 1 | 1 |  |  |
| &nbsp;&nbsp;New York <sup>(3)</sup> | 3 | 5 |  |  |
| &nbsp;&nbsp;Missouri <sup>(3)</sup> | 1 |  |  |  |
| &nbsp;&nbsp;&nbsp;Total | 260 | 343 | 62 | 100 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup>Includes franchised dealerships and AutoNation USA used vehicle stores.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(2)</sup>Includes collision centers, automotive auction operations, and parts distribution centers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(3)</sup>Revenue represented less than 1% of total revenue.

**Agreements with Vehicle Manufacturers**

***Framework Agreements***

We have entered into framework and related agreements with most major vehicle manufacturers and distributors. These agreements, which are in addition to the franchise agreements described below, contain provisions relating to our management, operation, advertising and marketing, and acquisition and ownership structure of automotive stores franchised by such manufacturers. These agreements contain certain requirements pertaining to our operating performance (with respect to matters such as sales volume, sales effectiveness, and customer satisfaction or loyalty), which, if we do not satisfy, adversely impact our ability to make further acquisitions of such manufacturers' stores or could result in us being compelled to take certain actions, such as divesting a significantly underperforming store, subject to applicable state franchise laws. Additionally, these agreements set limits (nationally, regionally, and in local markets) on the number of stores that we may acquire of the particular manufacturer and contain certain restrictions on our ability to name and brand our stores. Some of these framework agreements give the manufacturer or distributor the right to acquire at fair market value, or the right to compel us to sell, the automotive stores franchised by that manufacturer or distributor under specified circumstances in the event of a change in control of our Company (generally including certain material changes in the composition of our Board of Directors during a specified time period, the acquisition of 20% or more of the voting stock of our Company by another vehicle manufacturer or distributor, or the acquisition of 50% or more of our voting stock by a person, entity, or group not affiliated with a vehicle manufacturer or distributor) or other extraordinary corporate transactions such as a merger or sale of all or substantially all of our assets. In addition, we have granted certain manufacturers the right to acquire, at fair market value, our automotive dealerships franchised by such manufacturers in specified circumstances in the event of our default under certain of our debt agreements.

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***Franchise Agreements***

We operate each of our new vehicle stores under a franchise agreement with a vehicle manufacturer or distributor. The franchise agreements grant the franchised automotive store a non-exclusive right to sell the manufacturer's or distributor's brand of vehicles and offer related parts and service within a specified market area. These franchise agreements grant our stores the right to use the relevant manufacturer's or distributor's trademarks in connection with their operations, and they also impose numerous operational requirements and restrictions relating to inventory levels, working capital levels, the sales process, marketing and branding, showroom and service facilities, signage, personnel, changes in management, and monthly financial reporting, among other things. The contractual terms of our stores' franchise agreements provide for various durations, ranging from one year to no expiration date, and in certain cases manufacturers have undertaken to renew such franchises upon expiration so long as the store is in compliance with the terms of the agreement. We generally expect our franchise agreements to survive for the foreseeable future and, when the agreements do not have indefinite terms, anticipate routine renewals of the agreements without substantial cost or modification. Our stores' franchise agreements provide for termination of the agreement by the manufacturer or non-renewal for a variety of causes (including performance deficiencies in such areas as sales volume, sales effectiveness, and customer satisfaction or loyalty). However, in general, the states in which we operate have automotive dealership franchise laws that provide that, notwithstanding the terms of any franchise agreement, it is unlawful for a manufacturer to terminate or not renew a franchise unless "good cause" exists. It generally is difficult, outside of bankruptcy, for a manufacturer to terminate, or not renew, a franchise under these laws, which were designed to protect dealers. In addition, in our experience and historically in the automotive retail industry, dealership franchise agreements are rarely involuntarily terminated or not renewed by the manufacturer outside of bankruptcy. From time to time, certain manufacturers assert sales and customer satisfaction performance deficiencies under the terms of our framework and franchise agreements. We generally work with these manufacturers to address the asserted performance issues. For additional information, please refer to the risk factor captioned *"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"* in Part I, Item 1A of this Form 10-K.

**Regulations**

We operate in a highly regulated industry. A number of state and federal laws and regulations affect our business. In every state in which we operate, we must obtain various licenses in order to operate our businesses, including dealer, sales and finance, and insurance licenses issued by state regulatory authorities. Numerous laws and regulations govern how we conduct our business, including those relating to our sales, operations, finance and insurance, advertising, indirect auto financing, origination and servicing of consumer auto finance loans, and employment practices. These laws and regulations include state franchise laws and regulations, federal and state consumer protection laws and regulations, privacy laws, escheatment laws, anti-money laundering laws, and other extensive laws and regulations applicable to new and used motor vehicle dealers and auto finance companies, as well as a variety of other laws and regulations. These laws also include federal and state wage and hour, anti-discrimination, and other employment practices laws. See the risk factor "*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*" in Part I, Item 1A of this Form 10-K.

***Automotive and Other Laws and Regulations***

Our operations are subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards promulgated by the United States Department of Transportation, and the rules and regulations of various state motor vehicle regulatory agencies. In addition, automotive dealers are subject to regulation by the Federal Trade Commission (the "FTC"). The imported automobiles, parts, and accessories we purchase are subject to United States customs duties and, in the ordinary course of our business we may, from time to time, be subject to claims for duties, penalties, liquidated damages, or other charges. Further, following our acquisition of CIG Financial, our captive finance company, in October 2022, our operations are now subject to regulations and supervision by the Consumer Financial Protection Bureau (the "CFPB"). Among other things, the CFPB is authorized to take action to prevent auto finance companies from engaging in unfair, deceptive, or abusive acts and practices and to issue rules requiring enhanced disclosures concerning consumer financial products and services. In addition, state attorneys general have authority under their respective laws and regulations, and under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), enacted in 2010, to investigate and/or regulate certain aspects of our operations.

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Our financing activities with customers, including our origination and servicing activities through our captive finance company, are subject to the federal Truth-in-Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, federal and state prohibitions against unfair, deceptive, and abusive acts and practices, and various other federal laws and regulations, as well as state and local motor vehicle finance laws, leasing laws, collection, repossession, and installment finance laws, usury laws, and other installment sales and leasing laws and regulations. Among other things, these laws and regulations regulate finance and other fees and charges that may be imposed or received in connection with motor vehicle retail installment sales and leasing, require specific disclosures to consumers, define the rights to collect payments and repossess and sell collateral, and govern the sale and terms of ancillary products. Claims arising out of actual or alleged violations of law or regulation may be asserted against us by individuals, a class of individuals, or governmental entities and may expose us to significant damages or other penalties, including fines and revocation or suspension of our licenses to conduct our operations. See the risk factor "*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*" in Part I, Item 1A of this Form 10-K for additional information.

***Environmental, Health, and Safety Laws and Regulations***

Our operations involve the use, handling, storage, and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires, and fuel. Consequently, our business is subject to a complex variety of federal, state, and local requirements that regulate the environment and public health and safety.

Most of our stores utilize aboveground storage tanks and, to a lesser extent, underground storage tanks, primarily for petroleum-based products. Storage tanks are subject to periodic testing, containment, upgrading, and removal under the Resource Conservation and Recovery Act and its state law counterparts. Clean-up or other remedial action may be necessary in the event of leaks or other discharges from storage tanks or other sources. In addition, water quality protection programs under the federal Water Pollution Control Act (commonly known as the Clean Water Act), the Safe Drinking Water Act, and comparable state and local programs govern certain discharges from some of our operations. Similarly, certain air emissions from operations, such as auto body painting, may be subject to the federal Clean Air Act and related state and local laws. Certain health and safety standards promulgated by the Occupational Safety and Health Administration of the United States Department of Labor and related state agencies also apply.

Some of our stores are parties to proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, typically in connection with materials that were sent to former recycling, treatment, and/or disposal facilities owned and operated by independent businesses. The remediation or clean-up of facilities where the release of a regulated hazardous substance occurred is required under CERCLA and other laws.

We have a proactive strategy related to environmental, health, and safety laws and regulations, which includes contracting with third-party vendors to inspect our facilities routinely in an effort to ensure compliance. We incur significant costs to comply with applicable environmental, health, and safety laws and regulations in the ordinary course of our business. We do not anticipate, however, that the costs of such compliance 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 environmental, health, and safety regulatory framework. We do not have any material known environmental commitments or contingencies.

**Markets and Competition**

We operate in a highly competitive industry. We believe that the principal competitive factors in the automotive retail business are location, service, price, selection, and online and mobile offerings. Each of our markets includes a large number of well-capitalized competitors that have extensive automotive retail managerial experience and strong retail locations and facilities.

New vehicle unit volume has been impacted by a limited supply of new vehicles to sell driven largely by disruptions in the manufacturers' supply chains. We expect that reduced levels of new vehicle availability will continue into 2023. We have prioritized our capital expenditures towards opportunities with the greatest return potential. We continue to expand

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our footprint and increase scope and scale through both the acquisition of new dealerships and franchises and through the expansion of our AutoNation USA used vehicle stores.

According to industry sources, as of December 31, 2022, there were approximately 16,800 franchised automotive dealerships, which sell both new and used vehicles, in the United States. In addition, we estimate that there were approximately twice as many independent used vehicle dealers in the United States. We face competition from (i) several public companies that operate numerous automotive retail stores or collision centers on a regional or national basis, including franchised dealers that sell new and used vehicles, non-franchised dealers that sell only used vehicles, and manufacturers that sell directly to customers, (ii) private companies that operate automotive retail stores or collision centers in our markets, and (iii) online and mobile sales platforms. We compete with dealers that sell the same vehicle brands that we sell, as well as dealers and certain manufacturers that sell other vehicle brands that we do not represent in a particular market. Our new vehicle store competitors have franchise agreements with the various vehicle manufacturers and, as such, generally have access to new vehicles on the same terms as we have. We also compete with other dealers for qualified employees, including general managers and sales and service personnel.

In general, the vehicle manufacturers have designated marketing and sales areas within which only one franchised dealer of a given vehicle brand may operate. Under most framework agreements with vehicle manufacturers, the ability to acquire multiple dealers of a given vehicle brand within a particular market is limited. Dealers are also restricted by various state franchise laws from relocating stores or establishing new stores of a particular vehicle brand within any area that is served by another dealer of the same vehicle brand, and generally need the manufacturer to approve any relocation or the grant of a new franchise. However, to the extent that a market has multiple dealers of a particular vehicle brand, as most of our key markets do with respect to most vehicle brands we sell, we face significant intra-brand competition.

We also compete with independent automobile service shops, service center chains, collision service operations, and wholesale parts outlets. We believe that the principal competitive factors in the parts and service business are price, location, expertise with the particular vehicle lines, and customer service. We also compete with a broad range of financial institutions in our finance and insurance business. We believe that the principal competitive factors in the finance and insurance business are product selection, convenience, price, contract terms, and the ability to finance vehicle protection and aftermarket products.

We also operate in the auto finance sector of the consumer finance market. This sector is primarily comprised of banks, captive finance divisions of new car manufacturers, credit unions, and independent finance companies. According to industry sources, this sector represented more than $1 trillion in outstanding receivables as of December 31, 2022. Our primary competitors in this sector are banks and credit unions that offer direct and indirect financing to customers purchasing used cars.

**Insurance and Bonding**

Our business exposes us to the risk of liabilities arising out of our operations. For example, liabilities may arise out of claims of employees, customers, or other third parties for personal injury or property damage occurring in the course of our operations. We could also be subject to fines and civil and criminal penalties in connection with alleged violations of federal and state laws or regulatory requirements.

The automotive retail business is also subject to substantial risk of property loss due to the significant concentration of property values at store locations. In our case in particular, our operations are concentrated in states and regions in which natural disasters and severe weather events (such as hailstorms, hurricanes, earthquakes, fires, tornadoes, snowstorms, and landslides) may subject us to substantial risk of property loss and operational disruption. Under self-insurance programs, we retain various levels of aggregate loss limits, per claim deductibles, and claims-handling expenses as part of our various insurance programs, including property and casualty, automobile, workers' compensation, and employee medical benefits. Costs in excess of this retained risk per claim may be insured under various contracts with third-party insurance carriers. We estimate the ultimate costs of these retained insurance risks based on actuarial evaluations and historical claims experience, adjusted for current trends and changes in claims-handling procedures. The level of risk we retain may change in the future as insurance market conditions or other factors affecting the economics of our insurance purchasing change. Although we have, subject to certain limitations and exclusions, substantial insurance, we cannot assure you that we will not be exposed to uninsured or underinsured losses that could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

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Provisions for retained losses and deductibles are made by charges to expense based upon periodic evaluations of the estimated ultimate liabilities on reported and unreported claims. The insurance companies that underwrite our insurance require that we secure certain of our obligations for deductible reimbursements with collateral. Our collateral requirements are set by the insurance companies and, to date, have been satisfied by posting surety bonds, letters of credit, and/or cash deposits. Our collateral requirements may change from time to time based on, among other things, our claims experience.

**Seasonality**

In a stable environment, our operations generally experience higher volumes of vehicle unit sales in the second and third quarters of each year due in part to consumer buying trends and the introduction of new vehicle models. Also, demand for vehicles and light trucks is generally lower during the winter months than in other seasons, particularly in regions of the United States where stores may be subject to adverse winter conditions. However, we typically experience higher sales of Premium Luxury vehicles, which have higher average selling prices and gross profit per vehicle retailed, in the fourth quarter. Revenue and operating results may be impacted significantly from quarter to quarter by changing economic conditions, vehicle manufacturer incentive programs, and actual or threatened severe weather events.

**Trademarks**

We own a number of registered service marks and trademarks, including, among other marks, AutoNation® and AutoNation USA®. Pursuant to agreements with vehicle manufacturers, we have the right to use and display manufacturers' trademarks, logos, and designs at our stores and in our advertising and promotional materials, subject to certain restrictions. We also have licenses pursuant to various agreements with third parties authorizing the use and display of the marks and/or logos of such third parties, subject to certain restrictions. The current registrations of our service marks and trademarks are effective for varying periods of time, which we may renew periodically, provided that we comply with all applicable laws.

**Human Capital Resources**

*Purpose and Culture*

At AutoNation, our associates are our greatest asset. As of December 31, 2022, we employed approximately 23,600 full-time and part-time employees, whom we refer to as "associates," approximately 175 of whom were covered by collective bargaining agreements. We believe that our human capital management, which includes talent acquisition, development, and retention of a high-quality workforce, is critical to the success and growth of our business. Our Board of Directors and its Committees provide oversight on a broad range of human capital management topics, including corporate culture, diversity, inclusion, compensation, and benefits.

In 2022, we launched our "Go Be Great" campaign which characterizes the collective drive, ambition, and determination of our associates to be the best each and every day, leading the way in customer service excellence. We seek to develop and foster a diverse and inclusive work environment based on ethics and integrity where all associates can devote their best efforts to their jobs and "Go Be Great!"

*Diversity and Inclusion*

We are committed to an inclusive and welcoming environment where each individual feels valued, respected, and heard. In 2020, we launched ONE AutoNation, an employee-focused initiative designed to embrace diversity in thought and action, promote inclusion despite our differences, and foster ongoing opportunities for learning, growth, and leadership. Our ONE AutoNation mission is to keep driving forward towards a more inclusive world. Our associates are guided by our policies, procedures, and training programs to ensure everyone is treated with respect and has opportunities to reach their full potential.

Through ONE AutoNation, we established our Diversity & Inclusion Council in order to ensure a more diverse workforce and cultivate a culture of belonging at AutoNation. Through ongoing education and collaboration, the Council is dedicated to enhancing the associate experience in an atmosphere that values, respects, and celebrates our differences. In addition, we support a number of employee business resource groups ("BRGs") that are an integral part of our diversity and inclusion strategy. Our BRGs provide employees with the opportunity to engage with colleagues based on shared interests such as ethnic backgrounds, gender, and sexual orientation.

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*Talent Acquisition, Development, and Retention*

Creating opportunities for employee recognition, mentoring, and advancement is a key initiative in our human resources efforts. We provide a range of formal and informal learning programs, which are designed to help our associates continuously grow and strengthen their skills throughout their careers, including: (1) General Manager University, designed to develop existing and future leaders at our stores; (2) Leader Education and Development for high-potential Associates (LEAD) program, designed to facilitate development for our up-and-coming talent; (3) Lead & Learn webinar events, a series of training courses designed to provide fresh perspectives and relevant content to support employee growth and leadership development; and (4) AutoNation's Mentorship Program, created to offer opportunities for associates to accelerate their personal and professional development through regular interactions specific to career growth and expansion within the organization.

See "Corporate Social Responsibility – Our Workplace" below for more information on human capital measures and objectives that we focus on in managing the business.

**Corporate Social Responsibility**

As one of the largest automotive retailers in the United States and one of America's most admired companies, AutoNation was founded on the values of honesty, respect, and responsibility, which we believe extend to our stakeholders, which include our stockholders, our customers, our associates, and the communities in which we operate. AutoNation's dedication to fundamental principles of good corporate stewardship has been a cornerstone of our business.

*The Environment*

We are committed to managing our environmental impact and continually work to reduce it where practicable. The following highlights some of our environmental stewardship initiatives:

&nbsp;&nbsp;&nbsp;&nbsp;*• Driving Electrified*: As America transitions increasingly toward electric vehicles ("EV"), we have added and continue to add EV charging capabilities at many of our locations, many of which offer EV charging free of charge to customers. In addition, given the growing popularity of EVs, we have also created a "Driving Electrified" section of our purchasing website to help customers shop and compare different vehicles.

&nbsp;&nbsp;&nbsp;&nbsp;*• Product offering*: We offer a wide variety of environmentally friendly vehicles, including electric and hybrid vehicles. We expect our manufacturer partners to continue to enhance their offerings of these types of vehicles.

&nbsp;&nbsp;&nbsp;&nbsp;• *Building and maintenance*: As we build new facilities and expand our AutoNation USA network, we take various measures to reduce our environmental impact, such as improving energy efficiency, reducing water consumption, sourcing materials locally, improving air quality, and pursuing alternative energy sources for our facilities. Our corporate headquarters building in Fort Lauderdale, Florida, is LEED Gold Certified, and is one of several LEED certified properties that we occupy.

&nbsp;&nbsp;&nbsp;&nbsp;• *Recycling*: In addition to adhering to recycling statutes, we try to maximize our recycling efforts where practicable, whether water, oil, tire rubber, scrap metal, paper, plastic, car batteries, radiator cores, or other materials.

&nbsp;&nbsp;&nbsp;&nbsp;• *Stewardship*: We have implemented an Environmental, Health and Safety Compliance Program, which includes training and consulting support at our dealerships and other operating entities.

*Our Communities*

We are committed to supporting the communities in which we operate. We encourage our associates to be active members in the communities where they live and work through volunteerism and charitable giving. Cancer touches nearly everyone and that is why supporting cancer research and treatment is so important to us. We have transformed our brand through our "Drive Pink" initiative. More than a charitable focus on cancer research and treatment, Drive Pink is a core element of our corporate culture and has impacted customers, associates, and our communities in meaningful ways.

We fund national cancer research and treatment facilities from coast to coast through our philanthropic activities. Through the combined efforts of our 23,600 associates, vendors, partners, customers, and executive leadership, we have raised and donated over $35 million to support the world-class AutoNation Institute for Breast Cancer Research and Care, the Moffitt Cancer Center, the Breast Cancer Research Foundation, Cleveland Clinic, and other leading cancer facilities.

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Our presence is felt at local community-based cancer events, as teams of our associates represent AutoNation at runs, walks, and other fundraisers. Yearly, AutoNation celebrates Drive Pink Across America Day by providing our associates with opportunities to deliver thousands of "Totes for Hope" bags stuffed with comfort items for children and adults undergoing cancer care at hospitals in our markets.

Vehicles sold at our AutoNation locations are fitted with a pink license plate frame as a symbol of our commitment to "driving out" cancer. Millions of pink license plate frames have been distributed to date.

*Our Business and Our Customers*

We are proud to be America's most recognized automotive retailer, and we strive to create transparency and establish unparalleled trust with our customers or others with whom we do business.

&nbsp;&nbsp;&nbsp;&nbsp;• *Ethical standards*: We have a Code of Business Ethics in place to help support our commitment to business ethics and responsibility. This Code describes our standards of business conduct and the steps AutoNation takes to ensure that our standards are understood and followed. Each AutoNation associate throughout the organization is expected to comply with the standards set forth in the Code. We also maintain a 24-hour Alert-Line for associates to anonymously report any Company policy violations under our Business Ethics Program.

&nbsp;&nbsp;&nbsp;&nbsp;• *Customer satisfaction*: We seek to deliver a consistently superior customer experience by offering a broad selection of inventory, customer-friendly, transparent sales and service processes, and competitive pricing in a clean and safe environment. We measure customer satisfaction and loyalty on a regular basis with a mission to deliver a peerless customer experience.

&nbsp;&nbsp;&nbsp;&nbsp;• *Supplier relationships and sustainable procurement*: We purchase products and services at a fair value regardless of the manufacturer or provider, while conducting our operations according to high standards of business conduct and all applicable legal requirements. We are also a member of an affiliate of the National Minority Supplier Development Council, which focuses on advancing business opportunities for certified minority business enterprises.

*Our Workplace*

AutoNation values the dignity of all employees and is committed to maintaining a work environment where all associates are valued and treated with respect.

&nbsp;&nbsp;&nbsp;&nbsp;• *Respect in the Workplace*: At AutoNation, we provide equal employment and promotional opportunities for all associates, as well as any individual applying for employment without regard to race, religion, sex, sexual orientation, gender identity or expression, national origin, age, disability, or any other protected characteristic as defined by applicable federal, state, or local law. We are committed to maintaining a work environment free from sexual and other harassment.

&nbsp;&nbsp;&nbsp;&nbsp;*• Diversity*: We endeavor to attract and retain diverse and talented people throughout our Company by engaging in diversity and inclusion initiatives, including our ONE AutoNation Program and other programs specifically designed to develop diverse groups of leaders and to recruit current and former military personnel, among others.

&nbsp;&nbsp;&nbsp;&nbsp;• *Training*: We offer job-specific training programs, such as our General Management University, which is aimed at developing our existing and future leaders, and other training programs designed for high-potential associates to facilitate development of our up-and-coming talent. We offer e-commerce training, webinar events that present opportunities for associates to learn actionable tips on innovative ways to get results on the job, and individual development plans to target the specific needs of our associates. These types of courses help foster our culture of continual learning and growth, which in turn enriches the work environment for all our associates.

&nbsp;&nbsp;&nbsp;&nbsp;• *Employee benefits*: We offer a variety of employee benefits, such as competitive salaries/compensation plans, incentive compensation potential, and health and welfare benefits. Many of the valuable benefits we offer are free to our associates, including an innovative "Drive Pink"-inspired, Company-paid cancer insurance plan that provides financial assistance to associates and their eligible dependents who are diagnosed with cancer. This Company-paid benefit is offered by fewer than 5% of companies nationally and it underscores our commitment to driving out cancer.

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&nbsp;&nbsp;&nbsp;&nbsp;• *Healthy living*: We encourage our associates and their families to be mindful of their physical and mental health, and we offer programs that provide free and confidential support services for a multitude of issues, such as legal, family/marital, and stress/anxiety, among others. We also provide a complimentary biometric screening for our associates and their spouses to raise their awareness of certain factors that can affect their health and increase the risk for heart disease, diabetes, or stroke. In addition, employees are eligible to receive annual company contributions to a health savings account from the company based on the type of coverage selected.

*Cybersecurity Risk Management*

We have developed and continue to enhance our cybersecurity governance program to protect the security of our computer systems, software, networks, and other technology assets against unauthorized attempts to access confidential information or to disrupt or degrade business operations. Our cybersecurity governance program is an integrated IT risk management process that aims to (1) proactively manage cyber and information security risks at AutoNation; (2) implement the internal controls required by cybersecurity regulatory requirements as well as AutoNation's information security control objective documents and information security standards; and (3) improve the efficiency, maturity, and effectiveness of technology functions and processes.

We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements and examine the effectiveness and maturity of our cyber defenses through various means, including internal audits, targeted testing, incident response exercises, maturity assessments, and industry benchmarking. In addition, we dedicate significant resources to securing our systems and protecting confidential information such as firewalls, endpoint protection, and behavior analysis tools, among others.

Despite our efforts to ensure the integrity of our computer systems, software, networks, and other technology assets, we may not be able to anticipate, detect, or recognize threats to our systems and assets, or to implement effective preventive measures against all cyber threats, especially because the techniques used are increasingly sophisticated, change frequently, are complex, and are often not recognized until launched. See the risk factor "*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"* in Part I, Item 1A of this Form 10-K.

*Corporate Governance*

Our Board of Directors is committed to sound corporate governance principles and practices, which are set forth in our Corporate Governance Guidelines that serve as a framework within which our Board conducts its operations. The Corporate Governance and Nominating Committee of our Board is charged with reviewing annually, or more frequently as appropriate, the Guidelines and recommending to our Board appropriate changes in light of applicable laws and regulations, the governance standards identified by leading governance authorities, and our Company's evolving needs.

Our Board of Directors consists of a diverse group of leaders. Many of them have experience serving as executive officers or on boards and board committees of major companies. Many of them also have extensive corporate finance and investment banking experience as well as a broad understanding of capital markets. A majority of our Board of Directors is independent, and each of the members of our audit, compensation, and corporate governance and nominating committees is independent. Each of our directors must stand for re-election annually and are elected by a majority of our shareholders. In addition, Rick L. Burdick, one of our independent directors, currently serves as our Chairman of the Board.

*Investor Relations*

Our relationship with our shareholders is an important part of AutoNation's success. We have an investor outreach program committed to engaging with current and prospective stockholders and obtaining their perspectives. Our integrated outreach team engages proactively with our stockholders by participating in activities such as quarterly financial results conference calls, industry conferences and events, and one-on-one meetings.

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**Information about our Executive Officers**

The following sets forth certain information regarding our executive officers as of February 17, 2023.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Age** | **Position** | **Years with<br>AutoNation** | **Years in<br>Automotive<br>Industry** |
| Michael Manley | 58 | Chief Executive Officer and Director | 2 | 35 |
| Joseph T. Lower | 56 | Executive Vice President and Chief Financial Officer | 3 | 3 |
| Gianluca Camplone | 53 | Chief Operating Officer Precision Parts Business, and Executive Vice President, Head of Mobility, Business Strategy, and Development | 1 | 25 |
| Marc Cannon | 61 | Executive Vice President and Chief Customer Experience Officer | 25 | 36 |
| C. Coleman Edmunds | 58 | Executive Vice President, General Counsel and Corporate Secretary | 27 | 27 |
| Lisa Esparza | 53 | Executive Vice President and Chief Human Resource Officer | 1 | 1 |
| Dave Koehler | 54 | Chief Operating Officer, Non-Franchise Business | 11 | 30 |
| Steve Kwak | 50 | Chief Operating Officer, Franchise Business | 16 | 24 |

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***Michael Manley*** has served as our Chief Executive Officer and as a member of our Board since November 1, 2021. Prior to joining AutoNation, Mr. Manley served as Head of Americas and as a member of the Group Executive Council for Stellantis N.V., one of the largest automotive original equipment manufacturers in the world, from January 2021 until October 2021. From July 2018 until January 2021, he served as Chief Executive Officer of Fiat Chrysler Automobiles N.V. ("FCA"), a predecessor to Stellantis N.V. Mr. Manley joined DaimlerChrysler (a predecessor to FCA) in 2000 and, prior to becoming FCA's Chief Executive Officer, served in a number of management-level roles with increasing responsibility overseeing various aspects of FCA's operations, including as Executive Vice President - International Sales & Marketing, Business Development and Global Product Planning Operations, Chief Executive Officer of Jeep, Chief Executive Officer of Ram, Chief Operating Officer for the Asia Pacific region, and FCA Global Executive Council member. Mr. Manley currently serves on the Board of Directors of Rolls-Royce Holdings plc; however, Mr. Manley is not standing for re-election to such Board in 2023. On February 9, 2023, Mr. Manley was appointed to the Board of Directors of Dover Corporation (NYSE: DOV), a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services.

***Joseph T. Lower*** has served as our Executive Vice President and Chief Financial Officer since January 2020. Mr. Lower is responsible for overseeing the finance department and for all financial controls and external reporting, financial planning and analysis, and accounting, as well as the tax, internal audit, treasury, investor relations, and corporate real estate functions. He is also responsible for our shared service center in Irving, Texas. Prior to joining AutoNation, Mr. Lower served as Executive Vice President and Chief Financial Officer of Office Depot, Inc. from January 2018 until January 2020. From November 2014 until April 2017, he served as Vice President and Chief Financial Officer of B/E Aerospace. Prior to joining B/E Aerospace, Mr. Lower held a number of management-level positions at The Boeing Company. In addition, among other finance positions, Mr. Lower spent six years with Credit Suisse in various investment banking roles, including positions in mergers and acquisitions and corporate finance.

***Gianluca Camplone*** has served as our Chief Operating Officer Precision Parts Business, and Executive Vice President, Head of Mobility, Business Strategy, and Development since March 2022. Mr. Camplone is responsible for overseeing the Company's business strategy, corporate development, and Precision Parts teams. Prior to joining AutoNation, Mr. Camplone was a Senior Partner at McKinsey & Company, a global management consulting firm, from December 1996 to February 2022, where he was the leader in their Advanced Industries global practice and Private Equity Industrial practice in North America.

***Marc Cannon*** has served as our Executive Vice President since January 2017 and as our Chief Customer Experience Officer since April 2020. Mr. Cannon is responsible for marketing, communications, customer service, AutoNation.com, and public policy. From February 2016 until January 2017, he served as our Chief Marketing Officer, Senior Vice

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President of Communications and Public Policy, and from February 2007 until February 2016, he served as our Senior Vice President, Corporate Communications.

&nbsp;&nbsp;&nbsp;&nbsp;***C. Coleman Edmunds*** has served as our Executive Vice President, General Counsel and Corporate Secretary since April 2017. From October 2007 through March 2017, Mr. Edmunds served as our Senior Vice President, Deputy General Counsel and Assistant Secretary. He joined AutoNation in November 1996. Prior to joining AutoNation, Mr. Edmunds was in private practice with the international law firm of Baker & McKenzie.

***Lisa Esparza*** has served as our Executive Vice President and Chief Human Resource Officer since September 2022. Prior to joining AutoNation, Ms. Esparza served as Chief Human Resources Officer of Essilor North America, part of EssilorLuxottica, the global leader in the design, manufacture, and distribution of ophthalmic lenses, frames, and sunglasses, from July 2019 to June 2022. From 2017 to 2019, Ms. Esparza served as Chief Human Resources Officer at Par Pacific Holdings, Inc. (NYSE: PARR), which owns and operates market-leading energy and infrastructure businesses. In addition, Ms. Esparza has held various human resources leadership roles at Celanese, Flowserve, Ingersoll-Rand, and Eaton with global responsibilities.

***Dave Koehler*** has served as our Chief Operating Officer, Non-Franchised Business since March 2022. Mr. Koehler is responsible for overseeing AutoNation USA, AutoNation Auto Auctions, and the AutoNation Collision business. Previously, Mr. Koehler was the Eastern Region President for our stores located in Alabama, Florida, Georgia, Illinois, Maryland, Minnesota, New York, Ohio, Tennessee, and Virginia from May 2019 to February 2022. Prior to being promoted to Eastern Region President in May 2019, Mr. Koehler held several key positions within AutoNation, including General Manager, Market President, and Senior Vice President of Sales between 2011 to 2019.

***Steve Kwak*** has served as our Chief Operating Officer, Franchised Business since March 2022. Mr. Kwak is responsible for overseeing all activities and teams related to the new car franchised operations, manufacturer relations, Customer Financial Services, and After-Sales operations. Previously, Mr. Kwak was the Western Region President for our stores located in Arizona, California, Colorado, Nevada, Texas, and Washington from 2017 to March 2022. Prior to being promoted to Western Region President, Mr. Kwak served as a Market President for the Los Angeles County, Northern California, Nevada, and Orange County Markets for several years.

**Available Information**

Our website is located at *www.autonation.com*, and our Investor Relations website is located at *investors.autonation.com*. The information on or accessible through our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our Investor Relations website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC").

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**ITEM 1A. *RISK FACTORS***

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 Annual Report on Form 10-K, including, without limitation, statements regarding our strategic acquisitions, initiatives, partnerships, or investments, including the planned expansion of our AutoNation USA used vehicle stores and our investments in digital and online capabilities and mobility solutions; our expectations for the future performance of our business and the automotive retail 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:

**Risks Related to Economic Conditions**

***The automotive retail industry is sensitive to changing economic conditions and various other 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, as well as the gross profit margins that we can achieve on our sales of vehicles, all of which are very difficult to predict.***

We believe that many factors affect sales of new and used vehicles and automotive retailers' gross profit margins in the United States and in our particular geographic markets, including the economy, fuel prices, credit availability, interest rates, consumer confidence, consumer shopping preferences and the success of third-party online and mobile sales platforms, the level of personal discretionary spending, labor force participation and unemployment rates, the state of housing markets, vehicle production levels and capacity, auto emission and fuel economy standards, the rate of inflation, currency exchange rates, tariffs, manufacturer incentives (and consumers' reaction to such offers), intense industry competition, the prospects of war, other international conflicts or terrorist attacks, global pandemics, severe weather events, product quality, affordability and innovation, the number of consumers whose vehicle leases are expiring, the length of consumer loans on existing vehicles, and the rise of ride-sharing applications. Changes in interest rates can significantly impact new and used vehicle sales and vehicle affordability due to the direct relationship between interest rates and monthly loan payments, a critical factor for many vehicle buyers, and the impact interest rates have on customers' borrowing capacity and disposable income. Sales of certain vehicles, particularly trucks and sport utility vehicles that historically have provided us with higher gross profit per vehicle retailed, are sensitive to fuel prices and the level of construction activity. In addition, rapid changes in fuel prices can cause shifts in consumer preferences which are difficult to accommodate given the long lead-time of inventory acquisition. The imposition of new tariffs, quotas, duties, or other restrictions or limitations could increase prices for vehicles and/or parts imported into the United States and adversely impact demand for such vehicles and/or parts. Our vehicle sales, service, and collision businesses could also be adversely affected by changes in the automotive industry driven by new technologies, distribution channels, or products, including ride-sharing applications, subscription services, autonomous and electric vehicles, and accident avoidance technology.

Approximately 13.9 million, 15.1 million, and 14.6 million new vehicles, including retail and fleet vehicles, were sold in the United States in 2022, 2021, and 2020, respectively. Our performance may differ from the performance of the automotive retail industry due to particular economic conditions and other factors in the geographic markets in which we operate. Economic conditions and the other factors described above may also materially adversely impact our sales of parts and

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automotive repair and maintenance services and automotive finance and insurance products and our ability to approve/provide financing to customers.

***The COVID-19 pandemic disrupted, and may continue to disrupt, our business, results of operations, and financial condition going forward. Future epidemics, pandemics, and other outbreaks could also disrupt our business, results of operations, and financial condition.***

The COVID-19 pandemic led to disruptions in each of our markets and the global economy. Throughout the COVID-19 pandemic, federal, state, and local governments implemented a number of countermeasures to mitigate the impact of the pandemic. As a result, we experienced significant declines in new and used vehicle unit sales and sales of our finance and insurance products, particularly during the first and second quarters of 2020. In addition, our parts and service business operated below full capacity during 2020 as a result of the countermeasures discussed above and a decrease in the average miles being driven in our markets during the pandemic. Since the onset of the pandemic, we have experienced a shortage of available new vehicles for sale. The reduced levels of new vehicle availability is currently expected to continue into 2023; however, there is still significant uncertainty as to when new vehicle availability will improve.

We may continue to experience significant adverse effects to our business as a result of the economic impact of the COVID-19 pandemic, including any economic recession or downturn and the impact of such a recession or downturn on unemployment levels, consumer confidence, levels of personal discretionary spending, rate of inflation, and credit availability. Future epidemics, pandemics, and other outbreaks could disrupt and have a similar adverse impact on our business, results of operations, and financial condition.

**Risks Related to Vehicle Manufacturers**

***Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers.***

Most vehicle manufacturers from time to time establish various marketing and sales incentive programs designed to spur consumer demand for their vehicles, particularly during periods of excess supply and/or in a flat or declining new vehicle sales market. These programs impact our operations, particularly our sales of new vehicles. Since these programs are often not announced in advance, they can be difficult to plan for when ordering inventory. Furthermore, manufacturers may modify and discontinue these marketing and incentive programs from time to time, which could have a material adverse effect on our results of operations and cash flows.

In prior years, our new vehicle unit volume and new vehicle gross profit on a per vehicle retailed basis were adversely impacted by certain manufacturers' disruptive marketing and sales incentive programs based upon store-level growth targets established by those manufacturers (commonly referred to as "stair-step" incentive programs), which result in multi-tier pricing and adversely impact our ability to compete with other dealers. If those manufacturers continue to use such incentive programs or if other manufacturers adopt similar incentive programs, our operating results could be adversely impacted.

***We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises.***

The success of our stores is dependent on vehicle manufacturers in several key respects. First, we rely exclusively on the various vehicle manufacturers for our new vehicle inventory. Our ability to sell new vehicles is dependent on a vehicle manufacturer's ability to design, manufacture, and allocate to our stores an attractive, high-quality, and desirable product mix at the right time and at the right price in order to satisfy customer demand. Second, manufacturers generally support their franchisees by providing direct financial assistance in various areas, including, among others, floorplan assistance and advertising assistance. Third, manufacturers provide product warranties and, in some cases, service contracts to customers.

Our stores perform warranty and service contract work for vehicles under manufacturer product warranties and service contracts, and direct bill the manufacturer as opposed to invoicing the store customer. At any particular time, we have significant receivables from manufacturers for warranty and service work performed for customers. In addition, we rely on manufacturers to varying extents for original equipment manufactured replacement parts, training, product brochures and point of sale materials, and other items for our stores. Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has a material adverse effect on the vehicle manufacturers or distributors that are our primary franchisors.

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The core brands of vehicles that we sell, representing approximately 89% of the new vehicles that we sold in 2022, are manufactured by Toyota (including Lexus), Honda, BMW, Ford, Mercedes-Benz, General Motors, Stellantis, and Volkswagen (including Audi and Porsche). We are subject to a concentration of risk in the event of adverse events or financial distress, including bankruptcy, impacting one or more of these manufacturers.

Vehicle manufacturers may be adversely impacted by economic downturns or recessions, significant declines in the sales of their new vehicles, natural disasters, increases in interest rates, adverse fluctuations in currency exchange rates, declines in their credit ratings, liquidity concerns, labor strikes or similar disruptions (including within their major suppliers), supply shortages or rising raw material costs, rising employee benefit costs, vehicle recall campaigns, adverse publicity that may reduce consumer demand for their products (including due to bankruptcy), product defects, litigation, poor product mix or unappealing vehicle design, governmental laws and regulations (including fuel economy requirements), tariffs and other import product restrictions, the rise of ride-sharing applications, or other adverse events. These and other risks could materially adversely affect any manufacturer and impact its ability to profitably design, market, produce, or distribute new vehicles, which in turn could materially adversely affect our ability to obtain or finance our desired new vehicle inventories, our ability to take advantage of manufacturer financial assistance programs, our ability to collect in full or on a timely basis our manufacturer warranty and other receivables, and/or our ability to obtain other goods and services provided by the impacted manufacturer. In addition, vehicle recall campaigns could materially adversely affect our business, results of operations, and financial condition.

Vehicle manufacturers worldwide have recently faced production disruptions caused by a shortage of automotive microchips. The shortage is reported to be due to the overall high demand for microchips in the global economy. Prolonged shortages of new vehicle inventory could result in lower new vehicle sales volumes and a decrease in the total amount of gross profit we derive from new vehicle sales, which could adversely affect our business. Additionally, the shortage of new vehicles has increased market demand for used vehicles, increasing our costs of acquiring used vehicle inventory. Resolution of the microchip shortage should lead to an increase in the supply of new vehicles, which may adversely affect levels of profitability on both new and used vehicles.

Our business could be materially adversely impacted by the bankruptcy of a major vehicle manufacturer or related lender. For example, (i) a manufacturer in bankruptcy could attempt to terminate all or certain of our franchises, in which case we may not receive adequate compensation for our franchises, (ii) consumer demand for such manufacturer's products could be materially adversely affected, (iii) a lender in bankruptcy could attempt to terminate our floorplan financing and demand repayment of any amounts outstanding, (iv) we may be unable to arrange financing for our customers for their vehicle purchases and leases through such lender, in which case we would be required to seek financing with alternate financing sources, which may be difficult to obtain on similar terms, if at all, (v) we may be unable to collect some or all of our significant receivables that are due from such manufacturer or lender, and we may be subject to preference claims relating to payments made by such manufacturer or lender prior to bankruptcy, and (vi) such manufacturer may be relieved of its indemnification obligations with respect to product liability claims. Additionally, any such bankruptcy may result in us being required to incur impairment charges with respect to the inventory, fixed assets, and intangible assets related to certain franchises, which could adversely impact our results of operations and financial condition.

***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.***

Vehicle manufacturers and distributors with whom we hold franchises have significant influence over the operations of our stores. The terms and conditions of our framework, franchise, and related agreements and the manufacturers' interests and objectives may, in certain circumstances, conflict with our interests and objectives. For example, manufacturers can set performance standards with respect to sales volume, sales effectiveness, and customer satisfaction or loyalty, and can influence our ability to acquire additional stores, the naming and marketing of our stores, our digital channels, our selection of store management, product stocking and advertising spending levels, and the level at which we capitalize our stores. Manufacturers also impose minimum facility requirements that can require significant capital expenditures. Manufacturers may also have certain rights to restrict our ability to provide guaranties of our operating companies, pledges of the capital stock of our subsidiaries, and liens on our assets, which could adversely impact our ability to obtain financing for our business and operations on favorable terms or at desired levels. From time to time, we are precluded under agreements with certain manufacturers from acquiring additional franchises, or subject to other adverse actions, to the extent we are not

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meeting certain performance criteria at our existing stores (with respect to matters such as sales volume, sales effectiveness, and customer satisfaction or loyalty) until our performance improves in accordance with the agreements, subject to applicable state franchise laws.

Manufacturers also have the right to establish new franchises or relocate existing franchises, subject to applicable state franchise laws. The establishment or relocation of franchises in our markets could have a material adverse effect on the financial condition, results of operations, cash flows, and prospects of our stores in the market in which the franchise action is taken.

Our framework, franchise, and related agreements also grant the manufacturer the right to terminate or compel us to sell our franchise for a variety of reasons (including uncured performance deficiencies, any unapproved change of ownership or management, or any unapproved transfer of franchise rights or impairment of financial standing or failure to meet capital requirements), subject to applicable state franchise laws. From time to time, certain major manufacturers assert sales and customer satisfaction performance deficiencies under the terms of our framework and franchise agreements. Additionally, our framework agreements contain restrictions regarding a change in control, which may be outside of our control. See "Agreements with Vehicle Manufacturers" in Part I, Item 1 of this Form 10-K. While we believe that we will be able to renew all of our franchise agreements, we cannot guarantee that all of our franchise agreements will be renewed or that the terms of the renewals will be favorable to us. We cannot assure you that our stores will be able to comply with manufacturers' sales, customer satisfaction, loyalty, performance, facility, and other requirements in the future, which may affect our ability to acquire new stores or renew our franchise agreements, or subject us to other adverse actions, including termination or compelled sale of a franchise, any of which could have a material adverse effect on our financial condition, results of operations, cash flows, and prospects. Furthermore, we rely on the protection of state franchise laws in the states in which we operate and if those laws are repealed or weakened, our framework, franchise, and related agreements may become more susceptible to termination, non-renewal, or renegotiation.

In addition, we have granted certain manufacturers the right to acquire, at fair market value, our automotive dealerships franchised by that manufacturer in specified circumstances in the event of our default under certain of our debt agreements.

**Risks Related to Strategic Initiatives**

***We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA stores, and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.***

We have invested and will continue to invest substantial resources in marketing activities with the goals of, among other things, extending and enhancing the AutoNation retail brand and attracting consumers to our own digital channels. We are also investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA used vehicle stores, our recently acquired auto finance company, and our recently acquired mobile solution for automotive repair and maintenance. These strategic initiatives may be impacted by a number of variables, including customer adoption, availability of used vehicle inventory, demand for our branded products, market conditions, and our ability to identify, acquire, and build out suitable locations in a timely manner. There can be no assurance that these initiatives will be successful or that the amount we invest in these initiatives will result in improved financial results. If our initiatives are not successful, we will have incurred significant expenses without the benefit of improved financial results, and we may be required to incur impairment charges.

***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 believe that we have built an excellent reputation as an automotive retailer in the United States. All of our Domestic and Import stores are unified under the AutoNation retail brand. We believe that our continued success will depend on our ability to maintain and enhance the value of our retail brands across all of our sales channels, including in the communities in which we operate, and to attract consumers to our own digital channels.

Consumers are increasingly shopping for new and used vehicles, automotive repair and maintenance services, and other automotive products and services online and through mobile applications, including through third-party online and mobile

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sales platforms, with which we compete, that are designed to generate consumer sales leads that are sold to automotive dealers. We have invested and will continue to invest substantial resources on offering our vehicles and services through digital channels. There can be no assurance that our initiatives and investments in digital channels will be successful or result in improved financial performance. We face increased competition for market share from other automotive retailers and sales platforms that have also invested substantial resources on offering their vehicles and services through digital channels. If we fail to preserve the value of our retail brands, maintain our reputation, or attract consumers to our own digital channels, our business could be adversely impacted.

An isolated business incident at a single store could materially adversely affect our other stores, retail brands, reputation, and sales channels, particularly if such incident results in adverse publicity, governmental investigations, or litigation. In addition, the growing use of social media by consumers increases the speed and extent that information and opinions can be shared, and negative posts or comments on social media about AutoNation or any of our stores could materially damage our retail brands, reputation, and sales channels.

***We are subject 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 business.***

Following our acquisition of CIG Financial in October 2022, we started to originate and service consumer auto finance loans. We are subject to various risks in this business, including the risk that our borrowers do not repay their loans and that the vehicle collateral securing the payment of their loans may not be sufficient to ensure full repayment. Credit losses are an inherent risk of our auto loan portfolio, and changes in the availability or cost of financing, such as our securitized funding sources or warehouse facilities, to support the origination of auto loans receivable could adversely affect our results of operations. In addition, finance companies are highly regulated by governmental authorities, as discussed in the risk factors under the heading, "Risks Related to Legal, Regulatory, and Compliance Matters."

**Risks Related to Legal, Regulatory, and Compliance Matters**

***New laws, regulations, or governmental policies in response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, could adversely impact our business, results of operations, financial condition, cash flow, and prospects.***

Concerns over the long-term impacts of climate change have led and will continue to lead to governmental initiatives aimed to mitigate those impacts. Consumers may also change their behavior as a result of these concerns. We will need to respond to new laws and regulations as well as consumer preferences resulting from climate change concerns which may affect vehicle manufacturers' ability to produce cost effective vehicles. Laws and regulations enacted that directly or indirectly affect vehicle manufacturers (through an increase in the cost of production or their ability to produce satisfactory products) or our business (through an impact on our inventory availability, cost of sales, operations, or demand for the products we sell) could materially adversely impact our business, results of operations, financial condition, cash flow, and prospects.

In addition, vehicle manufacturers are subject to government-mandated fuel economy and greenhouse gas, or GHG, emission standards, which continue to change and become more stringent over time. Significant increases in fuel economy requirements or new federal or state restrictions on emissions of carbon dioxide that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven, or the products we sell.

***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.***

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, dealers (as a result of our acquisition of CIG Financial), 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 do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, results of operations, financial condition, cash flows, or prospects. 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 business, results of operations, financial condition, cash flows, and prospects.

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***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.***

The automotive retail and finance industry, including our facilities and operations, is subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle sales, retail installment sales, leasing, finance and insurance products, indirect auto financing, origination and servicing of consumer auto finance loans, vehicle protection products, advertising, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, the environment, vehicle emissions and fuel economy, health and safety, and employment practices. With respect to motor vehicle sales, retail installment sales, leasing, finance and insurance products, vehicle protection products, and advertising, we are subject to various laws and regulations, the violation of which could subject us to consumer class action or other lawsuits or governmental investigations and adverse publicity, in addition to administrative, civil, or criminal sanctions. With respect to our indirect auto financing and origination and servicing of consumer auto finance loans through our captive finance company, we are subject to extensive governmental laws and regulations relating to finance companies that could subject us to regulatory enforcement actions, including consent orders or similar orders where we may be required to revise the practices of our captive finance company, remunerate customers, or pay fines. In addition, as the assignee of consumer loans originated by third-party independent dealers, our captive finance company could be named as a co-defendant in litigation initiated by consumers primarily against a specific dealer. Our captive finance company may also be involved in litigation with dealers or other third-party service providers, which could materially adversely impact our business, operating results, and prospects. With respect to employment practices, we are subject to various laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws. We are also subject to lawsuits and governmental investigations alleging violations of these laws and regulations, including purported class action lawsuits, which could result in significant liability, fines, and penalties. See the risk factor "*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*" above. The violation of other laws and regulations to which we are subject also can result in administrative, civil, or criminal sanctions against us, which may include a cease and desist order against the subject operations or even revocation or suspension of our license to operate the subject business, as well as significant fines and penalties. We currently devote significant resources to comply with applicable federal, state, and local regulation of health, safety, environmental, zoning, and land use regulations, and we may need to spend additional time, effort, and money to keep our operations and existing or acquired facilities in compliance therewith. In addition, we may be subject to broad liabilities arising out of contamination at our currently and formerly owned or operated facilities, at locations to which hazardous substances were transported from such facilities, and at such locations related to entities formerly affiliated with us. Although for some such liabilities we believe we are entitled to indemnification from other entities, we cannot assure you that such entities will view their obligations as we do or will be able to satisfy them. Failure to comply with applicable laws and regulations or the unfavorable resolution of one or more lawsuits, regulatory enforcement actions, or governmental investigations may have an adverse effect on our business, results of operations, financial condition, cash flows, and prospects.

The Dodd-Frank Act established the CFPB, an independent federal agency funded by the United States Federal Reserve with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded from the Dodd-Frank Act, the CFPB could engage in additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its regulation of automotive finance companies and other financial institutions. Further, the CFPB has supervisory authority over certain non-bank lenders, including automotive finance companies, such as our captive finance company. The CFPB can use this authority to conduct supervisory examinations or initiate enforcement actions and/or litigation to ensure compliance with various federal consumer protection laws. The CFPB, other federal agencies, state governmental authorities, and individuals could assert claims arising out of actual or alleged violations of law, which could expose us to significant damages or other penalties, including revocation or suspension of the licenses necessary to conduct business and fines, in addition to adverse publicity.

The Dodd-Frank Act also provided the FTC with new and expanded authority regarding automotive dealers, and the FTC has implemented an enforcement initiative relating to the advertising practices of automotive dealers. Regulation from the CFPB, other federal agencies, or state agencies could lead to significant changes in the manner that dealers are compensated for arranging customer financing, and while it is difficult to predict how any such changes might impact us, any adverse changes could have a material adverse impact on our finance and insurance business and results of operations.

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**Risks Related to Cybersecurity** 

***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 business is dependent upon the efficient operation of our information systems. We rely on our information systems to manage, among other things, our sales, inventory, and service efforts, including through our digital channels, and customer information, as well as to prepare our consolidated financial and operating data. The failure of our information systems to perform as designed or the failure to maintain and enhance or protect the integrity of these systems could disrupt our business operations, impact sales and results of operations, expose us to customer or third-party claims, or result in adverse publicity. Additionally, we collect, process, and retain sensitive and confidential customer information in the normal course of our business. Despite the security measures we have in place and any additional measures we may implement in the future, our facilities and systems, and those of our third-party service providers, could experience security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events. For example, several well-known retailers have disclosed high-profile security breaches involving sophisticated and highly targeted attacks on their company's infrastructure or their customers' data, which were not recognized or detected until after such retailers had been affected notwithstanding the preventative measures such retailers had in place. Any security breach or event resulting in the misappropriation, loss, or other unauthorized disclosure of confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or otherwise adversely affect our results of operations.

**Risks Relating to our Indebtedness**

***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.***

The credit agreement governing our revolving credit facility and the indentures relating to our senior unsecured notes contain covenants that limit the discretion of our management with respect to various business matters. These covenants place restrictions on, among other things, our ability to incur additional indebtedness, to create liens or other encumbrances, to make investments, and to sell or otherwise dispose of assets and to merge or consolidate with other entities. A failure by us to comply with the obligations contained in any of our debt agreements could result in an event of default, which could permit acceleration of the related debt as well as acceleration of debt under other debt agreements that contain cross-acceleration or cross-default provisions. If any debt is accelerated, our liquid assets may not be sufficient to repay in full such indebtedness and our other indebtedness. Additionally, we have granted certain manufacturers the right to acquire, at fair market value, our automotive stores franchised by those manufacturers in specified circumstances in the event of our default under our debt agreements.

Under our credit agreement, we are required to remain in compliance with a maximum leverage ratio and a maximum capitalization ratio. See "Liquidity and Capital Resources — Restrictions and Covenants" in Part II, Item 7 of this Form 10-K. If our earnings decline, we may be unable to comply with the financial ratios required by our credit agreement. In such case, we would seek an amendment or waiver of a covenant of our credit agreement or consider other options, such as raising capital through an equity issuance to pay down debt, which could be dilutive to stockholders. There can be no assurance that our lenders would agree to an amendment or waiver of a covenant of our credit agreement. In the event we obtain an amendment or waiver of a covenant of our credit agreement, we would likely incur additional fees and higher interest expense.

As of December 31, 2022, we had $3.6 billion of total non-vehicle long-term debt, $2.1 billion of vehicle floorplan financing, and $181.8 million of non-recourse debt under our warehouse facilities. Our substantial indebtedness could have important consequences. For example:

&nbsp;&nbsp;&nbsp;&nbsp;• We may have difficulty satisfying our debt service obligations and, if we fail to comply with these requirements, an event of default could result;

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&nbsp;&nbsp;&nbsp;&nbsp;• We may be required to dedicate a substantial portion of our cash flow from operations to make required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures, acquisitions, strategic initiatives, investments, and other general corporate activities;

&nbsp;&nbsp;&nbsp;&nbsp;• A downgrade in our credit ratings could negatively impact the interest rate payable on certain of our senior notes and could negatively impact our ability to issue, or the interest rates for, commercial paper notes;

&nbsp;&nbsp;&nbsp;&nbsp;• Covenants relating to our indebtedness may limit our ability to obtain financing for working capital, capital expenditures, acquisitions, investments, originating auto loans receivable, and other general corporate activities;

&nbsp;&nbsp;&nbsp;&nbsp;• Covenants relating to our indebtedness may limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;• We may be more vulnerable to the impact of economic downturns and adverse developments in our business;

&nbsp;&nbsp;&nbsp;&nbsp;• We may be placed at a competitive disadvantage against any less leveraged competitors;

&nbsp;&nbsp;&nbsp;&nbsp;• Our variable interest rate debt will fluctuate with changing market conditions and, accordingly, our interest expense will increase if interest rates rise;

&nbsp;&nbsp;&nbsp;&nbsp;• An increase in our leverage ratio could negatively impact the applicable margins on interest rates charged for borrowings under our revolving credit facility; and

&nbsp;&nbsp;&nbsp;&nbsp;• Future share repurchases may be limited by the maximum leverage ratio and/or maximum capitalization ratio described above.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects, and ability to satisfy our debt service obligations.

***We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability.***

Our vehicle floorplan payables, revolving credit facility, and warehouse facilities are subject to variable interest rates, and the interest rate for our commercial paper notes varies based on duration and market conditions. Accordingly, our interest expense will fluctuate with changing market conditions and will increase if interest rates rise. Instability or disruptions of the capital markets, including credit markets, or the deterioration of our financial condition due to internal or external factors, could restrict or prohibit our access to capital markets and increase our financing costs. In addition, our net new vehicle inventory carrying cost (new vehicle floorplan interest expense net of floorplan assistance that we receive from automotive manufacturers) may increase due to changes in interest rates, inventory levels, and manufacturer assistance. We cannot assure you that a significant increase in interest rates or decrease in manufacturer floorplan assistance would not have a material adverse effect on our business, financial condition, results of operations, or cash flows.

**Risks Relating to Accounting Matters**

***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.***

Goodwill and indefinite-lived intangible assets are subject to impairment assessments at least annually (or more frequently when events or changes in circumstances indicate that an impairment may have occurred) by applying a fair-value based test. Our principal intangible assets are goodwill and our rights under our franchise agreements with vehicle manufacturers. A decrease in our market capitalization or profitability increases the risk of goodwill impairment. Negative or declining cash flows or a decline in actual or planned revenues for our stores increases the risk of franchise rights impairment. An impairment loss could have a material adverse impact on our results of operations and shareholders' equity. During 2020, we recorded non-cash goodwill impairment charges of $318.3 million and non-cash franchise rights impairment charges of $57.5 million. See Note 20 of the Notes to Consolidated Financial Statements for more information.

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***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 minority equity investments with readily determinable fair values are required to be measured at fair value each reporting period. Changes in the fair values of the underlying equity securities could result in unrealized gains or losses related to these investments. A material decrease in the fair values of these equity investments could adversely impact our results of operations and financial condition.

We have elected to measure our minority equity investment that does not have a readily determinable fair value using a measurement alternative permitted by accounting standards, and we recorded the equity investment at cost to be subsequently adjusted for observable price changes or impairment, if any. There may be future issuances of identical or similar equity securities by the same issuer that would result in observable price changes that could result in upward or downward adjustments to this equity investment. A material downward adjustment to or impairment of this equity investment could adversely impact our results of operations and financial condition.

**Risks Relating to our Stockholders**

***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. 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.***

Based on filings made with the SEC through February 15, 2023, William H. Gates III beneficially owns approximately 21% of the outstanding shares of our common stock, through holdings by Cascade Investment, L.L.C. ("Cascade"), which is solely owned by Mr. Gates. As a result, Cascade may have the ability to exert substantial influence over actions to be taken or approved by our stockholders, including the election of directors and any transactions involving a change of control.

Based on filings made with the SEC through February 15, 2023, ESL Investments, Inc. together with certain of its investment affiliates (collectively, "ESL") beneficially owns approximately 12% of the outstanding shares of our common stock. As a result, ESL may also have the ability to exert substantial influence over actions to be taken or approved by our stockholders, including the election of directors and any transactions involving a change of control.

In the future, our largest stockholders may acquire or dispose of shares of our common stock and thereby increase or decrease their ownership stake in us. Significant fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our common stock.

In the aggregate, based on filings made with the SEC through February 15, 2023, William H. Gates III and ESL beneficially own approximately 33% of our outstanding shares. Future share repurchases by the Company, together with any future share purchases by our affiliates, will reduce our "public float" (shares owned by non-affiliate stockholders and available for trading). Such reduction in our public float could decrease the volume of trading and liquidity of our common stock, could lead to increased volatility in the market price of our common stock, or could adversely impact the market price of our common stock.

**General Risk Factors**

***Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business.***

Our stores are concentrated in states and regions in the United States, including primarily Florida, Texas, and California, in which actual or threatened natural disasters and severe weather events (such as hailstorms, hurricanes, earthquakes, fires, tornadoes, snowstorms, and landslides) may disrupt our store operations, which may adversely impact our business, results of operations, financial condition, and cash flows. The effects of climate change may serve as a risk multiplier increasing the frequency, severity, and duration of natural disasters and adverse weather events that may affect our business operations. In addition to business interruption, the automotive retail business is subject to substantial risk of property loss due to the significant concentration of property values at store locations.

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We cannot assure you that we will not be exposed to uninsured or underinsured losses that could have a material adverse effect on our business, financial condition, results of operations, or cash flows. In addition, natural disasters and adverse weather events, including the effects of climate change, may adversely impact new vehicle production and the global automotive supply chain, which in turn could materially adversely impact our business, results of operations, financial conditions, and cash flows.

**ITEM 1B. *UNRESOLVED STAFF COMMENTS***

None.

**ITEM 2. *PROPERTIES***

We lease our current corporate headquarters facility in Fort Lauderdale, Florida, pursuant to a lease expiring on December 31, 2029. We also own or lease numerous facilities relating to our operations under each of our operating segments. These facilities are located in the following 19 states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Minnesota, Missouri, Nevada, New York, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia, and Washington. These facilities consist primarily of automobile showrooms, display lots, service facilities, collision repair centers, parts distribution centers, supply facilities, automobile storage lots, parking lots, and offices. We believe that our facilities are sufficient for our current needs and are in good condition in all material respects.

**ITEM 3. *LEGAL PROCEEDINGS***

See Note 21 of the Notes to Consolidated Financial Statements for information about our legal proceedings.

**ITEM 4. *MINE SAFETY DISCLOSURES***

Not applicable.

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**PART II**

**ITEM 5. *MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES***

**Market Information, Holders, and Dividends**

Our common stock is traded on the New York Stock Exchange under the symbol "AN." As of February 15, 2023, there were 1,108 holders of record of our common stock. A substantially greater number of holders of our common stock are "street name" or beneficial holders, whose shares are held of record by banks, brokers, and other financial institutions.

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.

**Issuer Purchases of Equity Securities**

The table below sets forth information with respect to shares of common stock repurchased by AutoNation, Inc. during the three and twelve months ended December 31, 2022.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number<br>of Shares<br>Purchased** | **Average<br>Price Paid<br>Per Share** | **Total Number of**<br>**Shares Purchased as**<br>**Part of Publicly**<br>**Announced Plans**<br>**or Programs** <sup>(1)</sup> | **Approximate**<br>**Dollar Value of**<br>**Shares That May**<br>**Yet Be Purchased**<br>**Under the Plans**<br>**or Programs<br>&nbsp;&nbsp;&nbsp;&nbsp;(in millions)** <sup>(1)</sup> |
| October 1, 2022 – October 31, 2022 | 2788808 | $102.57 | 2788808 | $1395.5 |
| November 1, 2022 – November 30, 2022 | 1096350 | $116.20 | 1096350 | $1268.1 |
| December 1, 2022 – December 31, 2022 | 750000 | $111.60 | 750000 | $1184.4 |
| &nbsp;&nbsp;&nbsp;Total for three months ended December 31, 2022 | 4635158 |  | 4635158 |  |
| &nbsp;&nbsp;&nbsp;Total for twelve months ended December 31, 2022 | 15567425 |  | 15567425 |  |

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(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 2022, all of our shares were repurchased under our stock repurchase program. As of February 15, 2023, $1.1 billion remained available under our stock repurchase limit. Our stock repurchase program does not have an expiration date.

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**Stock Performance Graph**

The following graph and table compare the cumulative total stockholder return on our common stock from December 31, 2017 through December 31, 2022 with the performance of: (i) the Standard & Poor's ("S&P") 500 Index and (ii) a self-constructed peer group consisting of other public companies in the automotive retail market, referred to as the "Public Auto Retail Peer Group." The Public Auto Retail Peer Group consists of Asbury Automotive Group, Inc., CarMax, Inc., Group 1 Automotive, Inc., Lithia Motors, Inc., Penske Automotive Group, Inc., and Sonic Automotive, Inc., and these companies are weighted by market capitalization. We have created these comparisons using data supplied by Research Data Group, Inc. The comparisons reflected in the graph and table are not intended to forecast the future performance of our stock and may not be indicative of future performance. The graph and table assume that $100 was invested on December 31, 2017 in each of our common stock, the S&P 500 Index, and the Public Auto Retail Peer Group and that any dividends were reinvested.

***Comparison of Five-Year Cumulative Return for AutoNation, Inc., the S&P 500 Index,***

***and the Public Auto Retail Peer Group***

![an-20221231_g2.jpg](an-20221231_g2.jpg)

Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved.

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|:---|:---|:---|:---|:---|:---|:---|
| | **12/2017** | **12/2018** | **12/2019** | **12/2020** | **12/2021** | **12/2022** |
| AutoNation Inc. | 100.00 | 69.55 | 94.74 | 135.96 | 227.64 | 209.04 |
| S&P 500 | 100.00 | 95.62 | 125.72 | 148.85 | 191.58 | 156.89 |
| Public Auto Retail Peer Group | 100.00 | 90.04 | 135.45 | 170.20 | 229.91 | 166.50 |

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**ITEM 7. *MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS***

The following discussion should be read in conjunction with Part I, including matters set forth in the "Risk Factors" section of this Form 10-K, and our Consolidated Financial Statements and notes thereto included in Part II, Item 8 of this Form 10-K. This section of this Form 10-K includes discussion of year-to-year comparisons between 2022 and 2021. Discussion of year-to-year comparisons between 2021 and 2020 can be found in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management's Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis.

**Overview**

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of December 31, 2022, we owned and operated 343 new vehicle franchises from 247 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 33 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 89% of the new vehicles that we sold in 2022, are manufactured by Toyota (including Lexus), Honda, BMW, Ford, Mercedes-Benz, General Motors, Stellantis, and Volkswagen (including Audi and Porsche). As of December 31, 2022, we also owned and operated 55 AutoNation-branded collision centers, 13 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, and an auto finance company.

We offer a diversified range of automotive products and services, including new vehicles, used vehicles, "parts and 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, as well as on installment contracts acquired by our captive finance company through third-party independent dealers.

As of December 31, 2022, we had three reportable segments: Domestic, Import, and Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford, 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, Audi, Lexus, 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.

For the year ended December 31, 2022, new vehicle sales accounted for 44% of our total revenue and 26% of our total gross profit. Used vehicle sales accounted for 36% of our total revenue and 11% of our total gross profit. Our parts and service operations, while comprising 15% of our total revenue, contributed 36% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 27% of our total gross profit.

**Market Conditions**

Full-year U.S. industry new vehicle unit sales were 13.9 million in 2022, as compared to 15.1 million in 2021, and 14.6 million in 2020. There continues to be a shortage of available new vehicles for sale as compared to historical inventory levels driven largely by disruptions in the manufacturers' supply chains. Although new vehicle inventory levels for certain manufacturers improved slightly during the second half of 2022, the demand for vehicles generally continued to exceed supply throughout the year. This demand and supply imbalance continues to result in higher levels of profitability for available new vehicles. The reduced levels of total new vehicle availability is currently expected to continue into 2023; however, there is still significant uncertainty as to the extent to which new vehicle availability will improve, as well as duration and/or degree of the higher levels of profitability being realized during this time. In addition, the decline in new vehicle unit volume could adversely impact the availability of nearly new vehicle inventory, which could have an adverse

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impact on our used vehicle sales volume. Additionally, worsening economic conditions could adversely impact consumer demand for vehicles.

**Results of Operations**

We had net income of $1.4 billion and diluted earnings per share of $24.29 in 2022, as compared to net income of $1.4 billion and diluted earnings per share of $18.31 in 2021.

Our total gross profit increased 6% during 2022, driven by increases in new vehicle gross profit of 14%, parts and service gross profit of 14%, and finance and insurance gross profit of 4%, each as compared to 2021. New vehicle gross profit benefited from an increase in gross profit per vehicle retailed ("PVR") resulting from strong demand and historically low new vehicle inventory levels. Parts and service results benefited primarily from increases in gross profit from customer-pay service and the preparation of vehicles for sale. Finance and insurance gross profit benefited from higher realized margins on vehicle protection products and an increase in product penetration. The increases in gross profit were partially offset by a decrease in used vehicle gross profit of 20% due to margin pressure as a result of a decline in used vehicle values from historically high levels and a decrease in used vehicle unit volume.

SG&A expenses increased largely due to newly acquired and opened stores and expenditures associated with investments in technology and strategic initiatives. Other interest expense increased due to higher average debt balances. Floorplan interest expense increased due to higher average interest rates.

Net income during 2022 was adversely impacted by the recognition of an initial credit loss expense of $25.8 million (after-tax) associated with the auto loans receivable acquired as part of our acquisition of CIG Financial. During 2022 and 2021, net income benefited from after-tax gains related to business/property divestitures, net of asset impairments, of $11.1 million and $10.9 million, respectively. Net income during 2021 also benefited from after-tax gains of $8.3 million related to sales of a minority equity investment as well as changes in the fair value of other minority equity investments held as of the end of the year.

**Strategic Initiatives**

To better service the personal transportation needs of our customers, we continue to expand our footprint through dealership acquisitions and the expansion of our AutoNation USA stores. We also continue to invest in various strategic partnerships and initiatives to expand the scope and scale of our business, broaden our product offerings, expand our reach to customers, and continue to provide a peerless customer experience.

On October 1, 2022, we closed on the acquisition of CIG Financial, an auto finance company headquartered in Irvine, California, for $83 million and the repayment of certain obligations totaling $21 million. The acquisition of CIG Financial aligns with our strategic business model and will further extend our relationship with our customers beyond the buying experience and throughout the vehicle ownership life cycle.

On November 4, 2022, we acquired a minority ownership stake in TrueCar, Inc., a leading automotive digital marketplace that lets auto buyers and sellers connect to its nationwide network of certified dealers. Our investment in TrueCar signals our continued commitment to emerging technologies and our constant focus on providing peerless customer experiences.

On January 26, 2023, we closed on the acquisition of RepairSmith, a mobile solution for automotive repair and maintenance, headquartered in Los Angeles, California, for approximately $190 million. With a significant operational footprint in the southern and western United States, RepairSmith expands AutoNation's ability to penetrate the extensive After-Sales service market and conveniently responds to our customers' needs by broadening the reach of our existing After-Sales network.

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. The roll-out of these strategic initiatives 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. See "Risk Factors" in Part I, Item 1A of this Form 10–K.

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**Inventory Management**

Our new and used vehicle inventories are stated at the lower of cost or net 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 December 31, 2022 and 2021, were 18,136 and 10,090, respectively. By historical standards, our inventory unit levels are significantly lower, driven by strong demand and 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 monitor our new vehicle inventory values as compared to net realizable values, and had no new vehicle inventory write-downs at December 31, 2022 or 2021.

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 $7.4 million at December 31, 2022, and $3.6 million at December 31, 2021.

Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $7.4 million at December 31, 2022, and $5.8 million at December 31, 2021.

**Critical Accounting Estimates**

We prepare our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles ("U.S. 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 at 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 Consolidated Financial Statements. Set forth below are the accounting estimates that we have identified as critical to our business operations and an understanding of our results of operations, based on the high degree of judgment or complexity in their application. See Note 1 of the Notes to Consolidated Financial Statements for a discussion of other significant accounting policies.

***Goodwill***

Goodwill for our reporting units is tested for impairment annually on April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit 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, our 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.

If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit 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 cost 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 based upon our stock price and/or average stock price over a reasonable period as of the measurement date. 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.

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

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.

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, 2022 and 2021, 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. As of December 31, 2022, we have $236.3 million of goodwill related to the Domestic reporting unit, $518.7 million related to the Import reporting unit, $482.1 million related to the Premium Luxury reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Centers reporting 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. 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 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 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 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.

We elected to perform quantitative tests for our annual franchise rights impairment testing as of April 30, 2022 and 2021, and no impairment charges resulted from these quantitative tests.

If the fair value of each of our franchise rights had been determined to be a hypothetical 10% lower as of the valuation dates of April 30, 2022 and 2021, no impairment would have resulted. The effect of a hypothetical 10% decrease in fair value estimates is not intended to provide a sensitivity analysis of every potential outcome.

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**Reported Operating Data**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **($ in millions, except per vehicle data)** | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions, except per vehicle data)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| Revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $11754.4 | $12081.7 | $(327.3) | (2.7) | $10418.6 | $1663.1 | 16.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retail used vehicle | 9020.9 | 8062.4 | 958.5 | 11.9 | 5260.5 | 2801.9 | 53.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wholesale | 640.9 | 576.4 | 64.5 | 11.2 | 340.8 | 235.6 | 69.1 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 9661.8 | 8638.8 | 1023.0 | 11.8 | 5601.3 | 3037.5 | 54.2 |
| &nbsp;&nbsp;&nbsp;Finance and insurance, net | 1437.3 | 1384.5 | 52.8 | 3.8 | 1059.3 | 325.2 | 30.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total variable operations<sup>(1)</sup> | 22853.5 | 22105.0 | 748.5 | 3.4 | 17079.2 | 5025.8 | 29.4 |
| &nbsp;&nbsp;&nbsp;Parts and service | 4100.6 | 3706.6 | 394.0 | 10.6 | 3257.4 | 449.2 | 13.8 |
| &nbsp;&nbsp;&nbsp;Other | 30.9 | 32.4 | (1.5) |  | 53.4 | (21.0) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $26985.0 | $25844.0 | $1141.0 | 4.4 | $20390.0 | $5454.0 | 26.7 |
| Gross profit: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $1366.6 | $1201.6 | $165 | 13.7 | $584.1 | $617.5 | 105.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retail used vehicle | 538.3 | 622.3 | (84.0) | (13.5) | 414.5 | 207.8 | 50.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wholesale | 14.8 | 65.8 | (51.0) |  | 44.5 | 21.3 |  |
| &nbsp;&nbsp;&nbsp;Used vehicle | 553.1 | 688.1 | (135.0) | (19.6) | 459.0 | 229.1 | 49.9 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | 1437.3 | 1384.5 | 52.8 | 3.8 | 1059.3 | 325.2 | 30.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total variable operations<sup>(1)</sup> | 3357.0 | 3274.2 | 82.8 | 2.5 | 2102.4 | 1171.8 | 55.7 |
| &nbsp;&nbsp;&nbsp;Parts and service | 1900.3 | 1672.7 | 227.6 | 13.6 | 1460.8 | 211.9 | 14.5 |
| &nbsp;&nbsp;&nbsp;Other | 8.0 | 5.7 | 2.3 |  | 3.2 | 2.5 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross profit | 5265.3 | 4952.6 | 312.7 | 6.3 | 3566.4 | 1386.2 | 38.9 |
| Selling, general, and administrative expenses | 3026.1 | 2876.2 | (149.9) | (5.2) | 2422.0 | (454.2) | (18.8) |
| Depreciation and amortization | 200.3 | 193.3 | (7.0) |  | 198.9 | 5.6 |  |
| Goodwill impairment |  |  |  |  | 318.3 | 318.3 |  |
| Franchise rights impairment |  |  |  |  | 57.5 | 57.5 |  |
| Other (income) expense, net | 14.4 | (19.7) | (34.1) |  | 6.5 | 26.2 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income | 2024.5 | 1902.8 | 121.7 | 6.4 | 563.2 | 1339.6 | 237.9 |
| Non-operating income (expense) items: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Floorplan interest expense | (41.4) | (25.7) | (15.7) |  | (63.8) | 38.1 |  |
| &nbsp;&nbsp;Other interest expense | (134.9) | (93.0) | (41.9) |  | (93.7) | 0.7 |  |
| &nbsp;&nbsp;Other income (loss), net | (14.7) | 24.3 | (39.0) |  | 144.4 | (120.1) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from continuing operations before income taxes | $1833.5 | $1808.4 | $25.1 | 1.4 | $550.1 | $1258.3 | 228.7 |
| Retail vehicle unit sales: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 229971 | 262403 | (32432) | (12.4) | 249654 | 12749 | 5.1 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 299806 | 304364 | (4558) | (1.5) | 241182 | 63182 | 26.2 |
|  | 529777 | 566767 | (36990) | (6.5) | 490836 | 75931 | 15.5 |
| Revenue per vehicle retailed: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $51113 | $46043 | $5070 | 11.0 | $41732 | $4311 | 10.3 |
| &nbsp;&nbsp;&nbsp;Used vehicle | $30089 | $26489 | $3600 | 13.6 | $21811 | $4678 | 21.4 |
| Gross profit per vehicle retailed: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $5942 | $4579 | $1363 | 29.8 | $2340 | $2239 | 95.7 |
| &nbsp;&nbsp;&nbsp;Used vehicle | $1795 | $2045 | $(250) | (12.2) | $1719 | $326 | 19.0 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | $2713 | $2443 | $270 | 11.1 | $2158 | $285 | 13.2 |
| &nbsp;&nbsp;Total variable operations<sup>(2)</sup> | $6309 | $5661 | $648 | 11.4 | $4193 | $1468 | 35.0 |
| <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. |
| <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. |

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

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| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** |
| | **2022 (%)** | **2021 (%)** | **2020 (%)** |
| Revenue mix percentages: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 43.6 | 46.7 | 51.1 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 35.8 | 33.4 | 27.5 |
| &nbsp;&nbsp;&nbsp;Parts and service | 15.2 | 14.3 | 16.0 |
| &nbsp;&nbsp;&nbsp;Finance and insurance, net | 5.3 | 5.4 | 5.2 |
| &nbsp;&nbsp;&nbsp;Other | 0.1 | 0.2 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100.0 | 100.0 | 100.0 |
| Gross profit mix percentages: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 26.0 | 24.3 | 16.4 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 10.5 | 13.9 | 12.9 |
| &nbsp;&nbsp;&nbsp;Parts and service | 36.1 | 33.8 | 41.0 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | 27.3 | 28.0 | 29.7 |
| &nbsp;&nbsp;&nbsp;Other | 0.1 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100.0 | 100.0 | 100.0 |
| Operating items as a percentage of revenue: |  |  |  |
| &nbsp;&nbsp;&nbsp;Gross profit: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New vehicle | 11.6 | 9.9 | 5.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Used vehicle-retail | 6.0 | 7.7 | 7.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parts and service | 46.3 | 45.1 | 44.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 19.5 | 19.2 | 17.5 |
| &nbsp;&nbsp;&nbsp;Selling, general, and administrative expenses | 11.2 | 11.1 | 11.9 |
| &nbsp;&nbsp;&nbsp;Operating income | 7.5 | 7.4 | 2.8 |
| Other operating items as a percentage of total gross profit: |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling, general, and administrative expenses | 57.5 | 58.1 | 67.9 |
| &nbsp;&nbsp;&nbsp;Operating income | 38.4 | 38.4 | 15.8 |
|  | **December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **December 31,&nbsp;&nbsp;&nbsp;&nbsp;** |  |
|  | **2022** | **2021** |  |
| Days supply: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle (industry standard of selling days) | 19 days | 9 days |  |
| &nbsp;&nbsp;&nbsp;Used vehicle (trailing calendar month days) | 31 days | 40 days |  |

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**Same Store Operating Data**

We have presented below our operating results on a same store basis to 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 year 2021 column that is being compared to the year 2022 column may differ from the amounts presented in the year 2021 column that is being compared to the year 2020 column. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **($ in millions, except per vehicle data)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2021** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| Revenue: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $11400.6 | $12034.9 | $(634.3) | (5.3) | $11989.1 | $10400.6 | $1588.5 | 15.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retail used vehicle | 8637.9 | 8027.7 | 610.2 | 7.6 | 7965.2 | 5249.9 | 2715.3 | 51.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wholesale | 616.3 | 574.9 | 41.4 | 7.2 | 572.6 | 340.3 | 232.3 | 68.3 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 9254.2 | 8602.6 | 651.6 | 7.6 | 8537.8 | 5590.2 | 2947.6 | 52.7 |
| &nbsp;&nbsp;&nbsp;Finance and insurance, net | 1388.3 | 1380.7 | 7.6 | 0.6 | 1374.5 | 1057.4 | 317.1 | 30.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total variable operations<sup>(1)</sup> | 22043.1 | 22018.2 | 24.9 | 0.1 | 21901.4 | 17048.2 | 4853.2 | 28.5 |
| &nbsp;&nbsp;&nbsp;Parts and service | 3966.0 | 3644.6 | 321.4 | 8.8 | 3635.0 | 3149.1 | 485.9 | 15.4 |
| &nbsp;&nbsp;&nbsp;Other | 30.3 | 32.5 | (2.2) |  | 32.4 | 52.9 | (20.5) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $26039.4 | $25695.3 | $344.1 | 1.3 | $25568.8 | $20250.2 | $5318.6 | 26.3 |
| Gross profit: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $1326.9 | $1198.0 | $128.9 | 10.8 | $1190.3 | $583.2 | $607.1 | 104.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retail used vehicle | 516.8 | 620.0 | (103.2) | (16.6) | 614.7 | 413.7 | 201.0 | 48.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wholesale | 17.1 | 65.8 | (48.7) |  | 67.0 | 44.6 | 22.4 |  |
| &nbsp;&nbsp;&nbsp;Used vehicle | 533.9 | 685.8 | (151.9) | (22.1) | 681.7 | 458.3 | 223.4 | 48.7 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | 1388.3 | 1380.7 | 7.6 | 0.6 | 1374.5 | 1057.4 | 317.1 | 30.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total variable operations<sup>(1)</sup> | 3249.1 | 3264.5 | (15.4) | (0.5) | 3246.5 | 2098.9 | 1147.6 | 54.7 |
| &nbsp;&nbsp;&nbsp;Parts and service | 1832.0 | 1647.1 | 184.9 | 11.2 | 1641.4 | 1448.6 | 192.8 | 13.3 |
| &nbsp;&nbsp;&nbsp;Other | 7.6 | 5.7 | 1.9 |  | 5.7 | 2.7 | 3.0 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross profit | $5088.7 | $4917.3 | $171.4 | 3.5 | $4893.6 | $3550.2 | $1343.4 | 37.8 |
| Retail vehicle unit sales: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 223479 | 261556 | (38077) | (14.6) | 260546 | 249058 | 11488 | 4.6 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 286908 | 303082 | (16174) | (5.3) | 300689 | 240411 | 60278 | 25.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 510387 | 564638 | (54251) | (9.6) | 561235 | 489469 | 71766 | 14.7 |
| Revenue per vehicle retailed: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $51014 | $46013 | $5001 | 10.9 | $46015 | $41760 | $4255 | 10.2 |
| &nbsp;&nbsp;&nbsp;Used vehicle | $30107 | $26487 | $3620 | 13.7 | $26490 | $21837 | $4653 | 21.3 |
| Gross profit per vehicle retailed: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $5937 | $4580 | $1357 | 29.6 | $4568 | $2342 | $2226 | 95.0 |
| &nbsp;&nbsp;&nbsp;Used vehicle | $1801 | $2046 | $(245) | (12.0) | $2044 | $1721 | $323 | 18.8 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | $2720 | $2445 | $275 | 11.2 | $2449 | $2160 | $289 | 13.4 |
| &nbsp;&nbsp;Total variable operations<sup>(2)</sup> | $6332 | $5665 | $667 | 11.8 | $5665 | $4197 | $1468 | 35.0 |
| <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. | <sup>(1)</sup> Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results. |
| <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. | <sup>(2)</sup> 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. |

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** | **Years Ended December 31,&nbsp;&nbsp;&nbsp;&nbsp;** |
| | **2022 (%)** | **2021 (%)** | **2021 (%)** | **2020 (%)** |
| Revenue mix percentages: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 43.8 | 46.8 | 46.9 | 51.4 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 35.5 | 33.5 | 33.4 | 27.6 |
| &nbsp;&nbsp;&nbsp;Parts and service | 15.2 | 14.2 | 14.2 | 15.6 |
| &nbsp;&nbsp;&nbsp;Finance and insurance, net | 5.3 | 5.4 | 5.4 | 5.2 |
| &nbsp;&nbsp;&nbsp;Other | 0.2 | 0.1 | 0.1 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100.0 | 100.0 | 100.0 | 100.0 |
| Gross profit mix percentages: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 26.1 | 24.4 | 24.3 | 16.4 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 10.5 | 13.9 | 13.9 | 12.9 |
| &nbsp;&nbsp;&nbsp;Parts and service | 36.0 | 33.5 | 33.5 | 40.8 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | 27.3 | 28.1 | 28.1 | 29.8 |
| &nbsp;&nbsp;&nbsp;Other | 0.1 | 0.1 | 0.2 | 0.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100.0 | 100.0 | 100.0 | 100.0 |
| Operating items as a percentage of revenue: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gross profit: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;New vehicle | 11.6 | 10.0 | 9.9 | 5.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Used vehicle-retail | 6.0 | 7.7 | 7.7 | 7.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Parts and service | 46.2 | 45.2 | 45.2 | 46.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 19.5 | 19.1 | 19.1 | 17.5 |

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

***New Vehicle***

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **($ in millions, except per vehicle data)** | **2022** | **2022** | **2021** | **2021** | **2022 vs. 2021** | **2022 vs. 2021** |  |  | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions, except per vehicle data)** | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| **<u>Reported:</u>** |  |  |  |  |  |  |  |  |  |  |
| Revenue | $| 11754.4 | $| 12081.7 | $(327.3) | (2.7) | $| 10418.6 | $1663.1 | 16.0 |
| Gross profit | $| 1366.6 | $| 1201.6 | $165.0 | 13.7 | $| 584.1 | $617.5 | 105.7 |
| Retail vehicle unit sales | 229971 | 229971 | 262403 | 262403 | (32432) | (12.4) | 249654 | 249654 | 12749 | 5.1 |
| Revenue per vehicle retailed | $| 51113 | $| 46043 | $5070 | 11.0 | $| 41732 | $4311 | 10.3 |
| Gross profit per vehicle retailed | $| 5942 | $| 4579 | $1363 | 29.8 | $| 2340 | $2239 | 95.7 |
| Gross profit as a percentage of revenue | 11.6% | 11.6% | 9.9% | 9.9% |  |  | 5.6% | 5.6% |  |  |
| Inventory days supply (industry standard of selling days) | 19 days | 19 days | 9 days | 9 days |  |  |  |  |  |  |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2022** | **2021** | **2021** | **2022 vs. 2021** | **2022 vs. 2021** | **2021** | **2021** | **2020** | **2020** | **2021 vs. 2020** | **2021 vs. 2020** |
| | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2021** | **2021** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| **<u>Same Store:</u>** |  |  |  |  |  |  |  |  |  |  |  |  |
| Revenue | $| 11400.6 | $| 12034.9 | $(634.3) | (5.3) | $| 11989.1 | $| 10400.6 | $1588.5 | 15.3 |
| Gross profit | $| 1326.9 | $| 1198.0 | $128.9 | 10.8 | $| 1190.3 | $| 583.2 | $607.1 | 104.1 |
| Retail vehicle unit sales | 223479 | 223479 | 261556 | 261556 | (38077) | (14.6) | 260546 | 260546 | 249058 | 249058 | 11488 | 4.6 |
| Revenue per vehicle retailed | $| 51014 | $| 46013 | $5001 | 10.9 | $| 46015 | $| 41760 | $4255 | 10.2 |
| Gross profit per vehicle retailed | $| 5937 | $| 4580 | $1357 | 29.6 | $| 4568 | $| 2342 | $2226 | 95.0 |
| Gross profit as a percentage of revenue | 11.6% | 11.6% | 10.0% | 10.0% |  |  | 9.9% | 9.9% | 5.6% | 5.6% |  |  |

---

The following discussion of new vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $353.8 million, $46.8 million, and $18.0 million in new vehicle revenue and $39.7 million, $3.6 million, and $0.9 million in new vehicle gross profit for 2022, 2021, and 2020, respectively, is related to acquisition and divestiture activity, as applicable in a given year.

*2022 compared to 2021* 

Same store new vehicle revenue decreased during 2022, as compared to 2021, due to a decrease in same store unit volume, partially offset by an increase in same store revenue PVR. Same store unit volume was adversely impacted by historically low inventory levels due to manufacturer supply shortages.

Same store revenue PVR and gross profit PVR both increased during 2022, as compared to 2021, primarily due to strong demand and reduced availability of new vehicle inventory. Same store revenue PVR and gross profit PVR also benefited from a shift in mix away from Import vehicles, which have relatively lower average selling prices and gross profit PVR, due to a more limited supply of these vehicles.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**<u>Net New Vehicle Inventory Carrying Benefit</u>**

The following table details net new vehicle inventory carrying benefit, 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). Floorplan assistance is accounted for as a component of new vehicle gross profit in accordance with U.S. GAAP.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **($ in millions)** | **2022** | **2021** | **Variance 2022 vs. 2021** | **2020** | **Variance 2021 vs. 2020** |
| Floorplan assistance | $108.9 | $121.4 | $(12.5) | $110.7 | $10.7 |
| New vehicle floorplan interest expense | (35.5) | (22.3) | (13.2) | (58.0) | 35.7 |
| Net new vehicle inventory carrying benefit | $73.4 | $99.1 | $(25.7) | $52.7 | $46.4 |

---

*2022 compared to 2021* 

The net new vehicle inventory carrying benefit decreased during 2022, as compared to the same period in 2021, due to an increase in floorplan interest expense and a decrease in floorplan assistance. Floorplan interest expense increased due to higher average interest rates, partially offset by lower average vehicle floorplan balances. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Floorplan assistance decreased due to a decrease in unit volume, partially offset by an increase in the average floorplan assistance rate per unit.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

***Used Vehicle***

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | | | **2022 vs. 2021** | **2022 vs. 2021** | | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions, except per vehicle data)** | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| **<u>Reported:</u>** |  |  |  |  |  |  |  |  |  |  |
| Retail revenue | $| 9020.9 | $| 8062.4 | $958.5 | 11.9 | $| 5260.5 | $2801.9 | 53.3 |
| Wholesale revenue | 640.9 | 640.9 | 576.4 | 576.4 | 64.5 | 11.2 | 340.8 | 340.8 | 235.6 | 69.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $| 9661.8 | $| 8638.8 | $1023.0 | 11.8 | $| 5601.3 | $3037.5 | 54.2 |
| Retail gross profit | $| 538.3 | $| 622.3 | $(84.0) | (13.5) | $| 414.5 | $207.8 | 50.1 |
| Wholesale gross profit | 14.8 | 14.8 | 65.8 | 65.8 | (51.0) |  | 44.5 | 44.5 | 21.3 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total gross profit | $| 553.1 | $| 688.1 | $(135.0) | (19.6) | $| 459.0 | $229.1 | 49.9 |
| Retail vehicle unit sales | 299806 | 299806 | 304364 | 304364 | (4558) | (1.5) | 241182 | 241182 | 63182 | 26.2 |
| Revenue per vehicle retailed | $| 30089 | $| 26489 | $3600 | 13.6 | $| 21811 | $4678 | 21.4 |
| Gross profit per vehicle retailed | $| 1795 | $| 2045 | $(250) | (12.2) | $| 1719 | $326 | 19.0 |
| Gross profit as a percentage of retail revenue | 6.0% | 6.0% | 7.7% | 7.7% |  |  | 7.9% | 7.9% |  |  |
| Inventory days supply (trailing calendar month days) | 31 days | 31 days | 40 days | 40 days |  |  |  |  |  |  |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2022** | **2021** | **2021** | **2022 vs. 2021** | **2022 vs. 2021** | **2021** | **2021** | **2020** | **2020** | **2021 vs. 2020** | **2021 vs. 2020** |
| | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2021** | **2021** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| **<u>Same Store:</u>** |  |  |  |  |  |  |  |  |  |  |  |  |
| Retail revenue | $| 8637.9 | $| 8027.7 | $610.2 | 7.6 | $| 7965.2 | $| 5249.9 | $2715.3 | 51.7 |
| Wholesale revenue | 616.3 | 616.3 | 574.9 | 574.9 | 41.4 | 7.2 | 572.6 | 572.6 | 340.3 | 340.3 | 232.3 | 68.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $| 9254.2 | $| 8602.6 | $651.6 | 7.6 | $| 8537.8 | $| 5590.2 | $2947.6 | 52.7 |
| Retail gross profit | $| 516.8 | $| 620.0 | $(103.2) | (16.6) | $| 614.7 | $| 413.7 | $201.0 | 48.6 |
| Wholesale gross profit | 17.1 | 17.1 | 65.8 | 65.8 | (48.7) |  | 67.0 | 67.0 | 44.6 | 44.6 | 22.4 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total gross profit | $| 533.9 | $| 685.8 | $(151.9) | (22.1) | $| 681.7 | $| 458.3 | $223.4 | 48.7 |
| Retail vehicle unit sales | 286908 | 286908 | 303082 | 303082 | (16174) | (5.3) | 300689 | 300689 | 240411 | 240411 | 60278 | 25.1 |
| Revenue per vehicle retailed | $| 30107 | $| 26487 | $3620 | 13.7 | $| 26490 | $| 21837 | $4653 | 21.3 |
| Gross profit per vehicle retailed | $| 1801 | $| 2046 | $(245) | (12.0) | $| 2044 | $| 1721 | $323 | 18.8 |
| Gross profit as a percentage of retail revenue | 6.0% | 6.0% | 7.7% | 7.7% |  |  | 7.7% | 7.7% | 7.9% | 7.9% |  |  |

---

The following discussion of used vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $383.0 million, $34.7 million, and $10.6 million in retail used vehicle revenue and $21.5 million, $2.3 million, and $0.8 million in retail used vehicle gross profit for 2022, 2021, and 2020, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores, as applicable in a given year.

*2022 compared to 2021* 

Same store retail used vehicle revenue increased during 2022, as compared to 2021, due to an increase in same store revenue PVR, partially offset by a decrease in same store unit volume of lower-priced entry-level vehicles.

Same store revenue PVR increased during 2022, as compared to 2021, primarily due to reduced availability of new vehicle inventory.

Same store gross profit PVR decreased during 2022, as compared to 2021, primarily due to margin pressure as a result of declining used vehicle values, which also adversely impacted used vehicle wholesale gross profit.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

***Parts & Service***

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | | | **2022 vs. 2021** | **2022 vs. 2021** | | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| **<u>Reported:</u>** |  |  |  |  |  |  |  |  |  |  |
| Revenue | $| 4100.6 | $| 3706.6 | $394.0 | 10.6 | $| 3257.4 | $449.2 | 13.8 |
| Gross profit | $| 1900.3 | $| 1672.7 | $227.6 | 13.6 | $| 1460.8 | $211.9 | 14.5 |
| Gross profit as a percentage of revenue | 46.3% | 46.3% | 45.1% | 45.1% |  |  | 44.8% | 44.8% |  |  |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | | | **2022 vs. 2021** | **2022 vs. 2021** | | | | | **2021 vs. 2020** | **2021 vs. 2020** |
| | **2022** | **2022** | **2021** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** | **2021** | **2021** | **2020** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| **<u>Same Store:</u>** |  |  |  |  |  |  |  |  |  |  |  |  |
| Revenue | $| 3966.0 | $| 3644.6 | $321.4 | 8.8 | $| 3635.0 | $| 3149.1 | $485.9 | 15.4 |
| Gross profit | $| 1832.0 | $| 1647.1 | $184.9 | 11.2 | $| 1641.4 | $| 1448.6 | $192.8 | 13.3 |
| Gross profit as a percentage of revenue | 46.2% | 46.2% | 45.2% | 45.2% |  |  | 45.2% | 45.2% | 46.0% | 46.0% |  |  |

---

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 the preparation of vehicles for sale.

The following discussion of parts and service is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $134.6 million, $62.0 million, and $108.3 million in parts and service revenue and $68.3 million, $25.6 million, and $12.2 million in parts and service gross profit for 2022, 2021, and 2020, respectively, is related to acquisition and divestiture activity and the opening of AutoNation USA stores, as applicable in a given year.

*2022 compared to 2021* 

During 2022, same store parts and service gross profit increased compared to the same period in 2021, primarily due to increases in gross profit associated with customer-pay service of $76.5 million and the preparation of vehicles for sale of $46.6 million.

Gross profit associated with customer-pay service and the preparation of vehicles for sale both benefited from higher value repair orders, partially offset by decreases in repair order volume. Gross profit associated with the preparation of vehicles for sale also benefited from improved margin performance.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

***Finance and Insurance***

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **($ in millions, except per vehicle data)** | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions, except per vehicle data)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| **<u>Reported:</u>** |  |  |  |  |  |  |  |
| Revenue and gross profit | $1437.3 | $1384.5 | $52.8 | 3.8 | $1059.3 | $325.2 | 30.7 |
| Gross profit per vehicle retailed | $2713 | $2443 | $270 | 11.1 | $2158 | $285 | 13.2 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | | **2021 vs. 2020** | **2021 vs. 2020** |
| | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** | **2021** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| **<u>Same Store:</u>** |  |  |  |  |  |  |  |  |
| Revenue and gross profit | $1388.3 | $1380.7 | $7.6 | 0.6 | $1374.5 | $1057.4 | $317.1 | 30.0 |
| Gross profit per vehicle retailed | $2720 | $2445 | $275 | 11.2 | $2449 | $2160 | $289 | 13.4 |

---

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 sell these products on a commission basis, and we also participate in the future underwriting profit on certain products pursuant to retrospective commission arrangements with the issuers of those 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 $49.0 million, $3.8 million, and $1.9 million for 2022, 2021, and 2020, respectively, is related to acquisition and divestiture activity, as well as the opening of new add-points and AutoNation USA stores, as applicable in a given year.

*2022 compared to 2021*

Same store finance and insurance revenue and gross profit was relatively flat during 2022, as compared to 2021, due to an increase in finance and insurance gross profit PVR, largely offset by a decrease in vehicle unit volume. The increase in finance and insurance gross profit PVR was primarily due to higher realized margins on vehicle protection products and an increase in product penetration. Finance and insurance gross profit PVR also benefited from increases in amounts financed per transaction and gross profit per transaction associated with arranging customer financing.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**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.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| **Revenue:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Domestic | $7987.5 | $7959.9 | $27.6 | 0.3 | $6490.6 | $1469.3 | 22.6 |
| &nbsp;&nbsp;&nbsp;Import | 7690.3 | 7798.5 | (108.2) | (1.4) | 5988.0 | 1810.5 | 30.2 |
| &nbsp;&nbsp;&nbsp;Premium Luxury | 10278.1 | 9229.9 | 1048.2 | 11.4 | 7202.8 | 2027.1 | 28.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 25955.9 | 24988.3 | 967.6 | 3.9 | 19681.4 | 5306.9 | 27.0 |
| &nbsp;&nbsp;&nbsp;Corporate and other | 1029.1 | 855.7 | 173.4 | 20.3 | 708.6 | 147.1 | 20.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consolidated revenue | $26985.0 | $25844.0 | $1141.0 | 4.4 | $20390.0 | $5454.0 | 26.7 |
| **Segment income**<sup>(1)</sup>**:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Domestic | $565.3 | $595.8 | $(30.5) | (5.1) | $355.2 | $240.6 | 67.7 |
| &nbsp;&nbsp;&nbsp;Import | 734.2 | 714.7 | 19.5 | 2.7 | 386.4 | 328.3 | 85.0 |
| &nbsp;&nbsp;&nbsp;Premium Luxury | 969.1 | 837.4 | 131.7 | 15.7 | 478.2 | 359.2 | 75.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 2268.6 | 2147.9 | 120.7 | 5.6 | 1219.8 | 928.1 | 76.1 |
| Corporate and other | (285.5) | (270.8) | (14.7) |  | (720.4) | 449.6 |  |
| Floorplan interest expense | 41.4 | 25.7 | (15.7) |  | 63.8 | 38.1 |  |
| &nbsp;&nbsp;&nbsp;Operating income | $2024.5 | $1902.8 | $121.7 | 6.4 | $563.2 | $1339.6 | 237.9 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Retail new vehicle unit sales: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Domestic | 66375 | 76211 | (9836) | (12.9) | 80687 | (4476) | (5.5) |
| &nbsp;&nbsp;&nbsp;Import | 95886 | 118863 | (22977) | (19.3) | 109077 | 9786 | 9.0 |
| &nbsp;&nbsp;&nbsp;Premium Luxury | 67710 | 67329 | 381 | 0.6 | 59890 | 7439 | 12.4 |
|  | 229971 | 262403 | (32432) | (12.4) | 249654 | 12749 | 5.1 |
| Retail used vehicle unit sales: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Domestic | 97642 | 105031 | (7389) | (7.0) | 83406 | 21625 | 25.9 |
| &nbsp;&nbsp;&nbsp;Import | 100131 | 103418 | (3287) | (3.2) | 82841 | 20577 | 24.8 |
| &nbsp;&nbsp;&nbsp;Premium Luxury | 83858 | 83447 | 411 | 0.5 | 66611 | 16836 | 25.3 |
|  | 281631 | 291896 | (10265) | (3.5) | 232858 | 59038 | 25.4 |
| <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

***Domestic***

The Domestic segment operating results included the following:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| Revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;New vehicle | $3409.1 | $3601.8 | $(192.7) | (5.4) | $3411.1 | $190.7 | 5.6 |
| &nbsp;&nbsp;Used vehicle | 3022.3 | 2875.0 | 147.3 | 5.1 | 1781.4 | 1093.6 | 61.4 |
| &nbsp;&nbsp;Parts and service | 1092.7 | 1007.6 | 85.1 | 8.4 | 891.5 | 116.1 | 13.0 |
| &nbsp;&nbsp;Finance and insurance, net | 460.3 | 469.1 | (8.8) | (1.9) | 370.5 | 98.6 | 26.6 |
| &nbsp;&nbsp;Other | 3.1 | 6.4 | (3.3) |  | 36.1 | (29.7) |  |
| Total Revenue | $7987.5 | $7959.9 | $27.6 | 0.3 | $6490.6 | $1469.3 | 22.6 |
| Segment income | $565.3 | $595.8 | $(30.5) | (5.1) | $355.2 | $240.6 | 67.7 |
| Retail new vehicle unit sales | 66375 | 76211 | (9836) | (12.9) | 80687 | (4476) | (5.5) |
| Retail used vehicle unit sales | 97642 | 105031 | (7389) | (7.0) | 83406 | 21625 | 25.9 |

---

*2022 compared to 2021* 

Domestic revenue increased slightly during 2022, as compared to 2021, primarily due to increases in used vehicle revenue and parts and service revenue. Used vehicle revenue increased due to an increase in used vehicle revenue PVR primarily due to reduced availability of new vehicle inventory, partially offset by a decrease in used vehicle unit volume. Parts and service revenue benefited from increases in revenue associated with customer-pay service, wholesale parts sales, and the preparation of vehicles for sale. Additionally, Domestic revenue benefited from the acquisitions we completed in 2021 and 2022. Increases in Domestic revenue were partially offset by a decrease in new vehicle unit volume, which was adversely impacted by historically low new vehicle inventory levels due to manufacturer supply shortages.

Domestic segment income decreased during 2022, as compared to 2021, primarily due to a decrease in used vehicle gross profit due to margin pressure as a result of a decline in used vehicle values and a decrease in used vehicle unit volume. Domestic segment income was also adversely impacted by a decrease in finance and insurance gross profit due to a decrease in vehicle unit volume, as well as increases in SG&A expenses and floorplan interest expense. Decreases in segment income were partially offset by increases in parts and service gross profit associated with the preparation of vehicles for sale, customer-pay service, and wholesale parts sales. Additionally, Domestic segment income benefited from the acquisitions we completed in 2021 and 2022.

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***Import***

The Import segment operating results included the following:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| Revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;New vehicle | $3473 | $3969.8 | $(496.8) | (12.5) | $3283.7 | $686.1 | 20.9 |
| &nbsp;&nbsp;Used vehicle | 2652.7 | 2370.5 | 282.2 | 11.9 | 1516.5 | 854.0 | 56.3 |
| &nbsp;&nbsp;Parts and service | 1050.9 | 950.0 | 100.9 | 10.6 | 811.3 | 138.7 | 17.1 |
| &nbsp;&nbsp;Finance and insurance, net | 494.1 | 489.6 | 4.5 | 0.9 | 361.7 | 127.9 | 35.4 |
| &nbsp;&nbsp;Other | 19.6 | 18.6 | 1.0 |  | 14.8 | 3.8 |  |
| Total Revenue | $7690.3 | $7798.5 | $(108.2) | (1.4) | $5988.0 | $1810.5 | 30.2 |
| Segment income | $734.2 | $714.7 | $19.5 | 2.7 | $386.4 | $328.3 | 85.0 |
| Retail new vehicle unit sales | 95886 | 118863 | (22977) | (19.3) | 109077 | 9786 | 9.0 |
| Retail used vehicle unit sales | 100131 | 103418 | (3287) | (3.2) | 82841 | 20577 | 24.8 |

---

*2022 compared to 2021* 

Import revenue decreased during 2022, as compared to 2021, primarily due to a decrease in new and used vehicle unit volume, partially offset by increases in new and used vehicle revenue PVR. New vehicle unit volume was adversely impacted by historically low new vehicle inventory levels due to manufacturer supply shortages, which also favorably impacted new and used vehicle revenue PVR. Decreases in Import revenue were partially offset by increases in parts and service revenue associated with customer-pay service, the preparation of vehicles for sale, and wholesale parts sales. Additionally, Import revenue benefited from the acquisitions we completed in 2021 and 2022.

Import segment income increased during 2022, as compared to 2021, primarily due to increases in parts and service gross profit and new vehicle gross profit. Parts and service results benefited from increases in gross profit associated with customer-pay service and the preparation of vehicles for sale, partially offset by a decrease in gross profit associated with warranty service. New vehicle gross profit benefited from reduced availability of new vehicle inventory. Import segment income also benefited from the acquisitions we completed in 2021 and 2022. Increases to Import segment income were partially offset by a decrease in used vehicle gross profit due to margin pressure as a result of a decline in used vehicle values, as well as an increase in SG&A expenses.

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***Premium Luxury***

The Premium Luxury segment operating results included the following:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| Revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;New vehicle | $4872.3 | $4510.1 | $362.2 | 8.0 | $3723.8 | $786.3 | 21.1 |
| &nbsp;&nbsp;Used vehicle | 3499.8 | 3067.4 | 432.4 | 14.1 | 2125.9 | 941.5 | 44.3 |
| &nbsp;&nbsp;Parts and service | 1448.6 | 1246.7 | 201.9 | 16.2 | 1058.1 | 188.6 | 17.8 |
| &nbsp;&nbsp;Finance and insurance, net | 453.8 | 401.0 | 52.8 | 13.2 | 294.7 | 106.3 | 36.1 |
| &nbsp;&nbsp;Other | 3.6 | 4.7 | (1.1) |  | 0.3 | 4.4 |  |
| Total Revenue | $10278.1 | $9229.9 | $1048.2 | 11.4 | $7202.8 | $2027.1 | 28.1 |
| Segment income | $969.1 | $837.4 | $131.7 | 15.7 | $478.2 | $359.2 | 75.1 |
| Retail new vehicle unit sales | 67710 | 67329 | 381 | 0.6 | 59890 | 7439 | 12.4 |
| Retail used vehicle unit sales | 83858 | 83447 | 411 | 0.5 | 66611 | 16836 | 25.3 |

---

*2022 compared to 2021* 

Premium Luxury revenue increased during 2022, as compared to 2021, primarily due to the acquisitions we completed in 2021. Premium Luxury revenue also benefited from increases in new and used vehicle revenue PVR, which benefited from historically low new vehicle inventory levels due to manufacturer supply shortages. Additionally, Premium Luxury revenue benefited from increases in parts and service revenue associated with customer-pay service, warranty service, and the preparation of vehicles for sale.

Premium Luxury segment income increased during 2022, as compared to 2021, primarily due to increases in new vehicle gross profit, parts and service gross profit, and finance and insurance gross profit. New vehicle gross profit benefited from reduced availability of new vehicle inventory. Parts and service results benefited from increases in gross profit associated with customer-pay service, warranty service, and the preparation of vehicles for sale. Finance and insurance gross profit benefited from an increase in finance and insurance gross profit PVR. Additionally, Premium Luxury segment income benefited from the acquisitions we completed in 2021. Increases to Premium Luxury segment income were partially offset by an increase in SG&A expenses.

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***Corporate and other***

Corporate and other results included the following:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** |
| Revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Used vehicle | $487.0 | $325.9 | $161.1 | 49.4 | $177.5 | $148.4 | 83.6 |
| &nbsp;&nbsp;Parts and service | 508.4 | 502.3 | 6.1 | 1.2 | 496.5 | 5.8 | 1.2 |
| &nbsp;&nbsp;Finance and insurance, net | 29.1 | 24.8 | 4.3 | 17.3 | 32.4 | (7.6) | (23.5) |
| &nbsp;&nbsp;Other | 4.6 | 2.7 | 1.9 | 70.4 | 2.2 | 0.5 | 22.7 |
| Revenue | $1029.1 | $855.7 | $173.4 | 20.3 | $708.6 | $147.1 | 20.8 |
| Income (loss) | $(285.5) | $(270.8) | $(14.7) |  | $(720.4) | $449.6 |  |

---

"Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations, 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 December 31, 2022, we had 55 AutoNation-branded collision centers, 13 AutoNation USA stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, and an auto finance company that we acquired in the fourth quarter of 2022, referred to as AutoNation Finance.

***AutoNation USA Stores***

During 2022, 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. We are targeting to have over 130 stores throughout the country. 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.

***AutoNation Finance***

AutoNation Finance, our captive finance company, provides financing to qualified retail customers on certain vehicles we sell, as well as on installment contracts acquired through third-party independent dealers. 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, and direct expenses. During the fourth quarter of 2022, we recognized an initial credit loss expense of $34.2 million associated with the auto loans receivable portfolio we acquired as part of the acquisition of the auto finance company. AutoNation Finance results are included in Other (Income) Expense, Net in our Consolidated Income Statement. See Notes 5 and 10 of the Notes to Consolidated Financial Statements for more information on auto loans receivable, the related allowance for credit losses, and the related debt of our captive finance company.

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**Selling, General, and Administrative Expenses**

Our 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.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | | | **2022 vs. 2021** | **2022 vs. 2021** | | **2021 vs. 2020** | **2021 vs. 2020** |
| **($ in millions)** | **2022** | **2021** | **Variance<br>Favorable /<br>(Unfavorable)** | **%<br>Variance** | **2020** | **Variance<br>Favorable /<br>(Unfavorable)** | **% <br>Variance** |
| **<u>Reported:</u>** |  |  |  |  |  |  |  |
| Compensation | $2061.3 | $2017.1 | $(44.2) | (2.2) | $1573.0 | $(444.1) | (28.2) |
| Advertising | 184.3 | 170.3 | (14.0) | (8.2) | 161.7 | (8.6) | (5.3) |
| Store and corporate overhead | 780.5 | 688.8 | (91.7) | (13.3) | 687.3 | (1.5) | (0.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $3026.1 | $2876.2 | $(149.9) | (5.2) | $2422.0 | $(454.2) | (18.8) |
| **<u>SG&A as a % of total gross profit:</u>** |  |  |  |  |  |  |  |
| Compensation | 39.1 | 40.7 | 160 | bps | 44.1 | 340 | bps |
| Advertising | 3.6 | 3.5 | (10) | bps | 4.5 | 100 | bps |
| Store and corporate overhead | 14.8 | 13.9 | (90) | bps | 19.3 | 540 | bps |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 57.5 | 58.1 | 60 | bps | 67.9 | 980 | bps |

---

*2022 compared to 2021* 

SG&A expenses increased in 2022, as compared to 2021, primarily due to newly acquired and opened stores, expenditures associated with investments in technology and strategic initiatives, and performance-driven increases in compensation expense, combined with modest inflationary pressures. Increases were partially offset by a decrease in deferred compensation obligations of $31.0 million as a result of changes in market performance of the underlying investments, as well as by divested stores. Additionally, gross advertising expenses increased $20.8 million, partially offset by an increase in advertising reimbursements from manufacturers of $6.8 million. As a percentage of total gross profit, SG&A expenses decreased to 57.5% during 2022, from 58.1% in 2021, primarily due to improvements in gross profit PVR and effective cost management.

**Other (Income) Expense, Net (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 2022, the results of our recently acquired auto finance company, including net interest margin, the provision for expected credit losses, and direct expenses. See "Segment - Results - Corporate and other" above and Notes 5 and 10 of the Notes to Consolidated Financial Statements for more information about our auto finance company.

During 2022, we recognized an initial credit loss expense of $34.2 million associated with the acquired loan portfolio of CIG Financial, the auto finance company we acquired in the fourth quarter of 2022. We also recognized a net gain of $16.3 million related to business/property divestitures and a gain on a legal settlement of $6.3 million.

During 2021, we recognized a gain of $5.2 million related to a legal settlement and net gains of $17.6 million related to business/property divestitures, partially offset by asset impairments of $3.2 million.

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**Non-Operating Income (Expenses)**

***Floorplan Interest Expense***

Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates.

Floorplan interest expense was $41.4 million in 2022 and $25.7 million in 2021. The increase in floorplan interest expense of $15.7 million in 2022, as compared to 2021, was the result of higher average interest rates, partially offset by lower average vehicle floorplan balances.

***Interest Expense***

Interest expense includes the interest related to non-vehicle long-term debt and finance lease obligations. Other interest expense was $134.9 million in 2022 compared to $93.0 million in 2021. The increase of $41.9 million was driven by higher average debt balances.

***Other Income (Loss), Net***

During 2022 and 2021, we recognized a net loss of $19.4 million and a net gain of $12.7 million, respectively, related to changes in the cash surrender value of corporate-owned life insurance ("COLI") for deferred compensation plan participants primarily 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.

During 2022, we recorded an unrealized gain of $2.9 million related to changes in fair value of the underlying securities of certain of our minority equity investments. In the first quarter of 2021, we sold the remaining shares of one of our minority equity investments and recorded a realized gain of $7.5 million. Additionally, we recorded an unrealized gain of $3.4 million during the second quarter of 2021 based on an observable price change of our minority equity investment that does not have a readily determinable fair value. 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 20 of the Notes to Consolidated Financial Statements for more information.

***Income Tax Provision***

Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates, adjusted, as necessary, for any discrete tax matters occurring during the period. As we operate in various states, our effective tax rate is also dependent upon our geographic revenue mix. Our effective income tax rate was 24.9% in 2022 and 24.1% in 2021.

**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 for real estate we have not yet sold associated with stores that were closed prior to January 1, 2014, and other adjustments related to disposed operations.

**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 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.

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***Available Liquidity Resources***

We had the following sources of liquidity available for the years ended December 31, 2022 and 2021:

---

| | | | |
|:---|:---|:---|:---|
| **(In millions)** | **December 31,<br>2022** | | **December 31,<br>2021** |
| Cash and cash equivalents | $72.6 |  | $60.4 |
| Revolving credit facility | $1799.6 | <sup>(1)</sup> | $1760.3 |
| Secured used vehicle floorplan facilities<sup>(2)</sup> | $0.3 |  | $0.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup>&nbsp;&nbsp;&nbsp;&nbsp;At December 31, 2022, we had $0.4 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 the commercial paper program. We had $50.0 million of commercial paper notes outstanding at December 31, 2022. See Note 10 of the Notes to Consolidated Financial Statements for additional information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(2)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 6 of the Notes to Consolidated Financial Statements for additional 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 December 31, 2022, surety bonds, letters of credit, and cash deposits totaled $109.6 million, including the $0.4 million of letters of credit issued under our revolving credit facility. We do not currently provide cash collateral for outstanding letters of credit.

In February 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, and units.

***Capital Allocation***

Our capital allocation strategy is focused on 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. 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. Our capital allocation decisions are 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 structure, our ability to complete acquisitions that meet our market and vehicle brand criteria and/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 share repurchase program authorized by our Board of Directors follows:

---

| | | | |
|:---|:---|:---|:---|
| **(In millions, except per share data)** | **2022** | **2021** | **2020** |
| Shares repurchased | 15.6 | 22.3 | 7.2 |
| Aggregate purchase price | $1710.2 | $2303.2 | $382.3 |
| Average purchase price per share | $109.86 | $103.18 | $52.76 |

---

The decision to repurchase shares at any given point in time is based on such factors 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 expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.

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As of February 15, 2023, and December 31, 2022, $1.1 billion and $1.2 billion, respectively, remained available under our stock repurchase limit most recently authorized by our Board of Directors.

*Capital Expenditures*

The following table sets forth information regarding our capital expenditures over the past three years:

---

| | | | |
|:---|:---|:---|:---|
| **(In millions)** | **2022** | **2021** | **2020** |
| Purchases of property and equipment, including operating lease buy-outs <sup>(1)</sup> | $336.2 | $231.9 | $137.2 |
| <sup>(1)</sup> Includes accrued construction in progress and excludes property associated with leases entered into during the year. | <sup>(1)</sup> Includes accrued construction in progress and excludes property associated with leases entered into during the year. | <sup>(1)</sup> Includes accrued construction in progress and excludes property associated with leases entered into during the year. | <sup>(1)</sup> Includes accrued construction in progress and excludes property associated with leases entered into during the year. |

---

At December 31, 2022, we owned approximately 80% of our new vehicle franchise store locations with a net book value of $2.3 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 $697.2 million. None of these properties are mortgaged or encumbered.

We continue to expand our AutoNation USA used vehicle stores and are targeting to have over 130 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.

*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, over the past three years:

---

| | | | |
|:---|:---|:---|:---|
| **(In millions)** | **2022** | **2021** | **2020** |
| Cash used in business acquisitions, net<sup>(1)</sup> | $(191.6) | $(432.7) | $(0.4) |
| Cash received from business divestitures, net | $55.2 | $48.7 | $9.0 |
| <sup>(1)</sup> Excludes finance leases. | <sup>(1)</sup> Excludes finance leases. | <sup>(1)</sup> Excludes finance leases. |  |

---

During 2022, we acquired CIG Financial, an auto finance company, and we also purchased four stores. During 2021, we purchased 20 stores and four collision centers. We did not purchase any stores during 2020.

During 2022, we divested three stores and terminated two franchises. During 2021, we divested three stores and 18 collision centers.

On January 26, 2023, we closed on the acquisition of RepairSmith, a mobile solution for automotive repair and maintenance for approximately $190 million.

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***Debt***

The following table sets forth our non-vehicle long-term debt as of December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **(in millions)** | **(in millions)** |
|<br>**Debt Description** |<br>**Maturity Date** |<br>**Interest Payable** | **2022** | **2021** |
| 3.5% Senior Notes | November 15, 2024 | May 15 and November 15 | $450.0 | $450.0 |
| 4.5% Senior Notes | October 1, 2025 | April 1 and October 1 | 450.0 | 450.0 |
| 3.8% Senior Notes | November 15, 2027 | May 15 and November 15 | 300.0 | 300.0 |
| 1.95% Senior Notes | August 1, 2028 | February 1 and August 1 | 400.0 | 400.0 |
| 4.75% Senior Notes | June 1, 2030 | June 1 and December 1 | 500.0 | 500.0 |
| 2.4% Senior Notes | August 1, 2031 | February 1 and August 1 | 450.0 | 450.0 |
| 3.85% Senior Notes | March 1, 2032 | March 1 and September 1 | 700.0 |  |
| Revolving credit facility | March 26, 2025 | Monthly |  |  |
| Finance leases and other debt | Various dates through 2041 |  | 375.5 | 330.6 |
|  |  |  | 3625.5 | 2880.6 |
| Less: unamortized debt discounts and debt issuance costs | Less: unamortized debt discounts and debt issuance costs | Less: unamortized debt discounts and debt issuance costs | (26.0) | (22.2) |
| Less: current maturities | Less: current maturities | Less: current maturities | (12.6) | (12.2) |
| &nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities | &nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities | &nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities | $3586.9 | $2846.2 |

---

On February 28, 2022, we issued $700.0 million aggregate principal amount of 3.85% Senior Notes due 2032, which were sold at 99.835% of the aggregate principal amount.

We had $50.0 million and $340.0 million of commercial paper notes outstanding as of December 31, 2022 and 2021, respectively. We also had $181.8 million of non-recourse debt outstanding under our warehouse facilities and $146.9 million of non-recourse debt under term securitizations of consolidated variable interest entities ("VIEs") as of December 31, 2022.

A downgrade in our credit ratings could negatively impact the interest rate payable on our 3.5% Senior Notes, 4.5% Senior Notes, 3.8% Senior Notes, and 4.75% Senior Notes and could negatively impact our ability to issue, or the interest rates for, commercial paper notes. Additionally, an increase in our leverage ratio could negatively impact the interest rates charged for borrowings under our revolving credit facility.

See Note 10 of the Notes to Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and non-recourse debt.

*Restrictions and Covenants*

Our credit agreement and the indentures for our senior unsecured notes contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness to create liens or other encumbrances, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities.

Under our credit agreement, we are required to remain in compliance with a maximum leverage ratio and maximum capitalization 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. The capitalization ratio is a contractually defined amount principally reflecting vehicle floorplan payable and non-vehicle debt divided by our total capitalization including vehicle floorplan payable. The specific terms of these covenants can be found in our credit agreement, which we filed with our Current Report on Form 8-K on March 26, 2020.

The indentures for our senior unsecured notes contain certain limited covenants, including limitations on liens and sale and leaseback transactions.

In addition, our failure to comply with the covenants contained in our credit agreement and the indentures for our senior unsecured notes could result in the acceleration of other indebtedness of AutoNation.

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As of December 31, 2022, we were in compliance with the requirements of the financial covenants under our credit agreement and the indentures for our senior unsecured notes. Under the terms of our credit agreement, at December 31, 2022, our leverage ratio and capitalization ratio were as follows:

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** |
| | **Requirement** | **Actual&nbsp;&nbsp;&nbsp;&nbsp;** |
| Leverage ratio | ≤ 3.75x | 1.62x |
| Capitalization ratio | ≤ 70.0% | 59.9% |

---

***Vehicle Floorplan Payable***

The components of vehicle floorplan payable are as follows:

---

| | | |
|:---|:---|:---|
| **(In millions)** | **2022** | **2021** |
| Vehicle floorplan payable - trade | $946.6 | $489.9 |
| Vehicle floorplan payable - non-trade | 1162.7 | 967.7 |
| &nbsp;&nbsp;&nbsp;&nbsp; Vehicle floorplan payable | $2109.3 | $1457.6 |

---

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.

Prior to October 2021, our vehicle floorplan facilities utilized LIBOR-based interest rates. In connection with global reference rate reform initiatives, particularly related to LIBOR, in October 2021, we began modifying our floorplan agreements to replace the reference rate from LIBOR to an alternative reference rate. The floorplan agreement modifications will be accounted for by prospectively adjusting the effective interest rate in accordance with accounting standards. We do not expect the change from LIBOR to an alternative reference rate to have a material impact on our annual floorplan interest expense. See Note 6 of the Notes to 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:

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| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| **(In millions)** | **2022** | **2021** | **2020** |
| Net cash provided by operating activities | $1668.1 | $1627.7 | $1207.6 |
| Net cash used in investing activities | $(479.3) | $(460.3) | $(73.7) |
| Net cash used in financing activities | $(1154.0) | $(1676.5) | $(606.7) |

---

***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 of parts and services, and proceeds from vehicle floorplan payable-trade. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of inventory, personnel-related expenditures, and payments related to taxes and leased properties.

*2022 compared to 2021* 

Net cash provided by operating activities increased during 2022, as compared to 2021, primarily due to an increase in earnings, partially offset by an increase in working capital requirements.

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***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 and collections of 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.

*2022 compared to 2021* 

Net cash used in investing activities increased during 2022, as compared to 2021, primarily due to an increase in purchases of property and equipment, a decrease in proceeds from the sale of equity securities, an increase in net cash outflows related to auto loans receivable due to our recently acquired captive finance company, and a decrease in proceeds from the disposal of assets held for sale, partially offset by a decrease in cash used in acquisitions, net of cash acquired.

***Cash Flows from Financing Activities***

Net cash flows from financing activities primarily include repurchases of common stock, debt activity, changes in vehicle floorplan payable-non-trade, payments of tax withholdings for stock-based awards, and proceeds from stock option exercises.

*2022 compared to 2021* 

During 2022, we repurchased 15.6 million shares of common stock for an aggregate purchase price of $1.7 billion (average purchase price per share of $109.86), including repurchases for which settlement occurred subsequent to December 31, 2022. During 2021, we repurchased 22.3 million shares of our common stock for an aggregate purchase price of $2.3 billion (average purchase price per share of $103.18).

During 2022, we issued $700.0 million aggregate principal amount of 3.85% Senior Notes due 2032. Cash flows from financing activities during 2022, reflect cash payments of $6.6 million for debt issuance costs associated with the senior notes issuance that are being amortized to interest expense over the term of the related senior notes.

During 2021, we repaid the outstanding $300.0 million of 3.35% Senior Notes due 2021 and issued $400.0 million aggregate principal amount of 1.95% Senior Notes due 2028 and $450.0 million aggregate principal amount of 2.4% Senior Notes due 2031. Cash flows from financing activities during 2021, reflect cash payments of $8.0 million for debt issuance costs associated with the senior note issuances that are being amortized to interest expense over the terms of the related senior notes.

Cash flows from financing activities include changes in commercial paper notes outstanding totaling net payments of $290.0 million during 2022 compared to net proceeds of $340.0 million during 2021 and vehicle floorplan payable-non-trade totaling net proceeds of $178.6 million during 2022 compared to net repayments of $263.9 million during 2021.

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**Material Cash Requirements**

The following table summarizes our current and long-term material cash requirements as of December 31, 2022. The amounts presented are based upon, among other things, the terms of any relevant agreements. Future events that may occur related to the following payment obligations could cause actual payments to differ significantly from these amounts.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
| **(In millions)** | **Total&nbsp;&nbsp;&nbsp;&nbsp;** | **Less Than 1**<br>**Year**<br>**(2023)** | **1 - 3 Years**<br>**(2024 and**<br>**2025)** | **3 - 5 Years**<br>**(2026 and**<br>**2027)** | **More Than** <br>**5 Years**<br>**(2028 and**<br>**thereafter)** |
| Vehicle floorplan payable (Note 6)<sup>(1)</sup> | $2109.3 | $2109.3 | $— | $— | $— |
| Non-vehicle long-term debt, including finance leases (Note 10)<sup>(1)(2)</sup> | 3625.5 | 12.6 | 982.0 | 330.0 | 2300.9 |
| Commercial paper (Note 10)<sup>(1)</sup> | 50.0 | 50.0 |  |  |  |
| Interest payments<sup>(3)</sup> | 848.2 | 132.3 | 246.9 | 181.2 | 287.8 |
| Operating lease and other commitments (Note 9)<sup>(1)(4)</sup> | 453.7 | 55.9 | 95.1 | 79.0 | 223.7 |
| Unrecognized tax benefits, net (Note 13)<sup>(1)</sup> | 11.7 |  | 3.0 | 8.7 |  |
| Deferred compensation obligations<sup>(5)</sup> | 107.8 | 5.3 |  |  | 102.5 |
| Estimated chargeback liability (Note 11)<sup>(1)(6)</sup> | 197.0 | 107.3 | 76.6 | 12.6 | 0.5 |
| Estimated self-insurance obligations (Note 12)<sup>(1)(7)</sup> | 94.5 | 37.6 | 31.6 | 12.1 | 13.2 |
| Purchase obligations and other commitments<sup>(8)</sup> | 274.0 | 209.5 | 45.6 | 13.9 | 5.0 |
| &nbsp;&nbsp;&nbsp;Total | $7771.7 | $2719.8 | $1480.8 | $637.5 | $2933.6 |

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<sup>(1)</sup> See Notes to Consolidated Financial Statements.

<sup>(2)</sup> Amounts for non-vehicle long-term debt obligations reflect principal payments and are not reduced for unamortized debt discounts of $5.5 million or debt issuance costs of $20.5 million.

<sup>(3)</sup> Primarily represents scheduled fixed interest payments on our outstanding senior unsecured notes and finance leases. Estimates of future interest payments for vehicle floorplan payables and commercial paper are excluded due to the short-term nature of these facilities.

<sup>(4)</sup> Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes. In 2022, these charges totaled approximately $26 million. Additionally, operating leases that are on a month-to-month basis are not included.

<sup>(5)</sup> Due to uncertainty regarding timing of payments expected beyond one year, long-term obligations for deferred compensation arrangements have been classified in the "More Than 5 Years" column.

<sup>(6)</sup> Our estimated chargeback obligations do not have scheduled maturities, however, the timing of future payments is estimated based on historical patterns.

<sup>(7)</sup> Our estimated self-insurance obligations are based on management estimates and actuarial calculations. Although these obligations do not have scheduled maturities, the timing of future payments is estimated based on historical patterns.

<sup>(8)</sup> Primarily represents purchase orders and contracts in connection with real estate construction projects and information technology and communication systems.

We expect that the amounts above will be funded through cash flows from operations or borrowings under our commercial paper program or credit agreement. In the case of payments due upon the maturity of our debt instruments, we currently expect to be able to refinance such instruments in the normal course of business.

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The table above excludes the non-recourse debt that relates to auto loans receivable funded through asset-backed term securitizations and/or warehouse facilities. These receivables can only be used as collateral to settle obligations of this non-recourse debt. In addition, the investors and/or creditors in the non-recourse debt 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. Non-recourse debt, net of unamortized debt discounts and issuance costs, totaled $323.6 million at December 31, 2022. See Note 5 and Note 10 to the 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. At December 31, 2022, surety bonds, letters of credit, and cash deposits totaled $109.6 million, of which $0.4 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit. We have negotiated a letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under this revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit.

As further discussed in Note 13 of the Notes to Consolidated Financial Statements, there are various tax matters where the ultimate resolution may result in us owing additional tax payments.

**Off-Balance Sheet Arrangements**

As of December 31, 2022, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

**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 Annual Report on Form 10-K, including, without limitation, statements regarding our strategic acquisitions, initiatives, partnerships, or investments, including the planned expansion of our AutoNation USA used vehicle stores and our investments in digital and online capabilities and mobility solutions; our expectations for the future performance of our business and the automotive retail 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:

&nbsp;&nbsp;&nbsp;&nbsp;***•*** The automotive retail industry is sensitive to changing economic conditions and various other 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, as well as the gross profit margins that we can achieve on our sales of vehicles, all of which are very difficult to predict*.***

&nbsp;&nbsp;&nbsp;&nbsp;• The COVID-19 pandemic disrupted, and may continue to disrupt, our business, results of operations, and financial condition going forward. Future epidemics, pandemics, and other outbreaks could also disrupt our business, results of operations, and financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers*.***

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&nbsp;&nbsp;&nbsp;&nbsp;***•*** We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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.

&nbsp;&nbsp;&nbsp;&nbsp;• We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA stores, and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.

&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** We are subject 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 business.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** New laws, regulations, or governmental policies in response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, could adversely impact our business, results of operations, financial condition, cash flow, and prospects.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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*.***

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** 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. 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.

&nbsp;&nbsp;&nbsp;&nbsp;***•*** Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business.

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**Additional Information**

Investors and others should note that we announce material financial information using our company website (<u>www.autonation.com</u>), our investor relations website (<u>investors.autonation.com</u>), 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 AutoNation's Twitter feed (<u>www.twitter.com/autonation</u>).

The information that we post on our website 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 those websites and social media channels. Our social media channels may be updated from time to time on our investor relations website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K.

**ITEM 7A. *QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK***

**Interest Rate Risk**

We have market risk exposure on 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 $2.1 billion of variable rate vehicle floorplan payable at December 31, 2022, and $1.5 billion at December 31, 2021. 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 $21.1 million in 2022 and $14.6 million in 2021. 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 $50.0 million of commercial paper notes outstanding at December 31, 2022, and $340.0 million at December 31, 2021. Based on the amount outstanding, a 100 basis point change in interest rates would result in an approximate change to our annual interest expense of $0.5 million in 2022 and $3.4 million in 2021.

Our fixed rate senior unsecured notes totaled $3.2 billion and had a fair value of $2.8 billion as of December 31, 2022, and totaled $2.5 billion and had a fair value of $2.7 billion as of December 31, 2021.

As of December 31, 2022, 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 $15.4 million at December 31, 2022. 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 $1.5 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 December 31, 2022. 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.

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**ITEM 8. *FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA***

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

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| | |
|:---|:---|
| | **Page** |
| <u>[Reports of Independent Registered Public Accounting Firm](#ia1a238a5878f4714ab09adbe7f58fb49_97)</u><br> (KPMG LLP, Fort Lauderdale, FL, Auditor Firm ID: 185) | <u>[58](#ia1a238a5878f4714ab09adbe7f58fb49_97)</u> |
| <u>[Consolidated Balance Sheets as of December 31, 202](#ia1a238a5878f4714ab09adbe7f58fb49_100)[2](#ia1a238a5878f4714ab09adbe7f58fb49_100)[and](#ia1a238a5878f4714ab09adbe7f58fb49_100)[2021](#ia1a238a5878f4714ab09adbe7f58fb49_100)</u> | <u>[62](#ia1a238a5878f4714ab09adbe7f58fb49_100)</u> |
| <u>[Consolidated Statements of Income for the Years Ended December 31, 202](#ia1a238a5878f4714ab09adbe7f58fb49_103)[2](#ia1a238a5878f4714ab09adbe7f58fb49_103)[, 202](#ia1a238a5878f4714ab09adbe7f58fb49_103)[1](#ia1a238a5878f4714ab09adbe7f58fb49_103)[, and](#ia1a238a5878f4714ab09adbe7f58fb49_103)[20](#ia1a238a5878f4714ab09adbe7f58fb49_103)[20](#ia1a238a5878f4714ab09adbe7f58fb49_103)</u> | <u>[63](#ia1a238a5878f4714ab09adbe7f58fb49_103)</u> |
| <u>[Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 202](#ia1a238a5878f4714ab09adbe7f58fb49_106)[2](#ia1a238a5878f4714ab09adbe7f58fb49_106)[, 202](#ia1a238a5878f4714ab09adbe7f58fb49_106)[1](#ia1a238a5878f4714ab09adbe7f58fb49_106)[, and](#ia1a238a5878f4714ab09adbe7f58fb49_106)[20](#ia1a238a5878f4714ab09adbe7f58fb49_106)[20](#ia1a238a5878f4714ab09adbe7f58fb49_106)</u> | <u>[64](#ia1a238a5878f4714ab09adbe7f58fb49_106)</u> |
| <u>[Consolidated Statements of Cash Flows for the Years Ended December 31, 202](#ia1a238a5878f4714ab09adbe7f58fb49_109)[2](#ia1a238a5878f4714ab09adbe7f58fb49_109)[, 202](#ia1a238a5878f4714ab09adbe7f58fb49_109)[1](#ia1a238a5878f4714ab09adbe7f58fb49_109)[, and](#ia1a238a5878f4714ab09adbe7f58fb49_109)[20](#ia1a238a5878f4714ab09adbe7f58fb49_109)[20](#ia1a238a5878f4714ab09adbe7f58fb49_109)</u> | <u>[65](#ia1a238a5878f4714ab09adbe7f58fb49_109)</u> |
| <u>[Notes to Consolidated Financial Statements](#ia1a238a5878f4714ab09adbe7f58fb49_112)</u> | <u>[67](#ia1a238a5878f4714ab09adbe7f58fb49_112)</u> |

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**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors

AutoNation, Inc.:

*Opinion on the Consolidated Financial Statements*

We have audited the accompanying consolidated balance sheets of AutoNation, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 17, 2023 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

*Basis for Opinion*

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

*Critical Audit Matter*

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Fair value of franchise rights*

As described in Note 8 to the consolidated financial statements, the franchise rights balance as of December 31, 2022 was $816.2 million. The Company performs franchise rights impairment testing annually or more frequently when events or changes indicate that impairment may have occurred. During the fiscal year ended December 31, 2022, the Company performed a quantitative impairment analysis of its franchise rights.

We identified the assessment of the fair values of franchise rights as a critical audit matter. We performed sensitivity analyses as a risk assessment procedure over assumptions used to estimate the fair value of the franchise rights and determined the forecasted revenue growth rates, the forecasted margin rates and the discount rates represented the significant assumptions. A higher degree of auditor judgment was required to evaluate the Company's estimated

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forecasted revenue growth rates and margin rates used to determine the fair value of franchise rights. Valuation professionals with specialized skills and knowledge were required to evaluate the determination of the discount rates.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the process to determine the fair value of the franchise rights, including controls over the:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• development of the forecasted revenue growth rates and the forecasted margin rates

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• selection of the discount rate assumptions.

We evaluated the Company's forecasted revenue growth rates by comparing the growth assumptions to market data, such as industry forecasted growth rates. We evaluated the Company's forecasted margin rates by comparing the rate assumptions to historical actual margins. We compared the Company's historical revenue growth and margin forecasts to actual results to assess the Company's ability to accurately forecast. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rates used by management in the valuations by comparing them against independently developed discount rates using publicly available market data for comparable entities.

/s/ KPMG LLP

We have served as the Company's auditor since 2003.

Fort Lauderdale, Florida

February 17, 2023

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**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors

AutoNation, Inc.:

*Opinion on Internal Control Over Financial Reporting*

We have audited AutoNation, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 17, 2023 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired CIG Financial and four automotive dealership stores during the fourth quarter of 2022 (the Acquired Entities), which management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2022. The Acquired Entities represented less than 3.70% of total assets and less than 0.04% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the Acquired Entities.

*Basis for Opinion*

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

*Definition and Limitations of Internal Control Over Financial Reporting*

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Fort Lauderdale, Florida

February 17, 2023

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**AUTONATION, INC.**

**CONSOLIDATED BALANCE SHEETS**

**As of December 31,** 

**(In millions, except share and per share data)**

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| **ASSETS** |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $72.6 | $60.4 |
| &nbsp;&nbsp;&nbsp;Receivables, net of allowance for credit losses of $1.7 million and $5.4 million, respectively | 858.8 | 730.0 |
| &nbsp;&nbsp;&nbsp;Inventory | 2048.3 | 1847.9 |
| &nbsp;&nbsp;&nbsp;Other current assets | 158.3 | 173.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 3138.0 | 2811.7 |
| AUTO LOANS RECEIVABLE, net of allowance for credit losses of $57.5 million at December 31, 2022 | 303.1 |  |
| PROPERTY AND EQUIPMENT, NET | 3607.2 | 3419.5 |
| OPERATING LEASE ASSETS | 323.5 | 284.0 |
| GOODWILL | 1320.1 | 1235.3 |
| OTHER INTANGIBLE ASSETS, NET | 837.0 | 743.5 |
| OTHER ASSETS | 530.8 | 449.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $10059.7 | $8943.6 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Vehicle floorplan payable - trade | $946.6 | $489.9 |
| &nbsp;&nbsp;&nbsp;Vehicle floorplan payable - non-trade | 1162.7 | 967.7 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 327.6 | 395.9 |
| &nbsp;&nbsp;&nbsp;Commercial paper | 50.0 | 340.0 |
| &nbsp;&nbsp;&nbsp;Current maturities of long-term debt | 12.6 | 12.2 |
| &nbsp;&nbsp;&nbsp;Current portion of non-recourse debt | 10.7 |  |
| &nbsp;&nbsp;&nbsp;Accrued payroll and benefits | 238.0 | 279.9 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 657.5 | 574.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 3405.7 | 3059.8 |
| LONG-TERM DEBT, NET OF CURRENT MATURITIES | 3586.9 | 2846.2 |
| NON-RECOURSE DEBT, NET OF CURRENT PORTION | 312.9 |  |
| NONCURRENT OPERATING LEASE LIABILITIES | 296.9 | 260.1 |
| DEFERRED INCOME TAXES | 76.5 | 78.2 |
| OTHER LIABILITIES | 333.0 | 322.3 |
| COMMITMENTS AND CONTINGENCIES (Note 21) |  |  |
| SHAREHOLDERS' EQUITY: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at December 31, 2022, and 86,562,149 shares issued at December 31, 2021, including shares held in treasury | 0.6 | 0.8 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 3.1 | 3.2 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 3663.7 | 4639.9 |
| &nbsp;&nbsp;&nbsp;Treasury stock, at cost; 15,915,358 and 23,951,543 shares held, respectively | (1619.6) | (2266.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Shareholders' Equity | 2047.8 | 2377.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Shareholders' Equity | $10059.7 | $8943.6 |

---

See accompanying Notes to Consolidated Financial Statements.

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**AUTONATION, INC.**

**CONSOLIDATED STATEMENTS OF INCOME**

**For the Years Ended December 31,** 

**(In millions, except per share data)**

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Revenue: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | $11754.4 | $12081.7 | $10418.6 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 9661.8 | 8638.8 | 5601.3 |
| &nbsp;&nbsp;&nbsp;Parts and service | 4100.6 | 3706.6 | 3257.4 |
| &nbsp;&nbsp;&nbsp;Finance and insurance, net | 1437.3 | 1384.5 | 1059.3 |
| &nbsp;&nbsp;&nbsp;Other | 30.9 | 32.4 | 53.4 |
| TOTAL REVENUE | 26985.0 | 25844.0 | 20390.0 |
| Cost of Sales: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 10387.8 | 10880.1 | 9834.5 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 9108.7 | 7950.7 | 5142.3 |
| &nbsp;&nbsp;&nbsp;Parts and service | 2200.3 | 2033.9 | 1796.6 |
| &nbsp;&nbsp;&nbsp;Other | 22.9 | 26.7 | 50.2 |
| TOTAL COST OF SALES | 21719.7 | 20891.4 | 16823.6 |
| Gross Profit: |  |  |  |
| &nbsp;&nbsp;&nbsp;New vehicle | 1366.6 | 1201.6 | 584.1 |
| &nbsp;&nbsp;&nbsp;Used vehicle | 553.1 | 688.1 | 459.0 |
| &nbsp;&nbsp;&nbsp;Parts and service | 1900.3 | 1672.7 | 1460.8 |
| &nbsp;&nbsp;&nbsp;Finance and insurance | 1437.3 | 1384.5 | 1059.3 |
| &nbsp;&nbsp;&nbsp;Other | 8.0 | 5.7 | 3.2 |
| TOTAL GROSS PROFIT | 5265.3 | 4952.6 | 3566.4 |
| Selling, general, and administrative expenses | 3026.1 | 2876.2 | 2422.0 |
| Depreciation and amortization | 200.3 | 193.3 | 198.9 |
| Goodwill impairment |  |  | 318.3 |
| Franchise rights impairment |  |  | 57.5 |
| Other (income) expense, net | 14.4 | (19.7) | 6.5 |
| OPERATING INCOME | 2024.5 | 1902.8 | 563.2 |
| Non-operating income (expense) items: |  |  |  |
| &nbsp;&nbsp;Floorplan interest expense | (41.4) | (25.7) | (63.8) |
| &nbsp;&nbsp;Other interest expense | (134.9) | (93.0) | (93.7) |
| &nbsp;&nbsp;Other income (loss), net | (14.7) | 24.3 | 144.4 |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 1833.5 | 1808.4 | 550.1 |
| Income tax provision | 455.8 | 435.1 | 168.3 |
| NET INCOME FROM CONTINUING OPERATIONS | 1377.7 | 1373.3 | 381.8 |
| Loss from discontinued operations, net of income taxes | (0.3) | (0.3) | (0.2) |
| NET INCOME | $1377.4 | $1373.0 | $381.6 |
| BASIC EARNINGS (LOSS) PER SHARE: |  |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations | $24.47 | $18.51 | $4.32 |
| &nbsp;&nbsp;&nbsp;Discontinued operations | $(0.01) | $— | $— |
| &nbsp;&nbsp;&nbsp;Net income | $24.47 | $18.50 | $4.32 |
| &nbsp;&nbsp;&nbsp;Weighted average common shares outstanding | 56.3 | 74.2 | 88.3 |
| DILUTED EARNINGS (LOSS) PER SHARE: |  |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations | $24.30 | $18.31 | $4.30 |
| &nbsp;&nbsp;&nbsp;Discontinued operations | $(0.01) | $— | $— |
| &nbsp;&nbsp;&nbsp;Net income | $24.29 | $18.31 | $4.30 |
| &nbsp;&nbsp;&nbsp;Weighted average common shares outstanding | 56.7 | 75.0 | 88.7 |
| COMMON SHARES OUTSTANDING, net of treasury stock, at period end | 47.6 | 62.6 | 83.5 |

---

See accompanying Notes to Consolidated Financial Statements.

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**AUTONATION, INC.**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

**For the Years Ended December 31, 2022, 2021, and 2020** 

**(In millions, except share data)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional<br>Paid-In<br>Capital** | **Retained<br>Earnings** | **Treasury<br>Stock** | **Total** |
| | **Shares** | **Amount** | **Additional<br>Paid-In<br>Capital** | **Retained<br>Earnings** | **Treasury<br>Stock** | **Total** |
| BALANCE AT DECEMBER 31, 2019 | 102562149 | $1.0 | $35.9 | $3688.3 | $(563.1) | $3162.1 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  | 381.6 |  | 381.6 |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock |  |  |  |  | (382.3) | (382.3) |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 30.2 |  |  | 30.2 |
| &nbsp;&nbsp;Shares awarded under stock-based compensation plans, net of shares withheld for taxes |  |  | (13.0) |  | 57.6 | 44.6 |
| &nbsp;&nbsp;&nbsp;Cumulative effect of change in accounting principle - current expected credit losses |  |  |  | (0.5) |  | (0.5) |
| BALANCE AT DECEMBER 31, 2020 | 102562149 | $1.0 | $53.1 | $4069.4 | $(887.8) | $3235.7 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  | 1373.0 |  | 1373.0 |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock |  |  |  |  | (2303.2) | (2303.2) |
| &nbsp;&nbsp;&nbsp;Treasury stock cancellation | (16000000) | (0.2) | (40.6) | (797.2) | 838.0 |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 35.0 |  |  | 35.0 |
| &nbsp;&nbsp;Shares awarded under stock-based compensation plans, net of shares withheld for taxes |  |  | (44.3) | (5.3) | 86.1 | 36.5 |
| BALANCE AT DECEMBER 31, 2021 | 86562149 | $0.8 | $3.2 | $4639.9 | $(2266.9) | $2377.0 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  | 1377.4 |  | 1377.4 |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock |  |  |  |  | (1710.2) | (1710.2) |
| &nbsp;&nbsp;&nbsp;Treasury stock cancellation | (23000000) | (0.2) | (7.8) | (2295.5) | 2303.5 |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 31.5 |  |  | 31.5 |
| &nbsp;&nbsp;Shares awarded under stock-based compensation plans, net of shares withheld for taxes |  |  | (23.8) | (58.1) | 54.0 | (27.9) |
| BALANCE AT DECEMBER 31, 2022 | 63562149 | $0.6 | $3.1 | $3663.7 | $(1619.6) | $2047.8 |

---

See accompanying Notes to Consolidated Financial Statements.

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**AUTONATION, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the Years Ended December 31,** 

**(In millions)**

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $1377.4 | $1373.0 | $381.6 |
| &nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued operations | 0.3 | 0.3 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 200.3 | 193.3 | 198.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs and accretion of debt discounts | 7.2 | 4.9 | 4.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 31.5 | 35.0 | 30.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses on auto loans receivable | 43.8 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax provision (benefit) | 1.3 | (17.4) | (38.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gain on asset sales and dispositions | (16.3) | (18.1) | (7.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill impairment |  |  | 318.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Franchise rights impairment |  |  | 57.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-cash impairment charges | 1.6 | 3.2 | 14.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on equity investments | (2.9) | (10.9) | (131.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on corporate-owned life insurance asset | 19.4 | (12.7) | (12.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other |  | (0.6) | 1.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease, net of effects from business combinationsand divestitures: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables | (129.2) | 114.9 | 70.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | (175.5) | 800.4 | 703.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (58.4) | 92.2 | 85.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease), net of effects from business combinationsand divestitures: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vehicle floorplan payable-trade | 461.1 | (1059.7) | (579.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (68.9) | 57.2 | 47.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (24.3) | 73.0 | 63.2 |
| Net cash provided by continuing operations | 1668.4 | 1628.0 | 1207.6 |
| Net cash used in discontinued operations | (0.3) | (0.3) |  |
| Net cash provided by operating activities | 1668.1 | 1627.7 | 1207.6 |
| CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property and equipment | (329.0) | (215.7) | (156.0) |
| &nbsp;&nbsp;&nbsp;Proceeds from the disposal of assets held for sale | 22.8 | 37.1 | 16.4 |
| &nbsp;&nbsp;&nbsp;Cash used in business acquisitions, net of cash acquired | (191.6) | (432.7) | (0.4) |
| &nbsp;&nbsp;&nbsp;Cash received from business divestitures, net of cash relinquished | 55.2 | 48.7 | 9.0 |
| &nbsp;&nbsp;&nbsp;Originations of auto loans receivable acquired through third-party dealers | (56.0) |  |  |
| &nbsp;&nbsp;&nbsp;Collections on auto loans receivable acquired through third-party dealers | 36.4 |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from the sale of equity securities | 1.8 | 109.4 | 105.4 |
| &nbsp;&nbsp;&nbsp;Investment in equity securities | (12.0) | (5.5) | (50.0) |
| &nbsp;&nbsp;&nbsp;Other | (6.9) | (1.6) | 1.9 |
| Net cash used in continuing operations | (479.3) | (460.3) | (73.7) |
| Net cash used in discontinued operations |  |  |  |
| Net cash used in investing activities | (479.3) | (460.3) | (73.7) |

---

See accompanying Notes to Consolidated Financial Statements.

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**AUTONATION, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the Years Ended December 31,** 

**(In millions)**

**(Continued)**

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock | (1699.5) | (2318.2) | (367.2) |
| &nbsp;&nbsp;&nbsp;Proceeds from 3.85% Senior Notes due 2032 | 698.8 |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from 1.95% Senior Notes due 2028 |  | 399.2 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from 2.4% Senior Notes due 2031 |  | 448.8 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from 4.75% Senior Notes due 2030 |  |  | 497.4 |
| &nbsp;&nbsp;&nbsp;Payment of 3.35% Senior Notes due 2021 |  | (300.0) |  |
| &nbsp;&nbsp;&nbsp;Payment of 5.5% Senior Notes due 2020 |  |  | (350.0) |
| &nbsp;&nbsp;&nbsp;Proceeds from revolving credit facilities |  |  | 1110.0 |
| &nbsp;&nbsp;&nbsp;Payments of revolving credit facilities |  |  | (1110.0) |
| &nbsp;&nbsp;&nbsp;Net proceeds from (payments of) commercial paper | (290.0) | 340.0 | (170.0) |
| &nbsp;&nbsp;&nbsp;Proceeds from non-recourse debt | 40.7 |  |  |
| &nbsp;&nbsp;&nbsp;Payments of non-recourse debt | (35.6) |  |  |
| &nbsp;&nbsp;&nbsp;Payment of debt issuance costs | (7.1) | (8.0) | (11.0) |
| &nbsp;&nbsp;Net proceeds from (payments of) vehicle floorplan payable - non-trade | 178.6 | (263.9) | (233.3) |
| &nbsp;&nbsp;&nbsp;Payments of other debt obligations | (12.0) | (10.9) | (17.2) |
| &nbsp;&nbsp;&nbsp;Proceeds from the exercise of stock options | 3.4 | 54.5 | 52.7 |
| &nbsp;&nbsp;&nbsp;Payments of tax withholdings for stock-based awards | (31.3) | (18.0) | (8.1) |
| Net cash used in continuing operations | (1154.0) | (1676.5) | (606.7) |
| Net cash used in discontinued operations |  |  |  |
| Net cash used in financing activities | (1154.0) | (1676.5) | (606.7) |
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 34.8 | (509.1) | 527.2 |
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of year | 60.6 | 569.7 | 42.5 |
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of year | $95.4 | $60.6 | $569.7 |

---

See accompanying Notes to Consolidated Financial Statements.

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(All tables in millions, except per share data)**

**1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Organization and Business***

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of December 31, 2022, we owned and operated 343 new vehicle franchises from 247 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores sell 33 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 89% of the new vehicles that we sold in 2022, are manufactured by Toyota (including Lexus), Honda, BMW, Ford, Mercedes-Benz, General Motors, Stellantis, and Volkswagen (including Audi and Porsche). As of December 31, 2022, we also owned and operated 55 AutoNation-branded collision centers, 13 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, and an auto finance company.

We offer a diversified range of automotive products and services, including new vehicles, used vehicles, "parts and 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, as well as on installment contracts acquired by our captive finance company through third-party independent dealers. 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 dealership operations are conducted by our subsidiaries.

***Basis of Presentation***

The accompanying Consolidated Financial Statements include the accounts of AutoNation, Inc. and its subsidiaries. All of our automotive dealership subsidiaries are indirectly wholly owned by the parent company, AutoNation, Inc. Intercompany accounts and transactions have been eliminated in the consolidation.

***Use of Estimates***

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. 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. Such estimates and assumptions affect, among other things, our goodwill, indefinite-lived intangible asset, and long-lived asset valuations; inventory valuation; equity investment valuation; assets held for 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; accruals related to self-insurance programs; the allowance for expected credit losses; certain legal proceedings; assessment of the annual income tax expense; deferred income taxes and income tax contingencies; and measurement of performance-based compensation costs.

***Cash and Cash Equivalents***

We consider all highly liquid investments with a maturity of three months or less as of the date of purchase to be cash equivalents unless the investments are legally or contractually restricted for more than three months. Under our cash management system, outstanding checks that are in excess of the cash balances at certain banks are included in Accounts

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

Payable in the Consolidated Balance Sheets and changes in these amounts are reflected in operating cash flows in the accompanying Consolidated Statements of Cash Flows.

***Auto Loans Receivable***

Auto loans receivable include amounts due from customers related to retail vehicle sales financed through our recently acquired captive auto finance company ("CIG" or "AutoNation Finance"), as well as retail vehicle installment sales contracts acquired through third-party independent dealers. Auto loans receivable are presented net of an allowance for expected credit losses. See Note 5 of the Notes to Consolidated Financial Statements for additional information on our significant accounting policies related to auto loans receivable and the allowance for expected credit losses.

***Financing and Securitization Transactions***

Through wholly-owned, bankruptcy-remote, special purpose entities, we utilize warehouse facilities to fund auto loans receivable originated by our auto finance company. Prior to our acquisition, CIG put in place term securitizations to provide long-term funding for certain auto loans receivable initially funded through the warehouse facilities. These securitizations remain in place following the acquisition. 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. The 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. See Note 10 of the Notes to Consolidated Financial Statements for more information on our non-recourse debt and consolidation of variable interest entities.

***Inventory***

Inventory consists primarily of new and used vehicles held for sale, valued at the lower of cost or net realizable value using the specific identification method. Cost includes acquisition, reconditioning, dealer installed accessories, and transportation expenses. Our new vehicle inventory costs are generally reduced by manufacturer holdbacks (percentage of either the manufacturer's suggested retail price or invoice price of a new vehicle that the manufacturer repays to the dealer), incentives, floorplan assistance, and non-reimbursement-based manufacturer advertising assistance. Parts, accessories, and other inventory are valued at the lower of cost or net realizable value. See Note 6 of the Notes to Consolidated Financial Statements for more detailed information about our inventory.

***Property and Equipment, net***

Property and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are charged to expense as incurred. In addition, we capitalize interest on borrowings during the active construction period of capital projects. Capitalized interest is added to the cost of the assets and depreciated over the estimated useful lives of the assets. Leased property meeting certain criteria is capitalized as a finance lease right-of-use asset and the present value of the related lease payments is recorded as a liability and included in current and/or long-term debt based on the lease term. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in Other (Income) Expense, Net (within Operating Income) in the Consolidated Statements of Income. See Note 7 of the Notes to Consolidated Financial Statements for detailed information about our property and equipment.

Depreciation is recorded over the estimated useful lives of the assets involved using the straight-line method. Leasehold improvements and finance lease right-of-use assets are amortized to depreciation expense over the estimated useful life of the asset or the respective lease term used in determining lease classification, whichever is shorter. The range of estimated useful lives is as follows:

Buildings and improvements&nbsp;&nbsp;&nbsp;&nbsp;5 to 40 years

Furniture, fixtures, and equipment&nbsp;&nbsp;&nbsp;&nbsp;3 to 10 years

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

We continually evaluate property and equipment, including leasehold improvements, to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the remaining balance should be evaluated for possible impairment. Such events or changes in circumstances 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. We use an estimate of the related undiscounted cash flows over the remaining life of the asset (asset group) in assessing whether an asset (asset group) is recoverable. If the asset (asset group) is not recoverable, we determine the fair value of the asset (asset group) based on Level 3 inputs, and measure impairment losses based upon the amount by which the carrying amount of the asset (asset group) exceeds the fair value. If we recognize an impairment loss on a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis, which is depreciated over the remaining useful life of that asset.

When property and equipment are 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. Such valuations include estimations of fair values and incremental direct costs to transact a sale. The fair value measurements for our long-lived assets held for sale are based on Level 3 inputs, which consider information obtained from third-party real estate valuation sources, or, in certain cases, pending agreements to sell the related assets. We recognize an impairment loss if the amount of the asset's or disposal group's carrying amount exceeds the asset's or disposal group's estimated fair value less cost to sell.

Assets held for sale in both continuing operations and discontinued operations are reported in the "Corporate and other" category of our segment information. We had assets held for sale in continuing operations of $5.7 million at December 31, 2022, and $53.3 million at December 31, 2021. We had assets held for sale in discontinued operations of $1.1 million at December 31, 2022, and $1.1 million at December 31, 2021.

See Note 20 of the Notes to Consolidated Financial Statements for information about our fair value measurement valuation process and impairment charges that were recorded during 2022, 2021, and 2020.

***Leases***

We lease numerous facilities and various types of equipment relating to our operations. See Note 9 of the Notes to Consolidated Financial Statements for a discussion of our significant accounting policies related to leases.

***Goodwill and Other Intangible Assets, net***

Goodwill consists of the cost of acquired businesses in excess of the fair value of the net assets acquired. Additionally, other intangible assets are separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented, or exchanged, regardless of our intent to do so.

Our principal identifiable intangible assets are rights under franchise agreements with vehicle manufacturers. We generally expect our franchise agreements to survive for the foreseeable future and, when the agreements do not have indefinite terms, anticipate routine renewals of the agreements without substantial cost. The contractual terms of our franchise agreements provide for various durations, ranging from one year to no expiration date, and in certain cases, manufacturers have undertaken to renew such franchises upon expiration so long as the dealership is in compliance with the terms of the agreement. However, in general, the states in which we operate have automotive dealership franchise laws that provide that, notwithstanding the terms of any franchise agreement, it is unlawful for a manufacturer to terminate or not renew a franchise unless "good cause" exists. It is generally difficult, outside of bankruptcy, for a manufacturer to terminate or not renew a franchise under these franchise laws, which were designed to protect dealers. In addition, in our experience and historically in the automotive retail industry, dealership franchise agreements are rarely involuntarily

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

terminated or not renewed by the manufacturer outside of bankruptcy. Accordingly, we believe that our franchise agreements will contribute to cash flows for the foreseeable future and have indefinite lives. Other intangible assets are amortized using a straight-line method over their useful lives, generally ranging from three to thirty years.

We do not amortize goodwill or franchise rights assets. Goodwill and franchise rights are tested for impairment annually or more frequently when events or changes in circumstances indicate that impairment may have occurred. During 2022 and 2021, we did not record any goodwill or franchise rights impairment charges.

See Note 8 of the Notes to Consolidated Financial Statements for more information about our goodwill and other intangible assets and Note 20 of the Notes to Consolidated Financial Statements for information about our annual impairment tests of goodwill and franchise rights.

***Other Current Assets***

Other current assets consist of various items, including, among other items, prepaid expenses, contract assets, and deposits. Other current assets also includes restricted cash on deposit in reserve accounts for the benefit of holders of certain non-recourse debt. These funds are not expected to be available to the company or its creditors.

***Other Assets***

Other assets consist of various items, including, among other items, service loaner and rental vehicle inventory, net, the cash surrender value of corporate-owned life insurance held in a Rabbi Trust for deferred compensation plan participants, and investments in equity securities.

***Other Current Liabilities***

Other current liabilities consist of various items payable within one year including, among other items, accruals for sales taxes, the current portions of finance and insurance chargeback liabilities, operating lease liabilities, contract liabilities, and deferred revenue, customer deposits, accrued expenses, and accrued interest payable.

***Other Liabilities***

Other liabilities consist of various items payable beyond one year including, among other items, the long-term portions of deferred compensation obligations, finance and insurance chargeback liabilities, contract liabilities, and self-insurance liabilities.

***Employee Savings Plans***

We offer a 401(k) plan to all of our associates and provided a matching contribution to certain associates that participate in the plan of $19.9 million in 2022, $14.3 million in 2021, and $4.5 million in 2020. Effective in April 2020, we suspended matching contributions to the 401(k) plan in light of the uncertain economic conditions resulting from the COVID-19 pandemic. A matching contribution to the 401k plan was reinstated effective January 2021. Employer matching are fully vested immediately upon contribution.

We offer a deferred compensation plan (the "Plan") to provide certain associates and non-employee directors with the opportunity to accumulate assets for retirement on a tax-deferred basis. Participants in the Plan are allowed to defer a portion of their compensation and are fully vested in their respective deferrals and earnings. Participants may choose from a variety of investment options, which determine their earnings credits. Effective in January 2021, we suspended matching contributions to the Plan, which were reinstated effective January 2022. We provided a matching contribution to employee participants in the Plan of $1.3 million for 2022 and $1.5 million for 2020. One-third of the matching contribution is vested and credited to participants on the first day of the subsequent calendar year, and an additional one-third vests and is credited on each of the first and second anniversaries of such date. We may also make discretionary contributions, which vest three years after the effective date of the discretionary contribution. The balances due to participants in the Plan were

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

$107.8 million as of December 31, 2022, and $117.2 million as of December 31, 2021, and are included in Other Current Liabilities and Other Liabilities in the accompanying Consolidated Balance Sheets.

***Stock-Based Compensation***

We grant stock-based awards in the form of time-based and performance-based restricted stock units ("RSUs"), which are issued from our treasury stock upon vesting. Compensation cost for RSUs is based on the closing price of our common stock on the date of grant. Prior to 2017, we also granted stock options and restricted stock, which were fully vested as of December 31, 2020.

Certain of our equity-based compensation plans contain provisions that provide for vesting of awards upon retirement. Accordingly, compensation cost for time-based RSUs is, and for restricted stock awards and stock options was, recognized on a straight-line basis over the shorter of the stated vesting period or the period until associates become retirement-eligible. Compensation cost for performance-based RSUs is recognized over the requisite service period based on the expected achievement level of the performance goals, which is evaluated over the performance period. We account for forfeitures of stock-based awards as they occur. See Note 15 of the Notes to Consolidated Financial Statements for more information about our stock-based compensation arrangements.

***Revenue Recognition***

Revenue consists of the sales of new and used vehicles, sales of parts and automotive services, commissions for the placement of finance and insurance products, and sales of other products. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of our significant accounting policies related to revenue recognition.

***Insurance***

Under our self-insurance programs, we retain various levels of aggregate loss limits, per claim deductibles, and claims-handling expenses as part of our various insurance programs, including property and casualty, automobile, workers' compensation, and employee medical benefits. Costs in excess of this retained risk per claim may be insured under various contracts with third-party insurance carriers. We review our claim and loss history on a periodic basis to assist in assessing our future liability. The ultimate costs of these retained insurance risks are estimated by management and by third-party actuarial evaluation of historical claims experience, adjusted for current trends and changes in claims-handling procedures. See Note 12 of the Notes to Consolidated Financial Statements for more information on our self-insurance liabilities.

***Manufacturer Incentives and Other Rebates***

We receive various incentives from manufacturers based on achieving certain objectives, such as specified sales volume targets, as well as other objectives, including maintaining standards of a particular vehicle brand, which may include but are not limited to facility image and design requirements, customer satisfaction survey results, and training standards, among others. These incentives are typically based upon units purchased or sold. These manufacturer incentives are recognized as a reduction of new vehicle cost of sales when earned, generally at the time the related vehicles are sold or upon attainment of the particular program goals, whichever is later.

We also receive manufacturer rebates and assistance for holdbacks, floorplan interest, and non-reimbursement-based advertising expenses (described below), which are reflected as a reduction in the carrying value of each vehicle purchased by us. We recognize holdbacks, floorplan interest assistance, non-reimbursement-based advertising rebates, cash incentives, and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold.

***Advertising***

We generally expense the cost of advertising as incurred, net of earned manufacturer reimbursements for specific advertising costs and other discounts. Advertising expense, net of manufacturer advertising reimbursements, was

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

$184.3 million in 2022, $170.3 million in 2021, and $161.7 million in 2020, and is reflected as a component of Selling, General, and Administrative Expenses in the accompanying Consolidated Statements of Income.

Manufacturer advertising rebates that are reimbursements of costs associated with specific advertising expenses are earned in accordance with the respective manufacturers' reimbursement-based advertising assistance programs, which is typically after we have incurred the corresponding advertising expenses, and are reflected as a reduction of advertising expense. Manufacturer advertising reimbursements classified as an offset to advertising expenses were $58.2 million in 2022, $51.4 million in 2021, and $48.2 million in 2020. All other non-reimbursement-based manufacturer advertising rebates that are not associated with specific advertising expenses are recorded as a reduction of inventory and recognized as a reduction of new vehicle cost of sales in the period the related vehicle is sold.

***Parts and Service Internal Profit***

Our parts and service departments recondition the majority of used vehicles acquired by our used vehicle departments and perform preparatory work and accessory installation on new vehicles acquired by our new vehicle departments. The parts and service departments charge the new and used vehicle departments as if they were third parties in order to account for total activity performed by that department. Revenues and costs of sales associated with the internal work performed by our parts and service departments are reflected in our parts and service results in our Consolidated Statements of Income. New and used vehicle revenues and costs of sales are reduced by the amount of the intracompany charge. As a result, the revenues and costs of sales associated with the internal work performed by our parts and service departments are eliminated in consolidation. We also defer internal profit associated with the internal work performed by our parts and service departments on our vehicle inventory until such vehicles have been sold.

***Income Taxes***

We file a consolidated federal income tax return. Deferred income taxes have been provided for temporary differences between the recognition of revenue and expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities and their reported amounts in the financial statements. See Note 13 of the Notes to Consolidated Financial Statements for more detailed information related to income taxes.

***Earnings Per Share***

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period, including vested RSU awards. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding, noted above, adjusted for the dilutive effect of unvested RSU awards and stock options. See Note 3 of the Notes to Consolidated Financial Statements for more information on the computation of earnings per share.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**2. REVENUE RECOGNITION**

***Disaggregation of Revenue***

The significant majority of our revenue is from contracts with customers. Taxes assessed by governmental authorities that are directly imposed on revenue transactions are excluded from revenue. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. We have determined that these categories depict how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. The tables below also include a reconciliation of the disaggregated revenue to reportable segment revenue.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other**<sup>(1)</sup> | **Total** |
| <u>Major Goods/Service Lines</u> |  |  |  |  |  |
| New vehicle | $3409.1 | $3473.0 | $4872.3 | $— | $11754.4 |
| Used vehicle | 3022.3 | 2652.7 | 3499.8 | 487.0 | 9661.8 |
| Parts and service | 1092.7 | 1050.9 | 1448.6 | 508.4 | 4100.6 |
| Finance and insurance, net | 460.3 | 494.1 | 453.8 | 29.1 | 1437.3 |
| Other | 3.1 | 19.6 | 3.6 | 4.6 | 30.9 |
|  | $7987.5 | $7690.3 | $10278.1 | $1029.1 | $26985.0 |
| <u>Timing of Revenue Recognition</u> |  |  |  |  |  |
| Goods and services transferred at a point in time | $7226.9 | $6896.2 | $9063.1 | $703.7 | $23889.9 |
| Goods and services transferred over time<sup>(2)</sup> | 760.6 | 794.1 | 1215.0 | 325.4 | 3095.1 |
|  | $7987.5 | $7690.3 | $10278.1 | $1029.1 | $26985.0 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other**<sup>(1)</sup> | **Total** |
| <u>Major Goods/Service Lines</u> |  |  |  |  |  |
| New vehicle | $3601.8 | $3969.8 | $4510.1 | $— | $12081.7 |
| Used vehicle | 2875.0 | 2370.5 | 3067.4 | 325.9 | 8638.8 |
| Parts and service | 1007.6 | 950.0 | 1246.7 | 502.3 | 3706.6 |
| Finance and insurance, net | 469.1 | 489.6 | 401.0 | 24.8 | 1384.5 |
| Other | 6.4 | 18.6 | 4.7 | 2.7 | 32.4 |
|  | $7959.9 | $7798.5 | $9229.9 | $855.7 | $25844.0 |
| <u>Timing of Revenue Recognition</u> |  |  |  |  |  |
| Goods and services transferred at a point in time | $7260.7 | $7079.0 | $8197.6 | $535.6 | $23072.9 |
| Goods and services transferred over time<sup>(2)</sup> | 699.2 | 719.5 | 1032.3 | 320.1 | 2771.1 |
|  | $7959.9 | $7798.5 | $9229.9 | $855.7 | $25844.0 |

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other**<sup>(1)</sup> | **Total** |
| <u>Major Goods/Service Lines</u> |  |  |  |  |  |
| New vehicle | $3411.1 | $3283.7 | $3723.8 | $— | $10418.6 |
| Used vehicle | 1781.4 | 1516.5 | 2125.9 | 177.5 | 5601.3 |
| Parts and service | 891.5 | 811.3 | 1058.1 | 496.5 | 3257.4 |
| Finance and insurance, net | 370.5 | 361.7 | 294.7 | 32.4 | 1059.3 |
| Other | 36.1 | 14.8 | 0.3 | 2.2 | 53.4 |
|  | $6490.6 | $5988.0 | $7202.8 | $708.6 | $20390.0 |
| <u>Timing of Revenue Recognition</u> |  |  |  |  |  |
| Goods and services transferred at a point in time | $5841.6 | $5343.8 | $6301.3 | $413.7 | $17900.4 |
| Goods and services transferred over time<sup>(2)</sup> | 649.0 | 644.2 | 901.5 | 294.9 | 2489.6 |
|  | $6490.6 | $5988.0 | $7202.8 | $708.6 | $20390.0 |
| <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. | <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. | <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. | <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. | <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. | <sup>(1)</sup> "Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations. |
| <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. | <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. | <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. | <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. | <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. | <sup>(2)</sup> Represents revenue recognized during the period for automotive repair and maintenance services. |

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***Performance Obligations and Significant Judgments and Estimates Related to Revenue Recognition***

<u>New and Used Vehicle</u>

We sell new vehicles at our franchised dealerships and used vehicles at our franchised dealerships and AutoNation USA used vehicle stores. The transaction price for a vehicle sale is determined with the customer at the time of sale. Customers often trade in their own vehicle to apply toward the purchase of a retail new or used vehicle. The "trade-in" vehicle is a type of noncash consideration measured at fair value, based on external and internal market data for the specific vehicle, and applied as payment to the contract price for the purchased vehicle.

When we sell a new or used vehicle, we typically transfer control at a point in time upon delivery of the vehicle to the customer, which is generally at time of sale, as the customer is able to direct the use of, and obtain substantially all of the benefits from, the vehicle at such time. We do not directly finance our customers' vehicle purchases or leases. We offer indirect financing on certain vehicles we sell, and income from such financing is reflected in our AutoNation Finance results within Other (Income) Expense, Net in our Consolidated Statements of Income. In many cases, we arrange third-party financing for the retail sale or lease of vehicles to our customers in exchange for a fee paid to us by the third-party financial institution. We receive payment directly from the customer at the time of sale, from the third-party financial institution (referred to as contracts-in-transit or vehicle receivables, which are part of our receivables from contracts with customers), or from our captive finance company within a short period of time following the sale. We establish provisions, which are not significant, for estimated returns and warranties on the basis of both historical information and current trends.

We also offer auction services at our AutoNation-branded automotive auctions, revenue from which is included within Used Vehicle wholesale revenue. The transaction price for auction services is based on an established pricing schedule and determined with the customer at the time of sale, and payment is due upon completion of service. We satisfy our performance obligations related to auction services at the point in time that control transfers to the customer, which is when the service is completed.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

<u>Parts and Service</u>

We sell parts and automotive services related to customer-paid repairs and maintenance, repairs and maintenance under manufacturer warranties and extended service contracts, and collision-related repairs. We also sell parts through our wholesale and retail counter channels.

Each automotive repair and maintenance service is a single performance obligation that includes both the parts and labor associated with the service. Payment for automotive service work is typically due upon completion of the service, which is generally completed within a short period of time from contract inception. The transaction price for automotive repair and maintenance services is based on the parts used, the number of labor hours applied, and standardized hourly labor rates. We satisfy our performance obligations, transfer control, and recognize revenue over time for automotive repair and maintenance services because we are creating an asset with no alternative use and we have an enforceable right to payment for performance completed to date. We use an input method to recognize revenue and measure progress based on labor hours expended relative to the total labor hours expected to be expended to satisfy the performance obligation. We have determined labor hours expended to be the relevant measure of work performed to complete the automotive repair or maintenance service for the customer. As a practical expedient, since automotive repair and maintenance service contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue.

The transaction price for wholesale and retail counter parts sales is determined at the time of sale based on the quantity and price of each product purchased. Payment is typically due at time of sale, or within a short period of time following the sale. We establish provisions, which are not significant, for estimated parts returns based on historical information and current trends. Delivery methods of wholesale and retail counter parts vary; however, we generally consider control of wholesale and retail counter parts to transfer when the products are shipped, which typically occurs the same day as or within a few days of the sale.

<u>Finance and Insurance</u>

We sell and receive a commission on the following types of finance and insurance products: extended service contracts, maintenance programs, guaranteed auto protection (known as "GAP," this protection covers the shortfall between a customer's loan balance and insurance payoff in the event of a casualty), "tire and wheel" protection, and theft protection products, among others. We offer products that are sold and administered by independent third parties, including the vehicle manufacturers' captive finance subsidiaries.

Pursuant to our arrangements with these third-party providers, we sell the products on a commission basis, and, for certain products, we also participate in future profit pursuant to retrospective commission arrangements with the issuers of those contracts through the life of the related contracts. For retrospective commission arrangements, we are paid annually based on the annual performance of the issuers' product portfolio. For the majority of finance and insurance product sales, our performance obligation is to arrange for the provision of goods or services by another party. Our performance obligation is satisfied when this arrangement is made, which is when the finance and insurance product is delivered to the end-customer, generally at the time of the vehicle sale. As agent, we recognize revenue in the amount of any fee or commission to which we expect to be entitled, which is the net amount of consideration that we retain after paying the third-party provider the consideration received in exchange for the goods or services to be fulfilled by that party.

The retrospective commission we earn on each product sold is a form of variable consideration that is subject to constraint due to it being highly susceptible to factors outside our influence and control. Our agreements with the third-party administrators generally provide for an annual retrospective commission payout based on the product portfolio performance for that year. We estimate variable consideration related to retrospective commissions and perform a constraint analysis using the expected value method based on the historical performance of the product portfolios and current trends to estimate the amount of retrospective commissions to which we expect we will be entitled. At each reporting period, we reassess our expectations about the amount of retrospective commission variable consideration to which we expect to be entitled and recognize revenue when we no longer believe a significant revenue reversal is probable.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

Additionally, we may be charged back for commissions related to finance and insurance products in the event of early termination, default, or prepayment of the contracts by end-customers ("chargebacks"). An estimated refund liability for chargebacks against the revenue recognized from sales of finance and insurance products is recorded in the period in which the related revenue is recognized and is based primarily on our historical chargeback experience. We update our measurement of the chargeback liability at each reporting date for changes in expectations about the amount of chargebacks. See Note 11 of the Notes to Consolidated Financial Statements for more information regarding chargeback liabilities.

We also sell a vehicle maintenance program (the Vehicle Care Program or "VCP") where we act as the principal in the sale since we have the primary responsibility to provide the specified services to the customer under the VCP contract. When a VCP product is sold in conjunction with the sale of a vehicle to the same customer, the stand-alone selling prices of each product are based on observable selling prices. Under a VCP contract, 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 and recognize revenue as maintenance services are rendered, since the customer benefits when we have completed the maintenance service. Although payment is due from the customer at the time of sale and services are rendered at points in time during a five-year contract term, these contracts do not contain a significant financing component as the transfer of services is at the discretion of the customer. 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.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Revenue Expected to Be Recognized by Period** | **Revenue Expected to Be Recognized by Period** | **Revenue Expected to Be Recognized by Period** | **Revenue Expected to Be Recognized by Period** |
| | **Total** | **Next 12 Months** | **13 - 36 Months** | **37 - 60 Months** |
| Revenue expected to be recognized on VCP contracts sold as of period end | $101.4 | $34.8 | $48.6 | $18.0 |

---

We also recognize revenue, net of estimated chargebacks, for commissions earned by us for the transfer of financial assets when we arrange installment loans and leases with third-party lenders in connection with customer vehicle purchases.

<u>Other Revenue</u>

The majority of our other revenue is generated from the sale of vehicles to fleet/rental car companies that are specifically ordered for such companies ("fleet" sales). Revenue recognition for fleet sales is very similar to the recognition of revenue for new vehicles, described above.

***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 with Other Current Assets, our long-term contract asset is included with Other Assets, our current contract liability is included with Other Current Liabilities, and our long-term contract liability is included with Other Liabilities in our Consolidated Balance Sheets.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

The following table provides the balances at December 31 of our receivables from contracts with customers and our current and long-term contract assets and contract liabilities:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Receivables from contracts with customers, net | $634.5 | $539.9 | $595.0 |
| Contract Asset (Current) | $27.7 | $30.4 | $25.7 |
| Contract Asset (Long-Term) | $8.6 | $14.2 | $10.2 |
| Contract Liability (Current) | $41.8 | $33.6 | $32.5 |
| Contract Liability (Long-Term) | $66.6 | $60.5 | $56.0 |

---

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 that was constrained for performance obligations satisfied in previous periods. The following table presents revenue recognized during the year from amounts included in the contract liability balance at the beginning of the period and performance obligations satisfied in previous periods:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Amounts included in contract liability at the beginning of the period | $33.6 | $32.1 | $31.0 |
| Performance obligations satisfied in previous periods | $2.1 | $19.4 | $19.0 |

---

Other significant changes include contract assets reclassified to receivables of $30.5 million during 2022 and $25.0 million in 2021.

***Contract Costs***

For sales commissions incurred related to sales of vehicles and sales of finance and insurance products for which we act as agent, we have elected as a practical expedient to not capitalize the incremental costs to obtain those contracts since they are point-of-sale transactions and the amortization period would be immediate.

Sales commissions and third-party administrator fees incurred related to sales of VCP products are capitalized since these payments are directly related to sales achieved during a time period and would not have been incurred if the contract had not been obtained. Since the capitalized costs are related to services that are transferred during a five-year contract term, we amortize the assets over the contract term of five years consistent with the pattern of transfer of the service to which the assets relate. We had capitalized costs incurred to obtain or fulfill a VCP contract with a customer of $10.1 million as of December 31, 2022 and $9.4 million at December 31, 2021. We amortized $3.8 million and $3.8 million of these capitalized costs during 2022 and 2021, respectively.

**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 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 unvested RSU awards and stock options.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

The following table presents the calculation of basic and diluted EPS:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Net income from continuing operations | $1377.7 | $1373.3 | $381.8 |
| Loss from discontinued operations, net of income taxes | (0.3) | (0.3) | (0.2) |
| Net income | $1377.4 | $1373.0 | $381.6 |
| Basic weighted average common shares outstanding | 56.3 | 74.2 | 88.3 |
| Dilutive effect of unvested RSUs and stock options | 0.4 | 0.8 | 0.4 |
| Diluted weighted average common shares outstanding | 56.7 | 75.0 | 88.7 |
| **Basic EPS amounts**<sup>(1)</sup>**:** |  |  |  |
| Continuing operations | $24.47 | $18.51 | $4.32 |
| Discontinued operations | $(0.01) | $— | $— |
| Net income | $24.47 | $18.50 | $4.32 |
| **Diluted EPS amounts**<sup>(1)</sup>**:** |  |  |  |
| Continuing operations | $24.30 | $18.31 | $4.30 |
| Discontinued operations | $(0.01) | $— | $— |
| Net income | $24.29 | $18.31 | $4.30 |
| <sup>(1)</sup> EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding. | <sup>(1)</sup> EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding. | <sup>(1)</sup> EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding. | <sup>(1)</sup> 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:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Anti-dilutive equity instruments excluded from the computation of diluted EPS | 0.1 |  | 1.7 |

---

**4. RECEIVABLES, NET**

The components of receivables, net of allowances for expected credit losses, at December 31 are as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Contracts-in-transit and vehicle receivables | $441.1 | $347.4 |
| Trade receivables | 156.6 | 162.6 |
| Manufacturer receivables | 174.4 | 148.4 |
| Income taxes receivable (see Note 13) | 20.2 |  |
| Other | 68.2 | 77.0 |
|  | 860.5 | 735.4 |
| Less: allowances for expected credit losses | (1.7) | (5.4) |
| &nbsp;&nbsp;&nbsp;Receivables, net | $858.8 | $730.0 |

---

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 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,

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

rebates, incentives, floorplan assistance, and warranty claims. We evaluate our receivables for collectability based on 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 recently acquired auto finance company (referred to as AutoNation Finance), as well as retail vehicle installment sales contracts acquired 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.

Interest income and expenses related to auto loans represent AutoNation Finance income (loss), which 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 December 31, 2022 are as follows:

---

| | |
|:---|:---|
| | **2022** |
| Total auto loans receivable | $377.0 |
| Accrued interest and fees | 4.4 |
| Deferred loan origination costs | 0.5 |
| Less: unearned discounts | (21.3) |
| Less: allowances for expected credit losses | (57.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Auto loans receivable, net | $303.1 |

---

***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. Customers with the highest probability of repayment are "Platinum" customers. Customers assigned a lower credit tier are determined to have a lower probability of repayment. For loans that are approved, 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 tier adequately reflect the customers' likelihood of repayment, and if needed, adjustments are made to the scoring models on a prospective basis.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

***Auto Loans Receivable by Major Credit Program***

The following table presents auto loans receivable, as of December 31, 2022, disaggregated by major credit program tier:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Fiscal Year of Origination** <sup>(1)</sup> | **Fiscal Year of Origination** <sup>(1)</sup> | **Fiscal Year of Origination** <sup>(1)</sup> | **Fiscal Year of Origination** <sup>(1)</sup> | **Fiscal Year of Origination** <sup>(1)</sup> | **Fiscal Year of Origination** <sup>(1)</sup> | |
| | **2022** | **2021** | **2020** | **2019** | **2018** | **Prior to 2018** |<br>**Total** |
| Credit Program Tier: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Platinum | $21.9 | $12.9 | $6.4 | $7.4 | $2.2 | $0.2 | $51 |
| &nbsp;&nbsp;Gold | 53.7 | 30.0 | 12.9 | 10.6 | 3.2 | 0.4 | 110.8 |
| &nbsp;&nbsp;Silver | 61.9 | 29.8 | 10.4 | 8.0 | 1.9 | 0.1 | 112.1 |
| &nbsp;&nbsp;Bronze | 41.4 | 17.1 | 7.4 | 3.7 | 1.0 | 0.1 | 70.7 |
| &nbsp;&nbsp;Copper | 19.2 | 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 |
| Current-period gross write-offs | $5.3 | $5.9 | $1.4 | $1.1 | $0.2 | $— | $13.9 |

---

<sup>(1)</sup> <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup>*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 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.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

***Rollforward of Allowance for Credit Losses***

The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the year ended December 31, 2022:

---

| | |
|:---|:---|
| | **2022** |
| Balance as of beginning of year | $— |
| Provision for credit losses<sup>(1)</sup> | 43.8 |
| Initial allowance for purchased credit-deteriorated loans | 21.7 |
| Write-offs | (13.9) |
| Recoveries<sup>(2)</sup> | 5.9 |
| Balance as of end of year | $57.5 |
| <sup>(1)</sup> Includes initial credit loss expense of $34.2 million associated with the auto loan portfolio acquired in the acquisition of CIG Financial on October 1, 2022. | <sup>(1)</sup> Includes initial credit loss expense of $34.2 million associated with the auto loan portfolio acquired in the acquisition of CIG Financial on October 1, 2022. |
| <sup>(2)</sup> Net of costs incurred to recover vehicle collateral. | <sup>(2)</sup> Net of costs incurred to recover vehicle collateral. |

---

**Purchased Financial Assets with Credit Deterioration**

Upon the acquisition of CIG Financial on October 1, 2022, we purchased certain auto loans receivable for which there was evidence of more than insignificant deterioration of credit quality since origination (purchased credit-deteriorated or "PCD" assets). The following is a reconciliation of the difference between the purchase price of the financial assets and the par value of the assets on the acquisition date:

---

| | |
|:---|:---|
| Purchase price of PCD loans at acquisition | $103.2 |
| Initial allowance for credit losses of PCD loans at acquisition | 21.7 |
| Noncredit premium of PCD loans at acquisition | (3.0) |
| Par value of acquired PCD loans at acquisition | $121.9 |

---

**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 December 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Age Analysis of Past-Due Financial Assets as of December 31, 2022** | **Age Analysis of Past-Due Financial Assets as of December 31, 2022** | **Age Analysis of Past-Due Financial Assets as of December 31, 2022** | **Age Analysis of Past-Due Financial Assets as of December 31, 2022** | | |
| | **31-60 Days** | **61-90 Days** | **Greater than 90 Days** | **Total Past Due** |<br>**Current** |<br>**Total** |
| Auto loans receivable | $13.0 | $4.1 | $2.6 | $19.7 | $357.3 | $377.0 |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**6. INVENTORY AND VEHICLE FLOORPLAN PAYABLE**

The components of inventory at December 31 are as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| New vehicles | $1009.7 | $515.1 |
| Used vehicles | 789.1 | 1109.3 |
| Parts, accessories, and other | 249.5 | 223.5 |
| &nbsp;&nbsp;&nbsp;Inventory | $2048.3 | $1847.9 |

---

The components of vehicle floorplan payable at December 31 are as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Vehicle floorplan payable - trade | $946.6 | $489.9 |
| Vehicle floorplan payable - non-trade | 1162.7 | 967.7 |
| &nbsp;&nbsp;&nbsp;Vehicle floorplan payable | $2109.3 | $1457.6 |

---

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 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 cost of the vehicle. The vehicle floorplan payables, as shown in the above table, may also be higher than the inventory cost due to the timing of the sale of a vehicle and payment of the related liability.

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.

At December 31, 2022, our new vehicle floorplan facilities utilized LIBOR-based, Prime-based, and SOFR-based interest rates. Our new vehicle floorplan outstanding had a weighted-average interest rate of 5.9% at December 31, 2022, and 1.6% at December 31, 2021. At December 31, 2022, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.7 billion, of which $1.5 billion had been borrowed.

At December 31, 2022, our used vehicle floorplan facilities utilized LIBOR-based, Prime-based, and SOFR-based interest rates. Our used vehicle floorplan outstanding had a weighted-average interest rate of 5.9% at December 31, 2022, and 1.8% at December 31, 2021. At December 31, 2022, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $683.6 million, of which $575.8 million had been borrowed. The remaining borrowing capacity of $107.8 million was limited to $0.3 million based on the eligible used vehicle inventory that could have been pledged as collateral.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**7. PROPERTY AND EQUIPMENT, NET**

A summary of property and equipment, net, at December 31 is as follows:

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| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Land | $1507.8 | $1471.8 |
| Buildings and improvements | 2671.6 | 2466.0 |
| Furniture, fixtures, and equipment | 1362.9 | 1262.9 |
|  | 5542.3 | 5200.7 |
| Less: accumulated depreciation and amortization | (1935.1) | (1781.2) |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | $3607.2 | $3419.5 |

---

We capitalized interest in connection with various construction projects to build, upgrade, or remodel our facilities of $2.2 million in 2022, $0.8 million in 2021, and $0.6 million in 2020.

**8. GOODWILL AND INTANGIBLE ASSETS, NET**

Goodwill and intangible assets, net, at December 31 consisted of the following:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Goodwill | $1320.1 | $1235.3 |
| Franchise rights - indefinite-lived | $816.2 | $727.5 |
| Other intangible assets | 30.7 | 24.0 |
|  | 846.9 | 751.5 |
| Less: accumulated amortization | (9.9) | (8.0) |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | $837.0 | $743.5 |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

***Goodwill***

Goodwill allocated to our reporting units and changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021, were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Domestic** | **Import** | **Premium<br>Luxury** | **Other** | **Consolidated** |
| Balance as of January 1, 2021 |  |  |  |  |  |
| &nbsp;&nbsp;Goodwill <sup>(1)</sup> | $367.2 | $500.6 | $714.6 | $1530.9 | $3113.3 |
| &nbsp;&nbsp;Accumulated impairment losses <sup>(1)</sup> | (140.0) |  | (257.4) | (1530.9) | (1928.3) |
|  | 227.2 | 500.6 | 457.2 |  | 1185.0 |
| &nbsp;&nbsp;Acquisitions, dispositions, and other adjustments, net <sup>(2)</sup> | 1.5 | 17.3 | 26.9 | 4.6 | 50.3 |
| Balance as of December 31, 2021 |  |  |  |  |  |
| &nbsp;&nbsp;Goodwill <sup>(1)</sup> | 368.7 | 517.9 | 741.5 | 1535.5 | 3163.6 |
| &nbsp;&nbsp;Accumulated impairment losses <sup>(1)</sup> | (140.0) |  | (257.4) | (1530.9) | (1928.3) |
|  | 228.7 | 517.9 | 484.1 | 4.6 | 1235.3 |
| &nbsp;&nbsp;Acquisitions, dispositions, and other adjustments, net <sup>(2)</sup> | 7.6 | 0.8 | (2.0) | 78.4 | 84.8 |
| Balance as of December 31, 2022 |  |  |  |  |  |
| &nbsp;&nbsp;Goodwill <sup>(1)(3)</sup> | 376.3 | 518.7 | 739.5 | 1613.9 | 3248.4 |
| &nbsp;&nbsp;Accumulated impairment losses <sup>(1)</sup> | (140.0) |  | (257.4) | (1530.9) | (1928.3) |
|  | $236.3 | $518.7 | $482.1 | $83.0 | $1320.1 |

---

<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Gross goodwill balance and accumulated impairment losses reflected in "Other" include$1.47 billion associated with our single reporting unit (prior to September 30, 2008, our reporting unit reporting structure was comprised of a single reporting unit), as well as amounts associated with the Collision Center and Parts Center reporting units.

<sup>(2)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Includes amounts reclassified to held for sale and related adjustments, which are presented in Other Current Assets in our Consolidated Balance Sheet as of period end.

<sup>(3)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Gross goodwill balance reflected in "Other" includes amounts associated with the AutoNation Finance reporting unit.

See Note 20 of the Notes to Consolidated Financial Statements for more information about our goodwill impairment test.

***Intangible Assets***

Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers. As of December 31, 2022, we had $816.2 million of franchise rights recorded on our Consolidated Balance Sheet, of which $220.1 million was related to Domestic stores, $150.1 million was related to Import stores, and $446.0 million was related to Premium Luxury stores.

See Note 20 of the Notes to Consolidated Financial Statements for more information about our franchise rights impairment tests.

**9. &nbsp;&nbsp;&nbsp;&nbsp;LEASES**

***General description***

The significant majority of leases that we enter into are for real estate. We lease numerous facilities relating to our operations, including primarily for automobile showrooms, display lots, service facilities, collision repair centers, supply facilities, automobile storage lots, parking lots, offices, and our corporate headquarters. Leases for real property generally

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

have terms ranging from 1 to 25 years. We also lease various types of equipment, including security cameras, diagnostic equipment, copiers, key-cutting machines, and postage machines, among others. Equipment leases generally have terms ranging from 1 to 5 years. In addition, we lease certain vehicles from vehicle manufacturers to provide our service customers with the use of a vehicle while their vehicles are being serviced at our dealerships. These service loaner vehicle leases generally have terms ranging from 6 to 18 months, and we typically purchase the service loaner vehicles at the end of the lease.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and obligations for us. We have elected the practical expedient under ASC Topic 842 to not separate lease and nonlease components for the following classes of underlying assets: real estate, office equipment, service loaner vehicles, and marketing-related assets (e.g., billboards).

Our real estate and equipment leases often require that we pay maintenance in addition to rent. Additionally, our real estate leases generally require payment of real estate taxes and insurance. Maintenance, real estate taxes, and insurance payments are generally variable and based on actual costs incurred by the lessor. Therefore, these amounts are not included in the consideration of the contract when determining the right-of-use ("ROU") asset and lease liability, but are reflected as variable lease expenses for those classes of underlying assets for which we have elected the practical expedient to not separate lease and nonlease components.

Leases with an initial term of 12 months or less that do not include a purchase option that is reasonably certain to be exercised are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We rent or sublease certain real estate to third parties, which are primarily operating leases.

***Variable lease payments***

A majority of our lease agreements include fixed rental payments. Certain of our lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index ("CPI"). Payments based on a change in an index or a rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments are incurred.

***Options to extend or terminate leases***

Most of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion. If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities. Certain leases also include options to purchase the leased property or asset. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

***Discount rate***

For our incremental borrowing rate, we generally use a portfolio approach to determine the discount rate for leases with similar characteristics. We determine discount rates based on current market prices of instruments similar to our unsecured borrowings with maturities that align with the relevant lease term, and such rates are then adjusted for our credit spread and the effects of full collateralization.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

The following tables present information about our ROU assets, lease liabilities, total lease costs, cash flows arising from lease transactions, and other supplemental information for the years ended December 31, 2022 and 2021:

---

| | | | |
|:---|:---|:---|:---|
| **Leases** | **Classification** | **2022** | **2021** |
| **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating | Operating Lease Assets | $323.5 | $284.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance | Property and Equipment, Net and Other Assets | 361.4 | 312.3 |
| Total right-of-use assets |  | $684.9 | $596.3 |
| **Liabilities** |  |  |  |
| Current |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating | Other Current Liabilities | $39.5 | $37.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance | Current Maturities of Long-Term Debt and Vehicle Floorplan Payable - Trade | 39.0 | 27.0 |
| Noncurrent |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating | Noncurrent Operating Lease Liabilities | 296.9 | 260.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance | Long-Term Debt, Net of Current Maturities | 363.2 | 318.6 |
| Total lease liabilities |  | $738.6 | $643.5 |

---

---

| | | |
|:---|:---|:---|
| **Lease Term and Discount Rate** | **2022** | **2021** |
| Weighted average remaining lease term |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating | 11 years | 12 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance | 14 years | 17 years |
| Weighted-average discount rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating | 5.25% | 5.09% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance | 4.47% | 4.15% |

---

---

| | | | |
|:---|:---|:---|:---|
| **Lease cost** | **Classification** | **2022** | **2021** |
| Operating lease cost | Selling, general, and administrative expenses | $56.0 | $54.8 |
| Finance lease cost: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of ROU assets | Depreciation and amortization | 20.9 | 12.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on lease liabilities | Other interest expense and floorplan interest expense | 13.3 | 8.0 |
| Short-term lease cost <sup>(1)</sup> | Selling, general, and administrative expenses | 10.6 | 8.8 |
| Variable lease cost | Selling, general, and administrative expenses | 10.5 | 10.6 |
| Sublease income | Selling, general, and administrative expenses | (3.6) | (0.9) |
| Net lease cost |  | $107.7 | $93.8 |
| <sup>(1)</sup> Includes leases with a term of one month or less. | <sup>(1)</sup> Includes leases with a term of one month or less. | <sup>(1)</sup> Includes leases with a term of one month or less. | <sup>(1)</sup> Includes leases with a term of one month or less. |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

---

| | | |
|:---|:---|:---|
| **Other Information** | **2022** | **2021** |
| Cash paid for amounts included in the measurement of lease liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows from operating leases | $56.8 | $55.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows from finance leases <sup>(1)</sup> | $36.2 | $38.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing cash flows from finance leases | $11.3 | $8.5 |
| Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | $78.7 | $13.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance lease liabilities | $90.8 | $249.4 |
| <sup>(1)</sup> Includes the interest component of payments made on finance leases as well as principal payments on vehicle floorplan payables with trade lenders for certain service loaner vehicle leases. | <sup>(1)</sup> Includes the interest component of payments made on finance leases as well as principal payments on vehicle floorplan payables with trade lenders for certain service loaner vehicle leases. |  |

---

---

| | | |
|:---|:---|:---|
| **Maturity of Lease Liabilities** | **Operating Leases** | **Finance Leases** |
| Year ending December 31, |  |  |
| 2023 | $55.9 | $54.6 |
| 2024 | 49.6 | 28.1 |
| 2025 | 45.5 | 83.2 |
| 2026 | 40.7 | 24.3 |
| 2027 | 38.3 | 25.5 |
| Thereafter | 223.7 | 307.4 |
| Total lease payments | 453.7 | 523.1 |
| Less: interest | (117.3) | (120.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Present value of lease liabilities | $336.4 | $402.2 |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**10. DEBT** 

**Non-Vehicle Long-Term Debt**

Non-vehicle long-term debt at December 31 consisted of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Debt Description** | **Maturity Date** | **Interest Payable** | **2022** | **2021** |
| 3.5% Senior Notes | November 15, 2024 | May 15 and November 15 | $450.0 | $450.0 |
| 4.5% Senior Notes | October 1, 2025 | April 1 and October 1 | 450.0 | 450.0 |
| 3.8% Senior Notes | November 15, 2027 | May 15 and November 15 | 300.0 | 300.0 |
| 1.95% Senior Notes  | August 1, 2028 | February 1 and August 1 | 400.0 | 400.0 |
| 4.75% Senior Notes  | June 1, 2030 | June 1 and December 1 | 500.0 | 500.0 |
| 2.4% Senior Notes  | August 1, 2031 | February 1 and August 1 | 450.0 | 450.0 |
| 3.85% Senior Notes  | March 1, 2032 | March 1 and September 1 | 700.0 |  |
| Revolving credit facility | March 26, 2025 | Monthly |  |  |
| Finance leases and other debt | Various dates through 2041 |  | 375.5 | 330.6 |
|  |  |  | 3625.5 | 2880.6 |
| Less: unamortized debt discounts and debt issuance costs | Less: unamortized debt discounts and debt issuance costs | Less: unamortized debt discounts and debt issuance costs | (26.0) | (22.2) |
| Less: current maturities |  |  | (12.6) | (12.2) |
| &nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities | &nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities |  | $3586.9 | $2846.2 |

---

At December 31, 2022, aggregate maturities of non-vehicle long-term debt were as follows:

---

| | |
|:---|:---|
| Year Ending December 31: |  |
| &nbsp;&nbsp;&nbsp;2023 | $12.6 |
| &nbsp;&nbsp;&nbsp;2024 | 463.0 |
| &nbsp;&nbsp;&nbsp;2025 | 519.0 |
| &nbsp;&nbsp;&nbsp;2026 | 14.1 |
| &nbsp;&nbsp;&nbsp;2027 | 315.9 |
| &nbsp;&nbsp;&nbsp;Thereafter | 2300.9 |
|  | $3625.5 |

---

***Senior Unsecured Notes and Credit Agreement***

On February 28, 2022, we issued $700.0 million aggregate principal amount of 3.85% Senior Notes due 2032, which were sold at 99.835%of the aggregate principal amount.

The interest rates payable on our 3.5% Senior Notes, 4.5% Senior Notes, 3.8% Senior Notes, and 4.75% Senior Notes are 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 billion revolving credit facility that matures on March 26, 2025. 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 December 31, 2022, we had no borrowings outstanding under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of our revolving credit facility. The amount

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

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 credit, which was $0.4 million at December 31, 2022, leaving an additional borrowing capacity under the revolving credit facility of $1.8 billion at December 31, 2022.

In September 2022, we made certain administrative amendments to our credit agreement, including the replacement of the reference rate from LIBOR to Term SOFR ("SOFR") in connection with global reference rate reform initiatives. This modification will be accounted for by prospectively adjusting the effective interest rate in accordance with accounting standards. We do not expect the change from LIBOR to SOFR to have a material impact on our annual interest expense. Our revolving credit facility under the amended credit agreement provides for a commitment fee on undrawn amounts ranging from 0.125% to 0.20% and interest on borrowings at SOFR plus a credit spread adjustment of 0.10% or the base rate, in each case plus an applicable margin. The applicable margin ranges from 1.125% to 1.50% for SOFR borrowings and 0.125% to 0.50% for base rate borrowings. The interest rate charged for our revolving credit facility is affected by our leverage ratio.

Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc. (the parent company) has no independent assets or operations. If guarantees of our subsidiaries were to be issued under our existing registration statement, we expect that such guarantees would be full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries would be minor.

***Other Long-Term Debt***

At December 31, 2022, we had finance leases and other debt obligations of $375.5 million, which are due at various dates through 2041. See Note 9 of the Notes to Consolidated Financial Statements for more information related to finance lease obligations.

**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 a maximum aggregate amount outstanding at any time of $1.0 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. 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 December 31, 2022, we had $50.0 million of commercial paper notes outstanding with a weighted-average annual, interest rate of 4.30% and a weighted-average remaining term of 1 day. We had $340.0 million commercial paper notes outstanding at December 31, 2021, with a weighted-average annual interest rate of 0.47% and a weighted-average remaining term of 10 days.

**Non-Recourse Debt**

The non-recourse debt relates to auto loans receivable of our recently acquired captive auto finance company ("CIG") funded through non-recourse funding facilities, including warehouse facilities and asset-backed term funding transactions.

Prior to our acquisition, CIG put in place 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. These warehouse facilities are secured by eligible auto loans receivable, which are pledged as collateral. We continue to fund auto loans receivable through the warehouse facilities.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

Additionally, prior to our acquisition, CIG put in place term securitizations to provide long-term funding for certain auto loans receivable initially funded through the warehouse facilities. These securitizations remain in place following the acquisition. 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. CIG retained 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 Consolidated Balance Sheet. 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.

Non-recourse debt outstanding at December 31, 2022, consisted of the following:

---

| | |
|:---|:---|
| | **2022** |
| Warehouse facilities | $181.8 |
| Term securitization debt of consolidated VIEs | 146.9 |
|  | 328.7 |
| Less: unamortized debt discounts and debt issuance costs | (5.1) |
| Less: current maturities | (10.7) |
| &nbsp;&nbsp;Non-recourse debt, net of current maturities | $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.

One of the warehouse facilities matures on October 1, 2023, 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 0.69% to 4.85% and maturity dates ranging from August 2024 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 $14.9 million as of December 31, 2022, and is included in Other Current Assets and Other Assets in our Consolidated Balance Sheet. Auto loans receivable pledged to the term securitization debt of consolidated VIEs totaled $151.4 million as of December 31, 2022.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**11. CHARGEBACK LIABILITY**

We may be charged back for commissions related to financing, vehicle service, or protection products in the event of early termination, default, or prepayment of the contracts by customers ("chargebacks"). However, our exposure to loss generally is limited to the commissions that we receive. An estimated chargeback liability is recorded in the period in which the related finance and insurance revenue is recognized. The following is a rollforward of our estimated chargeback liability for each of the three years presented in our Consolidated Financial Statements:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Balance - January 1 | $171.0 | $142.1 | $134.5 |
| Add: Provisions | 192.3 | 168.9 | 118.1 |
| Deduct: Chargebacks | (166.3) | (140.0) | (110.5) |
| Balance - December 31 | $197.0 | $171.0 | $142.1 |

---

**12. SELF-INSURANCE**

Under our self-insurance programs, we retain various levels of aggregate loss limits, per claim deductibles, and claims-handling expenses as part of our various insurance programs, including property and casualty, employee medical benefits, automobile, and workers' compensation.

At December 31, 2022 and 2021, current and long-term self-insurance liabilities were included in Other Current Liabilities and Other Liabilities, respectively, in the Consolidated Balance Sheets as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Self-insurance - current portion | $37.6 | $44.6 |
| Self-insurance - long-term portion | 56.9 | 51.2 |
| &nbsp;&nbsp;&nbsp;Total self-insurance liabilities | $94.5 | $95.8 |

---

**13. INCOME TAXES**

The components of the income tax provision from continuing operations for the years ended December 31 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $368.7 | $374.2 | $168.9 |
| &nbsp;&nbsp;&nbsp;State | 87.4 | 78.5 | 37.4 |
| Federal and state deferred | 0.8 | (17.2) | (39.0) |
| Change in valuation allowance, net | 0.2 | (0.2) | 0.3 |
| Adjustments and settlements | (1.3) | (0.2) | 0.7 |
| Income tax provision | $455.8 | $435.1 | $168.3 |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

A reconciliation of the income tax provision calculated using the statutory federal income tax rate to our income tax provision from continuing operations for the years ended December 31 is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2022** | **%** | **2021** | **%** | **2020** | **%** |
| Income tax provision at statutory rate | $385.0 | 21.0 | $379.8 | 21.0 | $115.5 | 21.0 |
| Impact of goodwill impairment |  |  |  |  | 21.4 | 3.9 |
| Other non-deductible expenses, net | 7.9 | 0.4 | (1.2) | (0.1) | 8.2 | 1.5 |
| State income taxes, net of federal benefit | 72.8 | 4.0 | 60.7 | 3.4 | 24.3 | 4.4 |
|  | 465.7 | 25.4 | 439.3 | 24.3 | 169.4 | 30.8 |
| Change in valuation allowance, net | 0.2 |  | (0.2) |  | 0.3 | 0.1 |
| Adjustments and settlements | (1.3) | (0.1) | (0.2) |  | 0.7 | 0.1 |
| Federal and state tax credits | (4.5) | (0.2) | (1.0) |  | (0.7) | (0.1) |
| Other, net | (4.3) | (0.2) | (2.8) | (0.2) | (1.4) | (0.3) |
| Income tax provision | $455.8 | 24.9 | $435.1 | 24.1 | $168.3 | 30.6 |

---

Deferred income tax asset and liability components at December 31 are as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Deferred income tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Inventory | $23.7 | $20.8 |
| &nbsp;&nbsp;&nbsp;Receivable allowances | 12.0 | 1.2 |
| &nbsp;&nbsp;&nbsp;Warranty, chargeback, and self-insurance liabilities | 70.2 | 61.9 |
| &nbsp;&nbsp;&nbsp;Other accrued liabilities | 27.7 | 31.5 |
| &nbsp;&nbsp;&nbsp;Deferred compensation | 26.5 | 28.7 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 7.7 | 7.0 |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 148.9 | 142.2 |
| &nbsp;&nbsp;&nbsp;Loss carryforwards— state | 5.8 | 6.2 |
| &nbsp;&nbsp;&nbsp;Other, net | 11.5 | 5.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred income tax assets | 334.0 | 304.8 |
| Valuation allowance | (4.6) | (4.6) |
| Deferred income tax assets, net of valuation allowance | 329.4 | 300.2 |
| Deferred income tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Long-lived assets (intangible assets and property) | (258.4) | (237.9) |
| &nbsp;&nbsp;&nbsp;Investments - unrealized appreciation | (1.6) | (0.9) |
| &nbsp;&nbsp;&nbsp;Right-of-use assets | (137.2) | (131.4) |
| &nbsp;&nbsp;&nbsp;Other, net | (8.7) | (8.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred income tax liabilities | (405.9) | (378.4) |
| Net deferred income tax liabilities | $(76.5) | $(78.2) |

---

Our net deferred tax liability of $76.5 million as of December 31, 2022, and $78.2 million as of December 31, 2021, is classified as Deferred Income Taxes in the accompanying Consolidated Balance Sheets.

Income taxes receivable included in Receivables, net totaled $20.2 million at December 31, 2022 and income taxes payable included in Other Current Liabilities totaled $6.9 million at December 31, 2021.

At December 31, 2022, we had $93.5 million of gross domestic state net operating loss carryforwards and capital loss carryforwards, and $1.6 million of state tax credits, all of which result in a deferred tax asset of $5.8 million and expire from 2023 through 2042.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We provide valuation allowances to offset portions of deferred tax assets due to uncertainty surrounding the future realization of such deferred tax assets. At December 31, 2022, we had $4.6 million of valuation allowance related to state net operating loss carryforwards. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.

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, the Company is 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 2018 to 2019 are under examination by U.S. state jurisdictions. We believe that our tax positions comply with applicable tax law and that we have adequately provided for these matters.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Balance at January 1 | $6.9 | $7.0 | $5.3 |
| Additions based on tax positions related to the current year |  |  | 0.4 |
| Additions for tax positions of prior years | 0.6 | 0.8 | 1.6 |
| Reductions for tax positions of prior years |  |  |  |
| Reductions for expirations of statute of limitations | (1.4) | (0.9) | (0.3) |
| Settlements | (0.6) |  |  |
| Balance at December 31 | $5.5 | $6.9 | $7.0 |

---

We had accumulated interest and penalties associated with these unrecognized tax benefits of $9.6 million at December 31, 2022, $9.1 million at December 31, 2021, and $8.4 million at December 31, 2020. We additionally had a deferred tax asset of $3.4 million at December 31, 2022, $3.6 million at December 31, 2021, and $3.4 million at December 31, 2020, related to these balances. The net of the unrecognized tax benefits, associated interest, penalties, and deferred tax asset was $11.7 million at December 31, 2022, $12.4 million at December 31, 2021, and $12.0 million at December 31, 2020, which if resolved favorably (in whole or in part) would reduce our effective tax rate. The unrecognized tax benefits, associated interest, penalties, and deferred tax asset are included as components of Other Liabilities and Deferred Income Taxes in the Consolidated Balance Sheets.

It is our policy to account for interest and penalties associated with income tax obligations as a component of income tax expense. We recognized $0.4 million during 2022, $0.6 million during 2021, and $0.7 million during 2020 (each net of tax effect), of interest and penalties as part of the provision for income taxes in the Consolidated Statements of Income.

We do not expect that our unrecognized tax benefits will significantly increase or decrease during the twelve months beginning January 1, 2023.

**14. SHAREHOLDERS' EQUITY**

A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Shares repurchased | 15.6 | 22.3 | 7.2 |
| Aggregate purchase price | $1710.2 | $2303.2 | $382.3 |
| Average purchase price per share | $109.86 | $103.18 | $52.76 |

---

As of December 31, 2022, $1.2 billion remained available under our stock repurchase limit most recently authorized by our Board of Directors.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

Our Board of Directors authorized the retirement of 23.0 million and 16.0 million shares of our treasury stock in November 2022 and April 2021, respectively, which assumed the status of authorized but unissued shares. Upon the retirement of treasury stock, it is our policy to charge the excess of the cost of the treasury stock over its par value entirely to additional paid-in capital. Any amounts exceeding additional paid-in capital are charged to retained earnings. These retirements had the effect of reducing treasury stock and issued common stock, which includes treasury stock. Our common stock, additional paid-in capital, retained earnings, and treasury stock accounts were adjusted accordingly. There was no impact to shareholders' equity or outstanding common stock.

We have 5.0 million authorized shares of preferred stock, par value $0.01 per share, none of which are issued or outstanding. The Board of Directors has the 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:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Shares issued | 0.1 | 1.0 | 1.1 |
| Proceeds from the exercise of stock options | $3.4 | $54.5 | $52.7 |
| Average exercise price per share | $47.94 | $53.13 | $49.91 |

---

The following table presents a summary of shares of common stock issued in connection with the settlement of RSUs, as well as shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the settlement of RSUs:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Shares issued | 0.8 | 0.7 | 0.5 |
| Shares surrendered to AutoNation to satisfy tax withholding obligations | 0.3 | 0.2 | 0.2 |

---

**15. STOCK-BASED COMPENSATION**

The AutoNation, Inc. 2017 Employee Equity and Incentive Plan (the "2017 Plan") provides for the grant of time-based and performance-based RSUs, 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.

The AutoNation, Inc. 2014 Non-Employee Director Equity Plan (the "2014 Director Plan") provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, and other stock-based awards to our non-employee directors. As of December 31, 2022, the maximum number of shares authorized for issuance under the 2014 Director Plan was 600,000.

***Restricted Stock Units***

On January 3, 2022, each of our non-employee directors received a grant of 2,192 RSUs under the 2014 Director Plan. RSUs granted to our non-employee directors are fully vested on the grant date and are settled in shares of the Company's common stock on the first trading day of February in the third year following the grant date, unless the non-employee director elects to defer delivery in accordance with the terms of the award and the 2014 Director Plan. Settlement of the RSUs will be accelerated in certain circumstances as provided in the terms of the award and the 2014 Director Plan, including in the event the non-employee director ceases to serve as a non-employee director of the Company. Compensation cost is recognized on the grant date and is based on the closing price of our common stock on the grant date.

In 2022, our Board's Compensation Committee approved the grant to employees of 0.4 million RSUs, which included time-based and performance-based RSUs. Time-based RSUs vest in equal installments generally over three or four years.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

In addition, certain time-based RSUs are also subject to a one-year earnings performance measure. Performance-based RSUs cliff vest after three years subject to the achievement of certain performance goals measured over a three-year period. The performance goals are based on a measure of earnings, a measure of return on invested capital, and a measure of our performance relative to certain customer satisfaction indices.

The fair value of each RSU award grant is based on the closing price of our 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 expected achievement level of the performance goals, which is evaluated over the performance period. We account for forfeitures of stock-based awards as they occur.

The following table summarizes information about vested and nonvested RSUs for 2022:

---

| | | |
|:---|:---|:---|
| | **RSUs** | **RSUs** |
| | **Shares** | **Weighted-Average<br>Grant Date<br>Fair Value** |
| Nonvested at January 1 | 1.7 | $54.31 |
| Granted | 0.4 | $112.66 |
| Vested | (0.8) | $51.68 |
| Forfeited | (0.1) | $82.41 |
| Nonvested at December 31 | 1.2 | $75.14 |

---

The weighted average grant-date fair value of RSUs and total fair value of RSUs vested are summarized in the following table:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Weighted average grant-date fair value of RSUs granted | $112.66 | $85.45 | $44.28 |
| Total fair value of RSUs vested (in millions) | $85.7 | $51.8 | $23.2 |

---

***Stock Options***

Prior to 2017, we granted non-qualified stock options with a term of 10 years from the date of grant that vested in equal installments over four years. We used the Black-Scholes valuation model to determine compensation expense and amortized compensation expense on a straight-line basis over the requisite service period of the grants. All stock options were fully vested as of December 31, 2020.

Upon exercise, shares of common stock are issued from our treasury stock. The total intrinsic value of stock options exercised was $5.0 million during 2022, $51.2 million during 2021, and $9.8 million during 2020.

&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2022, we had 0.1 million of stock options outstanding and exercisable with a weighted average exercise price of $52.50, a weighted average contractual term of 1.39 years, and an aggregate intrinsic value of $3.2 million. As of December 31, 2021, we had 0.1 million of stock options outstanding with a weighted average exercise price of $50.01.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

***Restricted Stock***

Prior to 2017, we granted restricted stock awards, which were issued from our treasury stock. All restricted stock awards were fully vested as of December 31, 2020. Compensation cost for restricted stock awards was based on the closing price of our common stock on the date of grant and was recognized on a straight-line basis over the requisite service period of the grants. The total fair value of restricted stock awards vested was $0.7 million in 2020.

***Compensation Expense***

The following table summarizes the total stock-based compensation expense recognized in Selling, General, and Administrative Expenses in the Consolidated Statements of Income and the total recognized tax benefit related thereto:

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| RSUs | $31.5 | $35.0 | $30.0 |
| Stock options |  |  | 0.1 |
| Restricted stock |  |  | 0.1 |
| Total stock-based compensation expense | $31.5 | $35.0 | $30.2 |
| Tax benefit related to stock-based compensation expense | $4.0 | $2.4 | $2.6 |

---

As of December 31, 2022, there was $31.0 million of total unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted average period of 1.58 years.

Tax benefits related to stock options exercised and vesting of restricted stock and RSUs were $9.7 million in 2022, $17.2 million in 2021, and $4.3 million in 2020.

**16. ACQUISITIONS**

During the fourth quarter of 2022, we acquired four stores operating in Colorado and CIG Financial, an auto finance company headquartered in Irvine, California. These acquisitions 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 full year ended December 31, 2022 and 2021, revenue and net income would not have been materially different from our reported revenue and net income for these periods. Acquisitions are included in the Consolidated Financial Statements from the date of acquisition. The purchase price allocations for these business combinations are preliminary and subject to final adjustments, primarily related to the valuation of working capital amounts and residual goodwill.

During 2021, we purchased 20 stores and 4 collision centers operating in South Carolina, Georgia, and Maryland. The following table summarizes the consideration paid and estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for the stores acquired during 2021.

---

| | |
|:---|:---|
| Inventory | $46.6 |
| Property and equipment | 282.8 |
| Goodwill | 51.6 |
| Franchise rights - indefinite-lived | 232.4 |
| Other assets | 17.7 |
| Vehicle floorplan payable - non-trade | (15.1) |
| Other liabilities | (2.8) |
| &nbsp;&nbsp;Aggregate purchase price | $613.2 |
| Finance lease obligations | (180.5) |
| &nbsp;&nbsp;Cash used in business acquisition, net of cash acquired | $432.7 |

---

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

The goodwill was assigned to the Domestic, Import, Premium Luxury, and Collision Centers reporting units in the amounts of $1.5 million, $15.3 million, $30.3 million, and $4.6 million, respectively. Substantially all of the goodwill recorded in 2021 will be deductible for federal income tax purposes.

From each acquisition date to December 31, 2021, the amounts of revenue and earnings of the stores and collision centers acquired during 2021 included in our Consolidated Statement of Income for the year ended December 31, 2021, were $176.9 million and $6.9 million, respectively. Our supplemental pro forma revenue and net income from continuing operations had the acquisition dates been January 1, 2020 are as follows:

---

| | | |
|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** |
| **<u>Unaudited supplemental pro forma:</u>** | **2021** | **2020** |
| Revenue | $26544.2 | $21074.8 |
| Net income from continuing operations | $1407.0 | $404.1 |

---

On January 26, 2023, we closed on the acquisition of RepairSmith, a mobile solution for automotive repair and maintenance, headquartered in Los Angeles, California, for approximately $190 million.

**17. DIVESTITURES**

During 2022, we divested three stores and terminated two franchises. During 2021, we divested three stores and 18 collision centers. During 2020, we divested one store and two collision centers, and terminated one franchise.

We recognized net gains related to divestitures of $16.0 million in 2022, $13.3 million in 2021, and $2.5 million in 2020. The net gains on divestitures are included in Other (Income) Expense, Net (within Operating Income) in our Consolidated Statements of Operations. The financial condition and results of operations of these businesses were not material to our consolidated financial statements.

**18. EXIT OR DISPOSAL COST OBLIGATIONS**

On August 17, 2020, we determined to close our aftermarket collision parts ("ACP") business by the end of 2020. In connection with the closing of the ACP business, we incurred total charges of $36.7 million in 2020 as follows:

---

| | | |
|:---|:---|:---|
| **Cost Associated with Exit Activity** | **Total Costs Incurred** | **Statement of Operations Line Item** |
| Inventory valuation adjustment | $17.6 | Parts and service cost of sales |
| Contract termination charges | 3.2 | Other (income) expense, net (operating) |
| Other associated closing costs | 2.6 | Selling, general, and administrative expenses |
| Accelerated depreciation | 3.9 | Depreciation and amortization |
| Accelerated amortization | 3.2 | Selling, general, and administrative expenses |
| Asset impairment charges | 5.1 | Other (income) expense, net (operating) |
| Involuntary termination benefits | 1.1 | Selling, general, and administrative expenses |
|  | $36.7 |  |

---

Charges incurred are reflected as part of the "Corporate and other" category of our segment information.

**19. 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

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

of cash and cash equivalents reported on our Consolidated Balance Sheets to the total amounts reported on our Consolidated Statements of Cash Flows:

---

| | | |
|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** |
| Cash and cash equivalents | $72.6 | $60.4 |
| Restricted cash included in Other Current Assets | 15.6 | 0.2 |
| Restricted cash included in Other Assets | 7.2 |  |
| Total cash, cash equivalents, and restricted cash | $95.4 | $60.6 |

---

***Non-Cash Investing and Financing Activities***

We had accrued purchases of property and equipment of $33.0 million at December 31, 2022, $25.9 million at December 31, 2021 and $9.6 million at December 31, 2020. We had non-cash investing and financing activities related to increases in property and equipment acquired under financing agreements of $1.7 million during 2020.

***Interest and Income Taxes Paid***

We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $153.7 million in 2022, $113.9 million in 2021, and $164.2 million in 2020. We made income tax payments, net of income tax refunds, of $482.5 million in 2022, $458.3 million in 2021, and $190.2 million in 2020.

**20. 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 1 | Quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity can access at the measurement date |
| Level 2 | Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly |
| Level 3 | Unobservable inputs |

---

The following methods and assumptions were used by us in estimating fair value disclosures for financial instruments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *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 Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Auto loans receivable, net*: Auto loans receivable are presented net of an allowance for expected credit losses, which we believe approximates fair value.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Investments in Equity Securities:* Our equity investments with readily determinable fair values are measured at fair value using Level 1 inputs. In the first quarter of 2021, we sold one of our minority equity investments with a readily determinable fair value for total proceeds of $109.4 million. The fair value of our equity investments with readily determinable fair values totaled $15.4 million at December 31, 2022, and $2.2 million at December 31, 2021.

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 December 31, 2022, and $56.7 million at December 31, 2021. 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 year ended December 31, 2022. Additionally, we have not recorded any impairments or downward adjustments to the carrying amounts of our equity investment as of and for the year ended December 31, 2022.

Investments in equity securities are reported in Other Current Assets and Other Assets in the accompanying Consolidated Balance Sheets. Realized and unrealized gains and losses are reported in Other Income (Loss), Net (non-operating) in the Consolidated Statements of Income and in the "Corporate and other" category of our segment information.

The following is the portion of unrealized gains recognized during the years ended December 31, 2022 and 2021, related to equity securities still held at December 31:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Net gains (losses) recognized during the period on equity securities | $2.9 | $10.9 |
| Less: Net gains recognized during the period on equity securities sold during the period |  | 7.5 |
| Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $2.9 | $3.4 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *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 at December 31 is as follows:

---

| | | |
|:---|:---|:---|
| | **2022** | **2021** |
| Carrying value | $3224.0 | $2527.8 |
| Fair value | $2803.6 | $2687.2 |

---

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 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.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

The following table presents assets measured and recorded at fair value on a nonrecurring basis during the years ended December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **2022** | **2022** | **2021** | **2021** |
| **Description** | **Fair Value Measurements Using Significant Unobservable Inputs (Level 3)** | **Gain/(Loss)** | **Fair Value Measurements Using Significant Unobservable Inputs (Level 3)** | **Gain/(Loss)** |
| Equity investment | $— | $— | $53.4 | $3.4 |
| Right-of-use assets | $— | $— | $— | $(0.1) |
| Long-lived assets held and used | $— | $(1.6) | $10.4 | $(3.1) |

---

***Goodwill*** 

Goodwill for our reporting units 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 testing as of April 30, 2022 and 2021, 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.

During the first quarter of 2020, due to the impact of the COVID-19 pandemic on our results and the decrease in our market capitalization as of March 31, 2020, we determined that a triggering event had occurred and we performed a quantitative impairment test. As a result, we recorded goodwill impairment charges as of $318.3 million of which $257.4 million related to our Premium Luxury reporting unit, $41.6 million related to our Collision Centers reporting unit, and $19.3 million related to our Parts Centers reporting unit. The non-cash impairment charges are reflected as Goodwill Impairment in the accompanying Consolidated Statements of Operations and in the "Corporate and other" category of our segment information.

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 cost 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, 2020 annual impairment test, we chose to make a qualitative evaluation about the likelihood of goodwill impairment 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.

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<u>[Table of Co](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nte](#ia1a238a5878f4714ab09adbe7f58fb49_7)[nts](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

***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.

We elected to perform quantitative franchise rights impairment tests as of April 30, 2022 and 2021, 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.

During the first quarter of 2020, as a result of the impacts from the COVID-19 pandemic, we determined that a triggering event had occurred and we performed quantitative impairment tests as of March 31, 2020. As a result, we identified eight stores with franchise rights carrying values that exceeded their estimated fair values, and we recorded non-cash franchise rights impairment charges of $57.5 million during the three months ended March 31, 2020. The non-cash impairment charges are reflected as Franchise Rights Impairment in the accompanying Consolidated Statements of Income and in the "Corporate and other" category of our segment information.

For our April 30, 2020 annual impairment test, we elected to perform quantitative franchise rights impairment tests, and no additional impairment charges resulted from these quantitative tests.

In 2020, we also recorded non-cash impairment charges of $2.4 million to reduce the carrying value of certain finite-lived intangible assets to estimated fair value, which are included in Other (Income) Expense, Net in our Consolidated Statements of Income and in the "Corporate and other" category of our segment information.

***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

We recorded non-cash impairment charges related to long-lived assets held and used of $1.6 million in 2022, $3.1 million in 2021, and $9.2 million in 2020. We recorded non-cash impairment charges related to right-of-use assets of $0.1 million in 2021 and $3.1 million in 2020. The non-cash impairment charges recorded in are included in Other (Income) Expense, Net in our Consolidated Statements of Income and are reported in the "Corporate and other" category of our segment information.

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

We had assets held for sale in continuing operations of $5.7 million as of December 31, 2022, related to property held for sale, and $53.3 million as of December 31, 2021, related to property held for sale, as well as inventory, goodwill, and property of disposal groups held for sale. We had assets held for sale in discontinued operations of $1.1 million as of December 31, 2022, and $1.1 million as of December 31, 2021, related to property held for sale. Assets held for sale are included in Other Current Assets in our Consolidated Balance Sheets.

***Repossessed assets***

Repossessed assets consists of vehicles repossessed in the event of non-payment of the related auto loans receivable. Repossessed assets are recorded at their estimated fair values, based on Level 3 inputs, less estimated costs to sell. The fair value is determined based on comparable recent sales and adjusted for various factors, including the age of the vehicle and known changes in the market and in the collateral. We had repossessed assets of $2.7 million as of December 31, 2022. Repossessed assets are included in Other Assets in our Consolidated Balance Sheets.

**21. 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, dealers (as a result of our acquisition of CIG Financial), 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 December 31, 2022 and 2021, 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 any 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 dealership premises. Pursuant to these leases, our subsidiaries generally 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 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.

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

From time to time, primarily in connection with dispositions of automotive stores, our subsidiaries assign or sublet to the dealership purchaser the subsidiaries' interests in any real property leases associated with such stores. In general, our subsidiaries 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 subsidiaries generally remain subject to the terms of any guarantees made by us in connection with such leases. We generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses. We presently have no reason to believe that we or our subsidiaries 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 2023 to 2034 are approximately $6 million at December 31, 2022. There can be no assurance that any performance of AutoNation or its subsidiaries required under these leases would not have a material adverse effect on our business, financial condition, and cash flows.

At December 31, 2022, surety bonds, letters of credit, and cash deposits totaled $109.6 million, of which $0.4 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 such compliance 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.

**22. BUSINESS AND CREDIT CONCENTRATIONS**

We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. In 2022, approximately 63% of our total revenue was generated by our stores in Florida, Texas, and California. Franchise agreements generally provide the manufacturers or distributors with considerable influence over the operations of the store. The success of any franchised automotive dealership is dependent, to a large extent, on the financial condition, management, marketing, production, and distribution capabilities of the vehicle manufacturers or distributors of which we hold franchises. We had receivables from manufacturers or distributors of $174.4 million at December 31, 2022, and $148.4 million at December 31, 2021. Additionally, a large portion of our Contracts-in-Transit included in Receivables, net, in the accompanying Consolidated Balance Sheets, are due from automotive manufacturers' captive finance subsidiaries which provide financing directly to our new and used vehicle customers.

We purchase substantially all of our new vehicles from various manufacturers or distributors at the prevailing prices available to all franchised dealers. Additionally, we finance a large portion of our new vehicle inventory with automotive manufacturers' captive finance subsidiaries. Our sales volume could be adversely impacted by the manufacturers' or distributors' inability to supply the stores with an adequate supply of vehicles and related financing.

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 89% of the new vehicles that we sold in 2022, are manufactured by Toyota (including Lexus), Honda, BMW, Ford, Mercedes-Benz, General Motors, 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.

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 December 31, 2022, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

**23. SEGMENT INFORMATION**

At December 31, 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 services, and automotive finance and insurance products.

"Corporate and other" is comprised of our other businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, and auction operations, 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 chief operating decision maker to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.

The following tables provide information on revenues from external customers, segment income of our reportable segments, floorplan interest expense, depreciation and amortization, total assets, and capital expenditures.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other** | **Total** |
| Revenues from external customers | $7987.5 | $7690.3 | $10278.1 | $1029.1 | $26985.0 |
| Floorplan interest expense | $14.4 | $4.8 | $15.0 | $7.2 | $41.4 |
| Depreciation and amortization | $39.1 | $35.6 | $74.9 | $50.7 | $200.3 |
| Segment income (loss)<sup>(1)</sup> | $565.3 | $734.2 | $969.1 | $(285.5) | $1983.1 |
| Capital expenditures | $32.8 | $70.1 | $126.5 | $106.8 | $336.2 |
| Segment assets | $1974.3 | $1555.6 | $2996.8 | $3533.0 | $10059.7 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other** | **Total** |
| Revenues from external customers | $7959.9 | $7798.5 | $9229.9 | $855.7 | $25844.0 |
| Floorplan interest expense | $7.9 | $5.1 | $8.8 | $3.9 | $25.7 |
| Depreciation and amortization | $39.3 | $33.9 | $64.8 | $55.3 | $193.3 |
| Segment income (loss)<sup>(1)</sup> | $595.8 | $714.7 | $837.4 | $(270.8) | $1877.1 |
| Capital expenditures | $15.5 | $27.1 | $80.0 | $109.3 | $231.9 |
| Segment assets | $1758.5 | $1424.2 | $2668.6 | $3092.3 | $8943.6 |

---

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** |
| | **Domestic** | **Import** | **Premium Luxury** | **Corporate and other** | **Total** |
| Revenues from external customers | $6490.6 | $5988.0 | $7202.8 | $708.6 | $20390.0 |
| Floorplan interest expense | $23.8 | $12.9 | $21.8 | $5.3 | $63.8 |
| Depreciation and amortization | $39.8 | $33.6 | $60.5 | $65.0 | $198.9 |
| Segment income (loss)<sup>(1)</sup> | $355.2 | $386.4 | $478.2 | $(720.4) | $499.4 |
| Capital expenditures | $17.9 | $25.7 | $51.6 | $42.0 | $137.2 |
| Segment assets | $2130.0 | $1764.7 | $2752.5 | $3240.0 | $9887.2 |
| <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. | <sup>(1)</sup> Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense. |

---

The following is a reconciliation of the total of the reportable segments' revenue and segment income to our consolidated revenue and income from continuing operations before income taxes, respectively.

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Total external revenues for reportable segments | $25955.9 | $24988.3 | $19681.4 |
| Corporate and other revenues | 1029.1 | 855.7 | 708.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total consolidated revenues  | $26985.0 | $25844.0 | $20390.0 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Total segment income for reportable segments | $2268.6 | $2147.9 | $1219.8 |
| Corporate and other | (285.5) | (270.8) | (720.4) |
| Other interest expense | (134.9) | (93.0) | (93.7) |
| Other income (loss), net | (14.7) | 24.3 | 144.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from continuing operations before income taxes | $1833.5 | $1808.4 | $550.1 |

---

**24. MULTIEMPLOYER PENSION PLANS**

Five of our 247 stores participate in multiemployer pension plans. We contribute to these multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover certain of our union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be assumed by the remaining participating employers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;If we choose to stop participating in a multiemployer plan, we may be required to pay the plan an amount based on the underfunded status of the plan, subject to certain limits, referred to as a withdrawal liability.

Both of the multiemployer pension plans in which we participate are designated as being in "red zone" status, as defined by the Pension Protection Act (PPA) of 2006. Our participation in these plans for the year ended December 31, 2022, is outlined in the table below. The "EIN/Pension Plan Number" column provides the Employer Identification Number (EIN) and the three-digit plan number. The most recent PPA zone status available in 2022 and 2021 is based on

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**AUTONATION, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Continued)**

information that we received from the plans and is certified by each plan's actuary. Among other factors, plans in the red zone are generally less than 65 percent funded. The last column lists the expiration date of the collective-bargaining agreements to which the plans are subject. A rehabilitation plan has been implemented for each plan. There have been no significant changes that affect the comparability of 2022, 2021, and 2020 contributions.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **Pension Protection Act Zone Status** | **Pension Protection Act Zone Status** | **Contributions of AutoNation** <br>**($ in millions)** <sup>(1)</sup> | **Contributions of AutoNation** <br>**($ in millions)** <sup>(1)</sup> | **Contributions of AutoNation** <br>**($ in millions)** <sup>(1)</sup> | | **Expiration Date of Collective-Bargaining Agreement** |
|<br>**Pension Fund** |<br>**EIN/Pension PlanNumber** | **2022** | **2021** | **2022** | **2021** | **2020** |<br>**Surcharge Imposed** <sup>(2)</sup> | **Expiration Date of Collective-Bargaining Agreement** |
| Automotive Industries Pension Plan | 94-1133245 - 001 | Red | Red | $1.3 | $1.2 | $1.4 | Yes | (3) |
| IAM National Pension Fund | 51-6031295- 002 | Red | Red | 0.2 | 0.2 | 0.2 | Yes | (4) |
| Other funds |  |  |  | 0.1 | 0.1 | 0.1 |  |  |
| Total contributions |  |  |  | $1.6 | $1.5 | $1.7 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup>&nbsp;&nbsp;&nbsp;&nbsp;Our stores were not listed in the Automotive Industries Pension Plan's or IAM National Pension Fund's Form 5500 as providing more than 5% of the total contributions for the plan years ended December 31, 2021 or 2020.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(2)</sup>&nbsp;&nbsp;&nbsp;&nbsp;We paid surcharges to the Automotive Industries Pension Plan of $0.6 million, $0.5 million, and $0.6 million in 2022, 2021, and 2020 respectively. Surcharges to the IAM National Pension Fund were de minimis.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(3)&nbsp;&nbsp;&nbsp;&nbsp;</sup>We are party to three collective-bargaining agreements that require contributions to the Automotive Industries Pension Plan with expirations dates of April 30, 2024, May 31, 2024, and December 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(4)</sup>&nbsp;&nbsp;&nbsp;&nbsp;We are party to two collective-bargaining agreements that require contributions to the IAM National Pension Fund. Both agreements have an expiration date of August 30, 2023.

In the event that we cease participating in these plans, we could be assessed withdrawal liabilities, which we estimate are approximately $16 million for the Automotive Industries Pension Plan and approximately $4 million for the IAM National Pension Fund.

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**ITEM 9. *CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE***

None.

**ITEM 9A. *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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K.

**Management's Annual Report on Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation*,* our management concluded that our internal control over financial reporting was effective as of December 31, 2022. Our independent registered public accounting firm, KPMG LLP, also concluded that we maintained effective internal control over financial reporting as set forth in its Report of Independent Registered Public Accounting Firm which is included in Part II, Item 8 of this Form 10-K.

As permitted by the Securities and Exchange Commission, management elected to exclude CIG Financial and the four automotive dealership stores acquired in the fourth quarter of 2022 (collectively, the "Acquired Entities") from its assessment of internal control over financial reporting as of December 31, 2022, as there was not an adequate amount of time between the acquisition dates and the date of management's assessment. The aggregate total assets and total revenue of the Acquired Entities included in our consolidated financial statements as of and for the year ended December 31, 2022, represented less than 3.70% of our consolidated total assets and less than 0.04% of our consolidated total revenue.

**Changes in Internal Control over Financial Reporting**

There were no changes 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 the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**ITEM 9B. *OTHER INFORMATION***

None.

**ITEM 9C. *DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS***

Not applicable.

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**PART III**

**ITEM 10. *DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE***

The information under the heading "Information about our Executive Officers" in Part I, Item 1 of this Form 10-K is incorporated by reference in this section.

We have adopted a Code of Business Ethics applicable to all employees. In addition, we have adopted a Code of Ethics for Senior Officers applicable to our principal executive officer, principal financial officer, principal accounting officer, and other senior officers and a Code of Ethics for Directors applicable to our directors. These codes are available on our Investor Relations website at *investors.autonation.com*. In the event that we amend or waive any of the provisions of the Code of Ethics for Senior Officers that relate to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, we intend to disclose the same on our Investor Relations website.

The other information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022.

**ITEM 11. *EXECUTIVE COMPENSATION***

The information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022.

**ITEM 12. *SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS***

**Equity Compensation Plans**

The following table provides information as of December 31, 2022, regarding our equity compensation plans:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **EQUITY COMPENSATION PLANS** | **EQUITY COMPENSATION PLANS** | **EQUITY COMPENSATION PLANS** | **EQUITY COMPENSATION PLANS** | **EQUITY COMPENSATION PLANS** | **EQUITY COMPENSATION PLANS** |
| | **(A)** | **(A)** | **(B)** | **(C)** | **(C)** |
| <br>**Plan Category** | **Number of Securities to<br>be Issued Upon Exercise<br>&nbsp;&nbsp;&nbsp;&nbsp;of Outstanding Options,&nbsp;&nbsp;&nbsp;&nbsp; Warrants and Rights** | **Number of Securities to<br>be Issued Upon Exercise<br>&nbsp;&nbsp;&nbsp;&nbsp;of Outstanding Options,&nbsp;&nbsp;&nbsp;&nbsp; Warrants and Rights** | **Weighted-Average<br>Exercise Price of<br>&nbsp;&nbsp;&nbsp;&nbsp;Outstanding Options,&nbsp;&nbsp;&nbsp;&nbsp; <br>Warrants and Rights** | **Number of Securities Remaining<br>Available for Future Issuance Under<br>Equity Compensation Plans<br>(Excluding Securities Reflected in<br>Column A)** | **Number of Securities Remaining<br>Available for Future Issuance Under<br>Equity Compensation Plans<br>(Excluding Securities Reflected in<br>Column A)** |
| Equity Compensation Plans Approved by Security Holders | 1333631 | (1) | $52.50(2) | 2372471 | (3) |
| Equity Compensation Plans Not Approved by Security Holders |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Total | 1333631 | (1) | $52.50(2) | 2372471 | (3) |

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(1)&nbsp;&nbsp;&nbsp;&nbsp;Includes 1,186,588 shares granted under the AutoNation, Inc. 2017 Employee Equity and Incentive Plan (the "2017 Plan") and 88,053 shares granted under the AutoNation, Inc. 2014 Non-Employee Director Equity Plan (the "2014 Plan") that are issuable upon settlement of outstanding restricted stock units ("RSUs"). The remaining balance consists of outstanding stock option awards.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The weighted average exercise price does not take into account the shares issuable upon settlement of outstanding RSUs, which have no exercise price.

(3)&nbsp;&nbsp;&nbsp;&nbsp;Includes 2,126,152 shares available under the 2017 Plan and 246,319 shares available under the 2014 Plan.

The other information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022.

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<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**ITEM 13. *CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE***

The information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022.

**ITEM 14. *PRINCIPAL ACCOUNTING FEES AND SERVICES***

The information required by this item is incorporated by reference to AutoNation's Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**PART IV**

**ITEM 15. *EXHIBITS, FINANCIAL STATEMENT SCHEDULES***

1. Financial Statements: The Consolidated Financial Statements of AutoNation are set forth in Part II, Item 8 of this Form 10-K.

2. Financial Statement Schedules: Not applicable.

3. Exhibits: The exhibits listed in the accompanying Exhibit Index are filed, furnished, or incorporated by reference as part of this Form 10-K.

Certain of the agreements listed as exhibits to this Form 10-K (including the exhibits to such agreements), which have been filed to provide investors with information regarding their terms, contain various representations, warranties, and covenants of AutoNation, Inc. and the other parties thereto. They are not intended to provide factual information about any of the parties thereto or any subsidiaries of the parties thereto. The assertions embodied in those representations, warranties, and covenants were made for purposes of each of the agreements, solely for the benefit of the parties thereto. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what a security holder might view as material, or may have been made for purposes of allocating contractual risk among the parties rather than establishing matters as facts. Investors should not view the representations, warranties, and covenants in the agreements (or any description thereof) as disclosures with respect to the actual state of facts concerning the business, operations, or condition of any of the parties to the agreements (or their subsidiaries) and should not rely on them as such. In addition, information in any such representations, warranties, or covenants may change after the dates covered by such provisions, which subsequent information may or may not be fully reflected in the public disclosures of the parties. In any event, investors should read the agreements together with the other information concerning AutoNation, Inc. contained in reports and statements that we file with the SEC.

**ITEM 16. *FORM 10-K SUMMARY***

None.

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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.** | **AUTONATION, INC.** |
| (Registrant) | (Registrant) |
| By: | /S/ MICHAEL MANLEY |
|  | Michael Manley<br>Chief Executive Officer and Director |
|  | February 17, 2023 |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /S/ MICHAEL MANLEY | Chief Executive Officer and Director | February 17, 2023 |
| Michael Manley | (Principal Executive Officer) |  |
| /S/ JOSEPH T. LOWER | Executive Vice President and Chief | February 17, 2023 |
| Joseph T. Lower | Financial Officer (Principal Financial Officer) |  |
| /S/ KIMBERLY R. DEES | Senior Vice President and Chief Accounting | February 17, 2023 |
| Kimberly R. Dees | Officer (Principal Accounting Officer) |  |
| /S/ RICK L. BURDICK | Chairman of the Board | February 17, 2023 |
| Rick L. Burdick |  |  |
| /S/ DAVID B. EDELSON | Director | February 17, 2023 |
| David B. Edelson |  |  |
| /S/ ROBERT R. GRUSKY | Director | February 17, 2023 |
| Robert R. Grusky |  |  |
| /S/ NORMAN K. JENKINS | Director | February 17, 2023 |
| Norman K. Jenkins |  |  |
| /S/ LISA LUTOFF-PERLO | Director | February 17, 2023 |
| Lisa Lutoff-Perlo |  |  |
| /S/ G. MIKE MIKAN | Director | February 17, 2023 |
| G. Mike Mikan |  |  |
| /S/ JACQUELINE A. TRAVISANO | Director | February 17, 2023 |
| Jacqueline A. Travisano |  |  |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**EXHIBIT INDEX**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Form** | **File Number** | **Exhibit** | **Filing Date** |
| 3.1 | <u>[Third Amended and Restated Certificate of Incorporation of AutoNation, Inc.](http://www.sec.gov/Archives/edgar/data/350698/000095014499010179/0000950144-99-010179.txt)</u> | 10-Q | 001-13107 | 3.1 | 8/13/99 |
| 3.2 | <u>[Amended and Restated By-Laws of AutoNation, Inc.](http://www.sec.gov/Archives/edgar/data/0000350698/000035069821000164/amendedandrestatedby-laws.htm)</u> | 8-K | 001-13107 | 3.1 | 11/18/21 |
| 4.1 | <u>[Indenture, dated April 14, 2010 (the "2010 Indenture"), among AutoNation, Inc. and](http://www.sec.gov/Archives/edgar/data/350698/000119312510083798/dex41.htm)[Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee](http://www.sec.gov/Archives/edgar/data/350698/000119312510083798/dex41.htm)</u> | 8-K | 001-13107 | 4.1 | 4/15/10 |
| 4.2 | <u>[Supplemental Indenture to 2010 Indenture, dated September 21, 2015, relating to the Company's 4.5% Senior Notes due 2025.](http://www.sec.gov/Archives/edgar/data/350698/000119312515324450/d48493dex43.htm)</u> | 8-K | 001-13107 | 4.3 | 9/21/15 |
| 4.3 | <u>[Form of 4.5% Senior Notes due 2025 (included in Exhibit 4.2).](http://www.sec.gov/Archives/edgar/data/350698/000119312515324450/d48493dex43.htm)</u> | 8-K | 001-13107 | 4.3 | 9/21/15 |
| 4.4 | <u>[Supplemental Indenture to 2010 Indenture, dated February 29, 2016, relating to the Company's 4.5% Senior Notes due 2025.](http://www.sec.gov/Archives/edgar/data/350698/000035069816000316/ex44.htm)</u> | 10-Q | 001-13107 | 4.4 | 4/22/16 |
| 4.5 | <u>[Supplemental Indenture to 2010 Indenture, dated July 29, 2016, relating to the Company's 4.5% Senior Notes due 2025.](http://www.sec.gov/Archives/edgar/data/350698/000035069816000354/ex44supplementalindenture.htm)</u> | 10-Q | 001-13107 | 4.4 | 10/28/16 |
| 4.6 | <u>[Supplemental Indenture to 2010 Indenture, dated August 3, 2017, relating to the Company's 4.5% Senior Notes due 2025.](http://www.sec.gov/Archives/edgar/data/350698/000035069817000118/an10q93017ex44.htm)</u> | 10-Q | 001-13107 | 4.4 | 11/2/17 |
| 4.7 | <u>[Supplemental Indenture to 2010 Indenture, dated November 10, 2017, relating to the Company's 3.5% Senior Notes due 2024.](http://www.sec.gov/Archives/edgar/data/350698/000119312517339933/d468524dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 11/13/17 |
| 4.8 | <u>[Form of 3.5% Senior Notes due 2024 (included in Exhibit 4.7).](http://www.sec.gov/Archives/edgar/data/350698/000119312517339933/d468524dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 11/13/17 |
| 4.9 | <u>[Supplemental Indenture to 2010 Indenture, dated November 10, 2017, relating to the Company's 3.8% Senior Notes due 2027.](http://www.sec.gov/Archives/edgar/data/350698/000119312517339933/d468524dex44.htm)</u> | 8-K | 001-13107 | 4.4 | 11/13/17 |
| 4.10 | <u>[Form of 3.8% Senior Notes due 2027 (included in Exhibit 4.9).](http://www.sec.gov/Archives/edgar/data/350698/000119312517339933/d468524dex44.htm)</u> | 8-K | 001-13107 | 4.4 | 11/13/17 |
| 4.11 | <u>[Supplemental Indenture to 2010 Indenture, dated May 22, 2020, relating to the Company's 4.75% Senior Notes due 2030.](http://www.sec.gov/Archives/edgar/data/0000350698/000119312520150091/d919014dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 5/22/20 |
| 4.12 | <u>[Form of 4.75% Senior Notes due 2030 (included in Exhibit 4.11).](https://www.sec.gov/Archives/edgar/data/0000350698/000119312520150091/d919014dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 5/22/20 |
| 4.13 | <u>[Supplemental Indenture to 2010 Indenture, dated July 29, 2021, relating to the Company's 1.95% Senior Notes due 2028 and 2.4% Senior Notes due 2031.](http://www.sec.gov/Archives/edgar/data/0000350698/000119312521229324/d188969dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 7/29/21 |
| 4.14 | <u>[Form of 1.95% Senior Notes due 2028 (included in Exhibit 4.13).](http://www.sec.gov/Archives/edgar/data/0000350698/000119312521229324/d188969dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 7/29/21 |
| 4.15 | <u>[Form of 2.4% Senior Notes due 2031 (included in Exhibit 4.13).](http://www.sec.gov/Archives/edgar/data/0000350698/000119312521229324/d188969dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 7/29/21 |
| 4.16 | <u>[Supplemental Indenture to 2010 Indenture, dated February 28, 2022, relating to the](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)[Company's](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)[3.85%](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)[Senior Notes](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)[due 2032](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)[.](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)</u> | 8-K | 001-13107 | 4.2 | 3/1/22 |
| 4.17 | <u>[Form of 3.85% Senior Notes due 2032 (included in Exhibit 4.16).](http://www.sec.gov/Archives/edgar/data/350698/000119312522061375/d217066dex42.htm)</u> | 8-K | 001-13107 | 4.3 | 3/1/22 |
| 4.18 | <u>[Description of Registrant's Securities.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex416descriptionofsecuriti.htm)</u> | 10-K | 001-13107 | 4.16 | 2/17/22 |
| 10.1\* | <u>[AutoNation, Inc. Deferred Compensation Plan, as amended and restated.](ex101amendeddcp.htm)</u> |  |  |  |  |
| 10.2 | <u>[AutoNation, Inc. 2007 Non-Employee Director Stock Option Plan.](http://www.sec.gov/Archives/edgar/data/350698/000095014407001673/g05620exv10w17.htm)</u> | 10-K | 001-13107 | 10.17 | 2/28/07 |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**EXHIBIT INDEX**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Form** | **File Number** | **Exhibit** | **Filing Date** |
| 10.3 | <u>[Amendment to the AutoNation, Inc. 2007 Non-Employee Director Stock Option Plan, effective as of October 26, 2010.](http://www.sec.gov/Archives/edgar/data/350698/000119312510239925/dex104.htm)</u> | 10-Q | 001-13107 | 10.4 | 10/28/10 |
| 10.4 | <u>[Amendment to the AutoNation, Inc. 2007 Non-Employee Director Stock Option Plan, effective as of February 1, 2012.](http://www.sec.gov/Archives/edgar/data/350698/000035069812000014/exhibit102.htm)</u> | 8-K | 001-13107 | 10.2 | 2/2/12 |
| 10.5 | <u>[AutoNation, Inc. 2014 Non-Employee Director Equity Plan (the "2014 Director Plan").](http://www.sec.gov/Archives/edgar/data/350698/000035069814000052/an10q33114ex106.htm)</u> | 10-Q | 001-13107 | 10.6 | 4/18/14 |
| 10.6 | <u>[Terms of Non-Employee Director Restricted Stock Units granted under the 2014 Director Plan.](http://www.sec.gov/Archives/edgar/data/350698/000035069814000111/an10q63014ex102.htm)</u> | 10-Q | 001-13107 | 10.2 | 7/17/14 |
| 10.7 | <u>[Amendment to the 2014 Director Plan, effective as of January 31, 2017.](http://www.sec.gov/Archives/edgar/data/350698/000035069817000057/an10q33117ex101.htm)</u> | 10-Q | 001-13107 | 10.1 | 4/25/17 |
| 10.8 | <u>[AutoNation, Inc. 2008 Employee Equity and Incentive Plan (the "2008 Plan").](http://www.sec.gov/Archives/edgar/data/350698/000095014408003147/g12923exv10w1.htm)</u> | 10-Q | 001-13107 | 10.1 | 4/25/08 |
| 10.9 | <u>[Form of Stock Option Agreement under the 2008 Plan (for grants made in 2009-2013).](http://www.sec.gov/Archives/edgar/data/350698/000095014409003507/g18720exv10w4.htm)</u> | 10-Q | 001-13107 | 10.4 | 4/24/09 |
| 10.10 | <u>[Form of Stock Option Agreement under the 2008 Plan (for grants made in 2014).](http://www.sec.gov/Archives/edgar/data/350698/000035069814000036/ex101.htm)</u> | 8-K | 001-13107 | 10.1 | 3/7/14 |
| 10.11 | <u>[Form of Stock Option Agreement under the 2008 Plan for grants in 2015.](http://www.sec.gov/Archives/edgar/data/350698/000035069815000085/ex104.htm)</u> | 10-Q | 001-13107 | 10.4 | 4/22/15 |
| 10.12 | <u>[Form of Stock Option Agreement under the 2008 Plan for grants in 2016.](http://www.sec.gov/Archives/edgar/data/350698/000035069816000316/ex101formofstockoptionagre.htm)</u> | 10-Q | 001-13107 | 10.1 | 4/22/16 |
| 10.13 | <u>[AutoNation, Inc. Policy Regarding Recoupment of Certain Incentive Compensation.](http://www.sec.gov/Archives/edgar/data/350698/000035069815000038/ex101policy.htm)</u> | 8-K | 001-13107 | 10.1 | 2/6/15 |
| 10.14 | <u>[AutoNation, Inc. 2017 Employee Equity and Incentive Plan (the "2017 Plan").](http://www.sec.gov/Archives/edgar/data/350698/000035069817000050/ex1012017plan.htm)</u> | 8-K | 001-13107 | 10.1 | 4/21/17 |
| 10.15 | <u>[Form of AutoNation, Inc. Restricted Stock Unit Award Agreement under the 2017 Plan for grants prior to November 2021.](http://www.sec.gov/Archives/edgar/data/350698/000035069817000100/an10q63017ex103.htm)</u> | 10-Q | 001-13107 | 10.3 | 8/2/17 |
| 10.16 | <u>[Form of AutoNation, Inc. Restricted Stock Unit Award Agreement under the 2017 Plan for grants](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex1016formofrsuawardagreem.htm)</u>in<u>[November 2021](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex1016formofrsuawardagreem.htm)[.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex1016formofrsuawardagreem.htm)</u> | 10-K | 001-13107 | 10.16 | 2/17/22 |
| 10.17 | <u>[Form of AutoNation, Inc. Stock Unit Awards Agreement under the 2017 Plan](http://www.sec.gov/Archives/edgar/data/350698/000035069818000090/ex101formofawardagreement.htm)[prior to 2022](http://www.sec.gov/Archives/edgar/data/350698/000035069818000090/ex101formofawardagreement.htm)[.](http://www.sec.gov/Archives/edgar/data/350698/000035069818000090/ex101formofawardagreement.htm)</u> | 10-Q | 001-13107 | 10.1 | 5/1/18 |
| 10.18 | <u>[Form of AutoNation, Inc. Retention Restricted Stock Unit Award Agreement.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex1018formofretentionrsuaw.htm)</u> | 10-K | 001-13107 | 10.18 | 2/17/22 |
| 10.19 | <u>[Form of AutoNation, Inc. Stock Unit Award Agreement](http://www.sec.gov/Archives/edgar/data/350698/000035069822000083/ex101formofstockunitawarda.htm)[under the 2017 Plan](http://www.sec.gov/Archives/edgar/data/350698/000035069822000083/ex101formofstockunitawarda.htm)[for grants in 2022.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000083/ex101formofstockunitawarda.htm)</u> | 10-Q | 001-13107 | 10.1 | 4/21/22 |
| 10.19 | <u>[AutoNation, Inc. Executive Severance Plan, adopted as of April 18, 2018.](http://www.sec.gov/Archives/edgar/data/350698/000035069818000090/ex102sevplan.htm)</u> | 10-Q | 001-13107 | 10.2 | 5/1/18 |
| 10.20 | <u>[Restricted Stock Unit Award Agreement, dated as of January 13, 2020, by and between AutoNation, Inc. and Joseph T. Lower.](http://www.sec.gov/Archives/edgar/data/350698/000035069820000042/ex1037rsuaward.htm)</u> | 10-K | 001-13107 | 10.37 | 2/18/20 |
| 10.21 | <u>[Separation Agreement and General Release of All Claims, dated July 14, 2020, by and between AutoNation, Inc. and Cheryl Miller.](http://www.sec.gov/Archives/edgar/data/0000350698/000035069820000083/ex102cmseparationagree.htm)</u> | 8-K | 001-13107 | 10.2 | 7/14/20 |
| 10.22 | <u>[Amended and Restated Employment Agreement, dated July 14, 2020, by and between AutoNation, Inc. and Michael J. Jackson.](http://www.sec.gov/Archives/edgar/data/0000350698/000035069820000083/ex101mjemploymentagree.htm)</u> | 8-K | 001-13107 | 10.1 | 7/14/20 |
| 10.23 | <u>[Employment Agreement, dated as of September 9, 2021, by and between AutoNation, Inc. and Michael Manley.](http://www.sec.gov/Archives/edgar/data/0000350698/000035069821000137/exhibit101.htm)</u> | 8-K | 001-13107 | 10.1 | 9/21/21 |

---

------

<u>[**Table of Contents**](#ia1a238a5878f4714ab09adbe7f58fb49_7)</u>

**EXHIBIT INDEX**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br>**<u>Number</u>** | **Exhibit Description** | **Form** | **File Number** | **Exhibit** | **Filing Date** |
| 10.24 | <u>[Retirement and General Release Agreement, dated as of November 1, 2021, by and between Michael J. Jackson and AutoNation, Inc.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000025/ex1024retirementandgeneral.htm)</u> | 10-K | 001-13107 | 10.24 | 2/17/22 |
| 10.25 | <u>[Letter Agreement, dated as of February 10, 2022, by and between AutoNation, Inc. and Gianluca Camplone.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000083/ex102gcemploymentofferlett.htm)</u> | 10-Q | 001-13107 | 10.2 | 4/21/22 |
| 10.26 | <u>[Restricted Stock Unit Award Agreement, dated as of March 1, 2022, by and between AutoNation, Inc. and Gianluca Camplone.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000083/ex103gcawardagreement.htm)</u> | 10-Q | 001-13107 | 10.3 | 4/21/22 |
| 10.27 | <u>[Letter Agreement, dated as of August 12, 2022, by and between AutoNation, Inc. and Lisa Esparza.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000133/ex102lisaesparzaemployment.htm)</u> | 10-Q | 001-13107 | 10.2 | 10/27/22 |
| 10.28 | <u>[First Amendment, dated as of September 29, 2022, to the Third Amended and Restated Credit Agreement, dated March 26, 2020, by and among the Company, JPMorgan Chase Bank, N.A. as Administrative Agent, and the other parties thereto.](http://www.sec.gov/Archives/edgar/data/350698/000035069822000133/ex101firstamendmenttocredi.htm)</u> | 10-Q | 001-13107 | 10.1 | 10/27/22 |
| 10.29 | <u>[Form of Commercial Paper Dealer Agreement between AutoNation, Inc., as Issuer, and the Dealer party thereto.](http://www.sec.gov/Archives/edgar/data/0000350698/000035069820000060/ex102formofdealeragree.htm)</u> | 8-K | 001-13107 | 10.2 | 3/26/20 |
| 21.1\* | <u>[Subsidiaries of AutoNation, Inc.](ex211listofsubsidiaries2022.htm)</u> |  |  |  |  |
| 23.1\* | <u>[Consent of KPMG LLP.](ex231kpmgconsent2022form.htm)</u> |  |  |  |  |
| 31.1\* | <u>[Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.](ex311section302ceocert2022.htm)</u> |  |  |  |  |
| 31.2\* | <u>[Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.](ex312section302cfocert2022.htm)</u> |  |  |  |  |
| 32.1\*\* | <u>[Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.](ex321section906ceocert2022.htm)</u> |  |  |  |  |
| 32.2\*\* | <u>[Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.](ex322section906cfocert2022.htm)</u> |  |  |  |  |
| 101.INS\* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |  |  |  |  |
| 101.SCH\* | XBRL Taxonomy Extension Schema Document |  |  |  |  |
| 101.CAL\* | XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |
| 101.DEF\* | XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |
| 101.LAB\* | XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |
| 101.PRE\* | XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |
| 104\* | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |  |  |  |  |

---

\*&nbsp;&nbsp;&nbsp;&nbsp;Filed herewith

\*\*&nbsp;&nbsp;&nbsp;&nbsp;Furnished herewith

Exhibits 10.1 through 10.27 are management contracts or compensatory plans, contracts, or arrangements.

In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the Company or its subsidiaries are not filed herewith. We hereby agree to furnish a copy of any such instrument to the Commission upon request.

## Exhibit 10.1

<u>Exhibit 10.1</u>

AutoNation, Inc.

Deferred Compensation Plan

Effective January 1, 2022

------

**Article I&nbsp;&nbsp;&nbsp;&nbsp;**

Establishment and Purpose&nbsp;&nbsp;&nbsp;&nbsp;1

**Article II**

Definitions&nbsp;&nbsp;&nbsp;&nbsp;2

**Article III**

Eligibility and Participation&nbsp;&nbsp;&nbsp;&nbsp;7

**Article IV**

Deferrals&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7

**Article V**

Company Contributions&nbsp;&nbsp;&nbsp;&nbsp;9

**Article VI**

Benefits&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10

**Article VII**

Modifications to Payment Schedules&nbsp;&nbsp;&nbsp;&nbsp;13

**Article VIII**

Valuation of Account Balances; Investments&nbsp;&nbsp;&nbsp;&nbsp;13

**Article IX**

Administration&nbsp;&nbsp;&nbsp;&nbsp;14

**Article X**

Amendment and Termination&nbsp;&nbsp;&nbsp;&nbsp;15

**Article XI**

Informal Funding&nbsp;&nbsp;&nbsp;&nbsp;15

**Article XII**

Claims&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15

**Article XIII**

General Provisions&nbsp;&nbsp;&nbsp;&nbsp;19

&nbsp;&nbsp;&nbsp;&nbsp;

------

AutoNation, Inc. Deferred Compensation Plan

**ARTICLE I**

*Establishment and Purpose* 

AutoNation, Inc. (the "Company") hereby amends and restates the AutoNation, Inc. Deferred Compensation Plan (the "Plan"), effective March 21, 2021. This amendment and restatement applies to Compensation Deferral Agreements submitted after the Effective Date and related earnings credited which are applicable to Compensation earned and deferred on or after January 1, 2020.

The purpose of the Plan is to attract and retain key employees ("Employees") and non-employee Directors ("Directors", and together with Employees, "Participants"), by providing each Participant with an opportunity to defer receipt of their cash compensation. The Plan is not intended to meet the qualification requirements of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent. The Plan is a continuation of the Plan as previously amended or restated effective as of January 1, 2009, November 16, 2010, November 5, 2012, November 1, 2013, October 31, 2014, October 25, 2016, November 1, 2017, October 1, 2019, and March 21, 2021.

The January 1, 2009 restatement was intended to bring the Plan into compliance with Code Section 409A. The November 16, 2010 restatement allowed Directors of the Company to defer their Director cash compensation on an elective basis, to be paid upon Separation from Service from the Board of Directors. Other than investment returns on deferrals the restatement provided no additional compensation to Directors. The Plan was also amended to allow Participants to establish a Secondary Termination Account with an independent Payment Schedule and investment election from the Termination Account. The November 5, 2012 restatement provided for an additional Secondary Termination Account with independent Payment Schedules and investment allocations, to be paid upon Separation from Service. The October 31, 2014 amendment clarified the application of deferral elections to commissions and made additional clarifying amendments to plan terms. Under its authority, the Committee may limit the number of Secondary Termination Accounts that may be established and maintained by a Participant at any one time. The October 25, 2016 amendment clarified the timing of Death Distributions. This restatement allows Participants to establish Specified Date Accounts that pay as scheduled regardless of separation from service or Disability and prohibits additional allocations of Deferrals to existing Specified Date Accounts under Compensation Deferral Agreements filed after the Effective Date. The November 1, 2017 restatement allows Participants to establish Specified Date Accounts that pay as scheduled regardless of separation from service or Disability and prohibits additional allocations of Deferrals to existing Specified Date Accounts under Compensation Deferral Agreements filed after the Effective Date. The October 1, 2019 restatement clarifies the definition of compensation by removing "base" from salary so as to include additional compensation components that Company may reasonably determine to be included in the definition of "Compensation". It also clarifies that a Specified Date Account established under the Prior Plan means established prior to November 1, 2017. It clarifies that a Specified Employee identified as a Corporate Vice President includes a Region Vice President. Finally, it removes the provision which automatically cancels deferrals if the Participant receives a hardship distribution under the Employer's 401(k) Plan. The March 21, 2021 amendment clarifies that regarding the automatic vesting of Company Contributions upon the occurrence of a Participant's Separation from Service at age sixty (60) or greater and completion of six (6) years of Service, such vesting shall only take place if the completed six (6) years of Service have been continuous. The January 1, 2022 restatement states that any arbitration proceedings arising from claims or disputes relating to the Plan will be conducted in Broward County, Florida, and if arbitration is not permissible under applicable law, any suit or legal action with respect to the claim must be brought in the United States District Court for the Southern District of Florida.

The Plan constitutes an unsecured promise by the Company to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company. The Company shall be solely responsible for payment of the benefits to Participants and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and Directors. Any amounts set aside to defray the liabilities assumed by the Company will remain the general assets of the Company and shall remain subject to the claims of the Company's creditors until such amounts are distributed to the Participants.

**ARTICLE II** 

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AutoNation, Inc. Deferred Compensation Plan

*Definitions* 

2.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Account</u>. Account means a bookkeeping account maintained by the Company to record the payment obligation of the Company to a Participant as determined under the terms of the Plan. The Company may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account established by the Company, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Account Balance</u>. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.

2.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Affiliate</u>. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

2.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Beneficiary</u>. Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan. The Participant's spouse, if living, otherwise the Participant's estate, shall be the Beneficiary if: (i) the Participant has failed to properly designate a Beneficiary, or (ii) all designated Beneficiaries have predeceased the Participant.

A former spouse shall have no interest under the Plan, as Beneficiary or otherwise, unless the Participant designates such person as a Beneficiary after dissolution of the marriage, except to the extent provided under the terms of a domestic relations order as described in Code Section 414(p)(1)(B).

2.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Business Day</u>*.* A Business Day is each day on which the New York Stock Exchange is open for business.

2.6 &nbsp;&nbsp;&nbsp;&nbsp;<u>Cause</u>. With respect to Employees, Separation from Service for "Cause" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;Participant's conviction for commission of a felony or other crime;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;the commission by Participant of any act against the Company or its subsidiaries constituting willful misconduct, dishonesty, fraud, theft or embezzlement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;Participant's failure, inability or refusal to perform any of the material services, duties or responsibilities required by him or her by the Company or its subsidiaries, or to materially comply with the policies or procedures established from time to time by the Company or its subsidiaries, for any reason other than his or her illness or physical or mental incapacity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;Participant's breach of any agreement entered into with the Company or its subsidiaries prior to or within one year after a Separation from Service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &nbsp;&nbsp;&nbsp;&nbsp;Participant's dependence, as determined in good faith by the Company or one of its subsidiaries, on any addictive substance, including, but not limited to, alcohol or any illegal or narcotic drugs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &nbsp;&nbsp;&nbsp;&nbsp;the destruction of or material damage to Company property or property of a subsidiary caused by Participant's willful or grossly negligent conduct; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;the willful engaging by Participant in any other conduct which is demonstrably injurious to the Company or its subsidiaries, monetarily or otherwise.

2.7 &nbsp;&nbsp;&nbsp;&nbsp;<u>Change in Control</u>*.*** Change in Control, with respect to an Employer that is organized as a corporation, occurs on the date on which any of the following events occur (i) a change in the ownership of the Employer; (ii) a change in the effective control of the Employer; (iii) a change in the ownership of a substantial portion of the assets of the Employer.

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AutoNation, Inc. Deferred Compensation Plan

For purposes of this Section, a change in the ownership of the Employer occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Employer that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Employer. A change in the effective control of the Employer occurs on the date on which either (i) a person, or more than one person acting as a group, acquires ownership of stock of the Employer possessing 30% or more of the total voting power of the stock of the Employer, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Employer's Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder of the Employer. A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to the Employer, acquires assets from the Employer that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Employer immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

An event constitutes a Change in Control with respect to a Participant only if the Participant performs services for the Employer that has experienced the Change in Control, or the Participant's relationship to the affected Employer otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii).

The determination as to the occurrence of a Change in Control shall be based on objective facts and in accordance with the requirements of Code Section 409A.

2.8 &nbsp;&nbsp;&nbsp;&nbsp;<u>Claimant</u>. Claimant means a Participant or Beneficiary filing a claim under Article XII of this Plan.

2.9 &nbsp;&nbsp;&nbsp;&nbsp;<u>Code</u>. Code means the Internal Revenue Code of 1986, as amended from time to time.

2.10 &nbsp;&nbsp;&nbsp;&nbsp;<u>Code Section 409A</u>. Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.

2.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Committee</u>. Committee means the Deferred Compensation Committee of the Company.

2.12 &nbsp;&nbsp;&nbsp;&nbsp;<u>Company</u>. Company means AutoNation, Inc. and its successors.

2.13 &nbsp;&nbsp;&nbsp;&nbsp;<u>Company Contribution</u>. Company Contribution means a credit by the Company to a Participant's Account(s) in accordance with the provisions of Article V of the Plan. Company Contributions are credited at the sole discretion of the Company and the fact that a Company Contribution is credited in one year shall not obligate the Company to continue to make such Company Contribution in subsequent years. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution. Directors are not eligible to receive Company Contributions.

2.14 &nbsp;&nbsp;&nbsp;&nbsp;<u>Compensation</u>. Compensation means an Employee's salary, bonus, commission, and such other cash or equity-based compensation (if any) approved by the Committee as Compensation that may be deferred under this Plan. With respect to Directors, Compensation means annual cash retainers and such other cash compensation approved by the Committee. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A.

2.15 &nbsp;&nbsp;&nbsp;&nbsp;<u>Compensation Deferral Agreement</u>. Compensation Deferral Agreement means an agreement between a Participant and the Company, written or electronic, that specifies (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts. The Committee may permit different deferral amounts for each component of

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AutoNation, Inc. Deferred Compensation Plan

Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee in the Compensation Deferral Agreement, Employees may defer up to 75% of their salary and up to 90% of other types of Compensation for a Plan Year, and Directors may defer up to 100% of Compensation. A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.4.

2.16 &nbsp;&nbsp;&nbsp;&nbsp;<u>Death Distribution</u>. Death Distribution means the benefit payable under the Plan to a Participant's Beneficiary upon the Participant's death as provided in Section 6.1 of the Plan.

2.17 &nbsp;&nbsp;&nbsp;&nbsp;<u>Deferral</u>. Deferral means a credit to a Participant's Account(s) that records that portion of the Participant's Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.

Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Committee as necessary so that it does not exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

2.18 &nbsp;&nbsp;&nbsp;&nbsp;<u>Director</u>. A Director means a non-employee member of the Company's Board of Directors.

2.19 &nbsp;&nbsp;&nbsp;&nbsp;<u>Disability Benefit</u>. Disability Benefit means the benefit payable under the Plan to a Participant in the event such Participant is determined to be Disabled.

2.20 &nbsp;&nbsp;&nbsp;&nbsp;<u>Disabled</u>. Disabled means that a Participant is, by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant's employer. The Committee shall determine whether a Participant is Disabled in accordance with Code Section 409A provided, however, that a Participant shall be deemed to be Disabled if determined to be totally disabled by the Social Security Administration. A Participant that becomes Disabled may be referred to as having a "Disability."

2.21 &nbsp;&nbsp;&nbsp;&nbsp;<u>Earnings</u>. Earnings means an adjustment to the value of an Account in accordance with Article VIII.

2.22 &nbsp;&nbsp;&nbsp;&nbsp;<u>Effective Date</u>. Effective Date means January 1, 2022.

2.23 &nbsp;&nbsp;&nbsp;&nbsp;<u>Eligible Employee</u>. Eligible Employee means an Employee who is a member of a "select group of management or highly compensated employees" of an Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion.

2.24 &nbsp;&nbsp;&nbsp;&nbsp;<u>Employee</u>. Employee means a full-time, common-law employee of an Employer.

2.25 &nbsp;&nbsp;&nbsp;&nbsp;<u>Employer</u>. Employer means, with respect to Employees it employs, the Company and each Affiliate.

2.26 &nbsp;&nbsp;&nbsp;&nbsp;<u>ERISA</u>. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.27 &nbsp;&nbsp;&nbsp;&nbsp;<u>Participant</u>. Participant means a Director or an Eligible Employee who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and any other person with an Account Balance greater than zero, regardless of whether such individual

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continues to be an Eligible Employee or Director. A Participant's continued participation in the Plan shall be governed by Section 3.2 of the Plan.

2.28 &nbsp;&nbsp;&nbsp;&nbsp;<u>Payment Schedule</u>. Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.

2.29 &nbsp;&nbsp;&nbsp;&nbsp;<u>Performance-Based Compensation</u>. Performance-Based Compensation means Compensation payable to an Employee where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether Compensation qualifies as "Performance-Based Compensation" will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

2.30 &nbsp;&nbsp;&nbsp;&nbsp;<u>Plan</u>. Generally, the term Plan means the "AutoNation, Inc. Deferred Compensation Plan" as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section.

2.31 &nbsp;&nbsp;&nbsp;&nbsp;<u>Plan Year</u>. Plan Year means January 1 through December 31.

2.32 &nbsp;&nbsp;&nbsp;&nbsp;<u>Prior Plan</u>. Prior Plan means the Plan document in effect prior to the Effective Date.

2.33 &nbsp;&nbsp;&nbsp;&nbsp;<u>Secondary Termination Account</u>. A Secondary Termination Account means an account established by a Participant on a Compensation Deferral Agreement to record amounts to be paid upon Separation from Service separate from the Termination Account. The Committee may determine in its sole discretion the maximum number of Secondary Termination Accounts that a Participant may establish. The Termination Account and any Secondary Termination Account may be referred to by different names in enrollment materials and other Participant communications, as determined by the Committee.

2.34 &nbsp;&nbsp;&nbsp;&nbsp;<u>Separation from Service</u>. An Employee incurs a Separation from Service upon termination of employment with the Employer. A Director incurs a Separation from Service on the first date that he or she is no longer a member of the Board of Directors of the Company. Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A. Except in the case of an Employee on a bona fide leave of absence as provided below, an Employee is deemed to have incurred a Separation from Service if the Employer and the Employee reasonably anticipated that the level of services to be performed by the Employee after a date certain would be reduced to 20% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which the Employee was on a bona fide leave of absence.

An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of (i) the six-month anniversary of the commencement of the leave or (ii) the expiration of the Employee's right, if any, to reemployment under statute or contract.

For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined in Section 2.25 of the Plan, except that for purposes of determining whether another organization is an Affiliate of the Company for this purpose, common ownership of at least 50% shall be determinative.

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AutoNation, Inc. Deferred Compensation Plan

The Committee specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to a Participant providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Code Section 409A.

2.35 &nbsp;&nbsp;&nbsp;&nbsp;<u>Specified Date Account</u>. A Specified Date Account means an Account established pursuant to Section 4.3, that will be paid (or that will commence to be paid) at a future date as specified in the Participant's Compensation Deferral Agreement. Unless otherwise determined by the Committee, a Participant may maintain no more than five (5) Specified Date Accounts in addition to any Specified Date Accounts established prior to November 1, 2017.

2.36 &nbsp;&nbsp;&nbsp;&nbsp;<u>Specified Date Benefit</u>. Specified Date Benefit means the benefit payable to a Participant under the Plan in accordance with Section 6.1(c).

2.37 &nbsp;&nbsp;&nbsp;&nbsp;<u>Specified Employee</u>. Unless otherwise specified by the Committee in accordance with Code Section 409A, Specified Employee means an Employee who, at any time during the 12-month period ending on the Specified Employee Identification Date was a Corporate or Region Vice President, Region or Market President or above of the Company or any Affiliate, provided any stock of the Company or an Affiliate is actively traded on an established securities market or otherwise. Such Employee shall be treated as a Specified Employee for the entire 12-month period beginning on the Specified Employee Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;In the event of corporate transactions described in Treas. Reg. Section 1.409A-1(i)(6), the identification of Specified Employees shall be determined in accordance with the default rules described therein, unless the Employer elects to utilize the available alternative methodology through designations made within the timeframes specified therein.

2.38 &nbsp;&nbsp;&nbsp;&nbsp;<u>Specified Employee Identification Date</u>. Specified Employee Identification Date means December 31, unless the Employer has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Employer.

2.39 &nbsp;&nbsp;&nbsp;&nbsp;<u>Specified Employee Effective Date</u>. Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date, or such earlier date as is selected by the Committee.

2.40 &nbsp;&nbsp;&nbsp;&nbsp;<u>Substantial Risk of Forfeiture</u>. Substantial Risk of Forfeiture shall have the meaning specified in Treas. Reg. Section 1.409A-1(d).

2.41&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination Account</u>. Termination Account means an Account established by the Company upon an Eligible Employee's commencement of participation in the Plan to record the amounts payable to a Participant upon Separation from Service. Unless the Participant has established a Specified Date Account or a Secondary Termination Account, all Deferrals and Company Contributions shall be allocated to the Termination Account on behalf of the Participant. The Termination Account and Secondary Termination Accounts may be referred to by different names in enrollment materials and other Participant communications, as determined by the Committee.

2.42 &nbsp;&nbsp;&nbsp;&nbsp;<u>Termination Benefit</u>. Termination Benefit means the benefit payable to a Participant under the Plan following the Separation from Service of the Participant for any reason other than death or Disability.

2.43 &nbsp;&nbsp;&nbsp;&nbsp;<u>Unforeseeable Emergency</u>. An Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, the Participant's dependent (as defined in Code Section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

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AutoNation, Inc. Deferred Compensation Plan

The types of events which may qualify as an Unforeseeable Emergency shall be specified by the Committee in administrative documents or forms.

2.44 &nbsp;&nbsp;&nbsp;&nbsp;<u>Valuation Date</u>. Valuation Date shall mean each Business Day.

**ARTICLE III** 

*Eligibility and Participation* 

3.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Eligibility and Participation</u>. An Eligible Employee or Director becomes a Participant upon the receipt of notification of eligibility to participate.

3.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Duration</u>. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions, subject to the terms of the Plan, for as long as such Participant remains an Eligible Employee or Director. A Participant who is no longer an Eligible Employee or Director but has not incurred Separation from Service may not defer Compensation under the Plan (except for deferrals elected for the year in which he ceases to be an Eligible Employee) but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero and during such time may continue to make allocation elections as provided in Section 8.4 and apply for emergency withdrawals to the extent permitted under Section 6.1(f). An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he or she is entitled have been paid.

3.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Revocation of Future Participation</u>. Notwithstanding the provisions of Section 3.2, the Committee may, in its discretion, revoke such Participant's eligibility to make future Deferrals under this Plan. Such revocation will not affect in any manner a Participant's Accounts or any deferral election in place for the year of such revocation.

**ARTICLE IV** 

*Deferrals* 

4.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Deferral Elections</u>, Generally.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;A Participant may elect to defer Compensation by submitting a Compensation Deferral Agreement during the enrollment periods established by the Company (which may be more restrictive than the timing requirements in section 4.2) and in the manner specified by the Company, but in any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service period or Compensation. The Company may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;The Participant shall specify on his or her Compensation Deferral Agreement whether to allocate Deferrals to a Termination Account, a Secondary Termination Account or a Specified Date Account. A Director shall specify on his or her Compensation Deferral Agreement whether to allocate Deferrals to a Termination Account or Secondary Termination Account. If no designation is made, all Deferrals shall be allocated to the Termination Account. A Participant may also specify in his or her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the form of payment is not specified in a Compensation Deferral Agreement, the form of payment shall be the form of payment specified in Section 6.2.

4.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Timing Requirements for Compensation Deferral Agreements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;*First Year of Eligibility.* In addition to other applicable timing rules described in this Section 4.2, in the case of the first year in which an Eligible Employee becomes eligible to participate in the Plan, he or she has up to 30 days following his initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned

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AutoNation, Inc. Deferred Compensation Plan

during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period. The determination of whether an Eligible Employee may file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-2(a)(7).

&nbsp;&nbsp;&nbsp;&nbsp;A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned on and after the date the Compensation Deferral Agreement becomes irrevocable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;*Prior Year Election.* Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement described in this paragraph shall become irrevocable with respect to such Compensation as of January 1 of the year in which such Compensation is earned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;*Performance-Based Compensation.* In addition to other applicable timing rules described in this Section 4.2, Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. &nbsp;&nbsp;&nbsp;&nbsp;the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation Deferral Agreement is submitted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. &nbsp;&nbsp;&nbsp;&nbsp;the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.

A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation as of the day immediately following the latest date for filing such election. Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant's death or Disability or upon a Change in Control prior to the satisfaction of the performance criteria, will be void unless it would be considered timely under another rule described in this Section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;*Sales Commissions.* For purposes of applying the election timing rules in this Section 4.2, sales commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(i)) are considered to be earned on the date the sale occurs. For the avoidance of doubt, notwithstanding the foregoing, any sales commissions payable after the last day of the applicable Plan Year solely for services performed during the final payroll period containing the last day of such Plan Year are considered to be earned in the subsequent Plan Year in which payment is made in accordance with Treas. Reg. Section 1.409A-2(a)(13).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &nbsp;&nbsp;&nbsp;&nbsp;*Certain Forfeitable Rights.* In addition to other applicable timing rules described in this Section 4.2, with respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the Participant's continued services for a period of at least twelve months from the date the Participant obtains the legally binding right, an election to defer such Compensation may be made on or before the 30th day after the Participant obtains the legally binding right to the Compensation, provided that the election is made at least twelve months in advance of the earliest date at which the forfeiture condition could lapse. The Compensation Deferral Agreement described in this paragraph becomes irrevocable after such 30th day. If the forfeiture condition applicable to the payment lapses before the end of the required service period as a result of the Participant's death or disability (as defined in Treas. Reg. Section 1.409A-3(i)(4)) or upon a Change in Control (as defined in Treas. Reg. Section 1.409A-3(i)(5)), the Compensation Deferral Agreement will be void unless it would be considered timely under another rule described in this Section.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &nbsp;&nbsp;&nbsp;&nbsp;*Company Awards.* In addition to other applicable timing rules described in this Section 4.2, the Company may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of severance pay may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) &nbsp;&nbsp;&nbsp;&nbsp;*"Evergreen" Deferral Elections.* The Committee, in its discretion, may provide in the Compensation Deferral Agreement that such Compensation Deferral Agreement will continue in effect for each subsequent year or performance period. Such "evergreen" Compensation Deferral Agreements will become effective with respect to an item of Compensation on the date such election becomes irrevocable under this Section 4.2. An evergreen Compensation Deferral Agreement may be terminated or modified prospectively with respect to Compensation for which such election remains revocable under this Section 4.2. A Participant whose Compensation Deferral Agreement is cancelled in accordance with Section 4.6 will be required to file a new Compensation Deferral Agreement under this Article IV in order to recommence Deferrals under the Plan.

4.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Allocation of Deferrals</u>. A Compensation Deferral Agreement submitted by an Employee may allocate Deferrals to the Termination Account, one or more Secondary Termination Accounts and/or one or more Specified Date Accounts. A Compensation Deferral Agreement submitted by a Director may allocate Deferrals between a Termination Account and one or more Secondary Termination Accounts. The Committee may, in its discretion, establish a minimum deferral period and maximum deferral period for the establishment of a Specified Date Account (for example, a minimum of the third, but no later than the 15<sup>th</sup>, Plan Year following the year Compensation is allocated to such accounts).

4.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Deductions from Pay</u>. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant's Compensation.

4.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Vesting</u>. Participant Deferrals shall be 100% vested at all times.

4.6 &nbsp;&nbsp;&nbsp;&nbsp;<u>Cancellation of Deferrals</u>. The Committee may cancel a Participant's Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable Emergency occurs, and (ii) during periods in which the Participant is unable to perform the duties of his or her position or any substantially similar position due to a mental or physical impairment that can be expected to result in death or last for a continuous period of at least six months, provided cancellation occurs by the later of the end of the taxable year of the Participant or the 15th day of the third month following the date the Participant incurs the disability (as defined in this paragraph).

**ARTICLE V** 

*Company Contributions* 

5.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Discretionary Company Contributions</u>. The Company may, from time to time in its sole and absolute discretion, credit Company Contributions to any Participant in any amount determined by the Company. Such contributions will be credited to a Participant's Termination Account. Directors are not eligible for discretionary Company Contributions.

5.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Vesting</u>. Company Contributions des<u>c</u>ribed in Section 5.1, above, and the Earnings thereon, shall vest in accordance with the vesting schedule(s) established by the Committee at the time that the Company Contribution is made. All Company Contributions shall become 100% vested upon the occurrence of the earliest of: (i) the death of the Participant while actively employed; (ii) the Disability of the Participant, or (iii) a Participant's Separation from Service after attainment of age sixty (60) and completion of six (6) continuous Years of Service. The Committee may, at any time, in its sole discretion, increase a Participant's vested interest in a Company Contribution. The portion of a Participant's Accounts that remains unvested upon his or her Separation from Service after the application of the terms of this Section 5.2 shall be forfeited. Vested and unvested Company contributions will be recorded in the Participant's Termination Account.

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Notwithstanding the foregoing, in the event of a Separation from Service for Cause, (i) a Participant's vested interest in Company Contributions (other than "matching" contributions) will be determined without regard to any accelerated vesting due to age and service and (ii) amounts (other than "matching contributions") to which a Participant otherwise would have attained a vested interest in the year of Separation from Service and the three immediately preceding Plan Years will be forfeited.

**ARTICLE VI** 

*Benefits* 

6.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Benefits</u>. A Participant shall be entitled to the following benefits under the Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;*Termination Benefit.* Upon the Participant's Separation from Service for reasons other than death or Disability (or in cases of Directors, for reasons other than death), he or she shall be entitled to a Termination Benefit. The Termination Benefit shall be equal to the vested portion of the Termination Account and the Account Balances of any Specified Date Accounts established prior to November 1, 2017 with respect to which payments have not yet commenced. The Termination Benefit shall be based on the value of that Account(s) as of the end of the month following the month in which Separation from Service occurs or such later date as the Committee, in its sole discretion, shall determine. Payment of the Termination Benefit will be made or begin the first day of the second month following the month in which Separation from Service occurs, provided, however, that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made or begin on the first day of the seventh month following the month in which such Separation from Service occurs. If the Termination Benefit is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date it would have been paid had the Participant not been a Specified Employee and in accordance with the provisions of 6.2(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;*Secondary Termination Account Benefit.* Upon the Participant's Separation from Service for reasons other than death or Disability (or, in the case of Directors, for reasons other than death), he or she shall be entitled to receive the Account Balances from his or her Secondary Termination Account(s). The amount of the payment from each Secondary Termination Account shall be based on the value of such Secondary Termination Account as of the end of the month following the month in which Separation from Service occurs or such later date as the Committee, in its sole discretion, shall determine. Payment of the Secondary Termination Accounts will be made or begin the first day of the second month following the month in which Separation from Service occurs, provided, however, that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made or begin on the first day of the seventh month following the month in which such Separation from Service occurs. If a Secondary Termination Account is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date it would have been paid had the Participant not been a Specified Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;*Specified Date Benefit.* If the Participant has established one or more Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with respect to each such Specified Date Account. The Specified Date Benefit shall be equal to the Account Balance of the Specified Date Account, based on the value of that Account as of the end of the month designated by the Participant at the time the Account was established. Payment of the Specified Date Benefit will be made or begin the first day of the month following the designated month.

In the event of the Participant's Separation from Service or Disability prior to the payment commencement date, Specified Date Accounts established prior to November 1, 2017 will be paid as provided under Sections 6.1(a) or (d), as is applicable. In the event

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of the Participant's death before or after the payment commencement date, all Specified Date Accounts will be paid under Section 6.1(e).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;*Disability Benefit.* Upon a determination by the Committee that an Employee Participant is Disabled, he or she shall be entitled to a Disability Benefit. The Disability Benefit shall be equal to the vested portion of the Termination Account, and the Account Balances of any Secondary Termination Accounts and any Specified Date Accounts established prior to November 1, 2017 with respect to which payments have not yet commenced. The Disability Benefit shall be based on the value of the Accounts as of the last day of the month following the month in which Disability occurs and will be paid the first day of the second month following the month in which Disability occurs. Directors are not eligible for a Disability Benefit. Any Specified Date Accounts established after the Effective Date will remain payable as described in Section 6.1(c).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &nbsp;&nbsp;&nbsp;&nbsp;*Death Distribution.* In the event of the Participant's death, his or her designated Beneficiary shall be entitled to a Death Distribution. The Death Distribution shall be equal to the unpaid Account Balances of the Termination Account, any Secondary Termination Accounts and any Specified Date Accounts. The Death Distribution shall be paid no later than December 31 of the year following the year the death occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &nbsp;&nbsp;&nbsp;&nbsp;*Unforeseeable Emergency Payments.* Notwithstanding any other provision of this Article VI, a Participant who is an Employee or former Employee and who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment from his or her Accounts as provided in this Section 6.1(f). Directors are not eligible for payments under this Section 6.1(f).

Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted first from the Participant's Secondary Termination Account with the longest Payment Schedule until depleted, then from Deferrals held in the Termination Account until depleted, then from any Specified Date Accounts established prior to November 1, 2017, beginning with the Account with the latest payment commencement date, then from any Specified Date Accounts established on or after November 1, 2017, beginning with the Specified Date Account with the latest payment commencement date and finally from vested Company Contributions held in the Termination Account. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee.

6.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Form of Payment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;*Termination Benefit.* A Participant who is entitled to receive a Termination Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects on his or her initial Compensation Deferral Agreement to have such benefit paid in a series of substantially equal annual installments paid over two (2) to fifteen (15) years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;*Secondary Termination Account Benefit*. Payments from a Secondary Termination Account will be made in a single lump sum, unless the Participant elects on his or her Compensation Deferral Agreement with which the account was established to have such

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payment made in a series of substantially equal annual installments paid over two (2) to fifteen (15) years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) &nbsp;&nbsp;&nbsp;&nbsp;*Specified Date Benefit.* The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the Compensation Deferral Agreement with which the account was established to have the Specified Date Account paid in substantially equal annual installments over a period of two (2) to five (5) years, as elected by the Participant.

Notwithstanding any election of a form of payment by the Participant, upon a Separation from Service the unpaid balance of a Specified Date Account established prior to November 1, 2017 and with respect to which payments have not commenced shall be paid in accordance with the form of payment applicable to the Termination, Disability or Death Distribution, as applicable. If such benefit is payable in a single lump sum, the unpaid balance of all Specified Date Accounts established prior to November 1, 2017 (including those in pay status) will be paid in a lump sum.<br>Specified Date Accounts established after the Effective Date will continue to pay as scheduled regardless of any earlier Separation from Service or Disability, but will be fully paid as part of any Death Distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;*Disability Benefit.* A Participant who is entitled to receive a Disability Benefit shall receive payment of such benefit according to the Payment Schedule in effect for the Termination Benefit at the time the Disability arises. Payment from a Secondary Termination Account, if any, will be made according to the Payment Schedule in effect for such Account at the time the Disability arises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &nbsp;&nbsp;&nbsp;&nbsp;*Death Distribution.* A Designated Beneficiary who is entitled to receive a Death Distribution shall receive payment of such benefit in a single lump sum. In the event of a Participant's death while receiving installment payments from his or her Account, his or her remaining Account Balance will be paid to his or her Beneficiary in a single lump sum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &nbsp;&nbsp;&nbsp;&nbsp;*Small Account Balances.* Notwithstanding any Participant election or other provisions of the Plan, a Participant's Accounts will be paid in a single lump sum if, as of the first payment commencement date under Sections 6.1(a), (b) or (d), as is applicable, the combined value of his or her Accounts is not greater than $25,000. In addition, notwithstanding anything to the contrary in this Article VI, the Committee may, in accordance with Code Section 409A and the regulations thereunder, at any time and without regard to whether a payment event has occurred, direct in writing an immediate lump sum payment of the Participant's Accounts if the balance of such Accounts, combined with any other amounts required to be treated as deferred under a single plan pursuant to Code Section 409A, does not exceed the applicable dollar amount under Code Section 402(g)(1)(B), provided any other such aggregated amounts are also distributed in a lump sum at the same time. Such lump sum payment shall automatically be made if the balance of such Accounts does not exceed the applicable dollar amount under Code Section 402(g)(1)(B) at the time the Participant Separates from Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) &nbsp;&nbsp;&nbsp;&nbsp;*Rules Applicable to Installment Payments.* If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the Valuation Date and (b) equals the remaining number of installment payments.

For purposes of Article VII, installment payments will be treated as a single form of payment.

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6.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Acceleration of or Delay in Payments</u>. The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant's Accounts be paid to an "alternate payee," any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum.

**ARTICLE VII** 

*Modifications to Payment Schedules* 

7.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Participant's Right to Modify</u>. A Participant may modify any or all of the alternative Payment Schedules with respect to an Account, consistent with the permissible Payment Schedules available under the Plan, provided such modification complies with the requirements of this Article VII. The Committee may further restrict a Participant's right to modify Account Payment Schedules.

7.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Time of Election</u>. The date on which a modification election is submitted to the Committee must be at least twelve months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification.

7.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Date of Payment under Modified Payment Schedule</u>. Except with respect to modifications that relate to the payment of a Disability Benefit, the date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A.

7.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Effective Date</u>. A modification election submitted in accordance with this Article VII is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.

7.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Effect on Accounts</u>. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Accounts.

**ARTICLE VIII** 

*Valuation of Account Balances; Investments* 

8.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Valuation</u>. Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Company Contributions shall be credited to the Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee.

8.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Earnings Credit</u>. Each Account will be credited with Earnings on each Business Day, based upon the Participant's investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Article VIII ("investment allocation").

8.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Investment Options</u>. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.

8.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Investment Allocations</u>. A Participant's investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Company or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant's investment allocation. A Participant's

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investment allocation shall be used solely for purposes of adjusting the value of a Participant's Account Balances.

A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Committee. Allocation among the investment options must be designated in increments of 1%. The Participant's investment allocation will become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day.

A Participant may change an investment allocation on any Business Day, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with procedures adopted by the Committee. Changes shall become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day, and shall be applied prospectively.

8.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Unallocated Deferrals and Accounts</u>. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment option, the primary objective of which is the preservation of capital, as determined by the Committee.

**ARTICLE IX** 

*Administration* 

9.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Plan Administration</u>. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Article XII.

9.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Withholding</u>. The Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.

9.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification</u>. The Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents, against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by the Employer. Notwithstanding the foregoing, the Employer shall not indemnify any person or organization if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Employer consents in writing to such settlement or compromise.

9.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Delegation of Authority</u>. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company.

9.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Binding Decisions or Actions</u>. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

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**ARTICLE X** 

*Amendment and Termination* 

10.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment and Termination</u>. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article X.

10.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Amendments</u>. The Company may at any time amend the Plan, provided that such amendment shall not cancel, reduce, or otherwise adversely affect the amount of benefits of any Participant accrued (and any form of payment elected) as of the date of any such amendment, without the consent of the Participant.

10.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Termination</u>. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix).

**ARTICLE XI** 

*Informal Funding* 

11.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>General Assets</u>. Obligations established under the terms of the Plan may be satisfied from the general funds of the Company, or a trust described in this Article XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Company. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Employers and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Company.

11.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Rabbi Trust</u>. The Company may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Company or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

**ARTICLE XII** 

*Claims* 

12.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Filing a Claim</u>. Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee which shall make all determinations concerning such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the "Claimant").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;*In General.* Notice of a denial of benefits (other than Disability benefits) will be provided within ninety (90) days of the Committee's receipt of the Claimant's claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial ninety (90) day period. The extension will not be more than ninety (90) days from the end of the initial ninety (90) day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects to make a decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;*Disability Benefits.* Notice of denial of Disability benefits will be provided within forty-five (45) days of the Committee's receipt of the Claimant's claim for Disability benefits. If the Committee determines that it needs additional time to review the Disability claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial forty-five (45) day period. If the Committee determines that a decision cannot be made within the first extension period due to matters beyond the control of the Committee, the time period for making a determination may be further extended for an additional thirty (30) days. If such an additional extension is necessary, the Committee shall notify the Claimant prior to the expiration of the initial thirty (30) day extension.

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Any notice of extension shall indicate the circumstances necessitating the extension of time, the date by which the Committee expects to furnish a notice of decision, the specific standards on which such entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim and any additional information needed to resolve those issues. A Claimant will be provided a minimum of forty-five (45) days to submit any necessary additional information to the Committee. In the event that a thirty (30) day extension is necessary due to a Claimant's failure to submit information necessary to decide a claim, the period for furnishing a notice of decision shall be tolled from the date on which the notice of the extension is sent to the Claimant until the earlier of the date the Claimant responds to the request for additional information or the response deadline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;*Contents of Notice.* If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language. The notice shall (i) cite the pertinent provisions of the Plan document and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review. In the case of a complete or partial denial of a Disability benefit claim, the notice shall provide a statement that the Committee will provide to the Claimant, upon request and free of charge, a copy of any internal rule, guideline, protocol, or other similar criterion that was relied upon in making the decision.

12.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Appeal of Denied Claims</u>. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written appeal with a committee designated to hear such appeals (the "Appeals Committee"). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relevant to the claim to the Appeals Committee. All written comments, documents, records, and other information shall be considered "relevant" if the information (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was relied upon to make the decision, or (iii) demonstrates compliance with administrative processes and safeguards established for making benefit decisions. The Appeals Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim appeal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;*In General.* Appeal of a denied benefits claim (other than a Disability benefits claim) must be filed in writing with the Appeals Committee no later than sixty (60) days after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied claim within sixty (60) days following receipt of the appeal (or within one hundred and twenty (120) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. The review will take into account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to whether such information was submitted or considered in the initial benefit determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;*Disability Benefits.* Appeal of a denied Disability benefits claim must be filed in writing with the Appeals Committee no later than one hundred eighty (180) days after receipt of the written notification of such claim denial. The review shall be conducted by the Appeals Committee (exclusive of the person who made the initial adverse decision or such person's subordinate). In reviewing the appeal, the Appeals Committee shall (i) not afford deference to the initial denial of the claim, (ii) consult a medical professional who

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AutoNation, Inc. Deferred Compensation Plan

has appropriate training and experience in the field of medicine relating to the Claimant's disability and who was neither consulted as part of the initial denial nor is the subordinate of such individual and (iii) identify the medical or vocational experts whose advice was obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decision. The Appeals Committee shall make its decision regarding the merits of the denied claim within forty-five (45) days following receipt of the appeal (or within ninety (90) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. Following its review of any additional information submitted by the Claimant, the Appeals Committee shall render a decision on its review of the denied claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;*Contents of Notice.* If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language.

The decision on review shall set forth (i) the specific reason or reasons for the denial, (ii) specific references to the pertinent Plan provisions on which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, or other information relevant (as defined above) to the Claimant's claim, and (iv) a statement describing any voluntary appeal procedures offered by the plan and a statement of the Claimant's right to bring an action under Section 502(a) of ERISA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;For the denial of a Disability benefit, the notice will also include a statement that the Appeals Committee will provide, upon request and free of charge, (i) any internal rule, guideline, protocol or other similar criterion relied upon in making the decision, (ii) any medical opinion relied upon to make the decision and (iii) the required statement under Section 2560.503-1(j)(5)(iii) of the Department of Labor regulations.

12.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>Legal Action</u>. A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures. Any such legal action must be commenced within one year of a final determination hereunder with respect to such claim. To the extent a claim or controversy is not required to be submitted to arbitration pursuant to Section 12.5 (for example, because the arbitration is not permissible under applicable law), the sole and exclusive venue for the filing of a suit of legal action with respect to such claim or controversy shall be the United States District Court for the Southern District of Florida, and the parties hereby irrevocably consent to the jurisdiction of said court.

If a Participant or Beneficiary prevails in a legal proceeding brought under the Plan to enforce the rights of such Participant or any other similarly situated Participant or Beneficiary, in whole or in part, the Company shall reimburse such Participant or Beneficiary for all legal costs, expenses, attorneys' fees and such other liabilities incurred as a result of such proceedings.

12.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>Discretion of Appeals Committee</u>. All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion, and shall be final and conclusive.

12.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Arbitration</u>. If any claim or controversy between the Committee and a Participant or Beneficiary is not resolved through the claims procedure set forth in Article XII, such claim shall be submitted to and resolved exclusively by expedited binding arbitration by a single arbitrator, excluding claims for which arbitration is not permissible under applicable law. Arbitration shall be conducted in accordance with the following procedures:

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AutoNation, Inc. Deferred Compensation Plan

The complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following the giving of such notice, the parties shall meet and attempt in good faith to resolve the matter. In the event the parties are unable to resolve the matter within twenty one (21) days, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within ten (10) Business Days following the giving of the written notice of dispute, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or recognized arbitrator and who, in either event, is experienced in serving as an arbitrator in disputes between employers and employees, which list shall be provided by the main office of either JAMS, the American Arbitration Associate ("AAA") or the Federal Mediation and Conciliation Service. If, within three Business Days of the parties' receipt of such list, the parties are unable to agree on an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

Unless the parties agree otherwise, within sixty (60) days of the selection of the arbitrator, a hearing shall be conducted in Broward County, Florida before such arbitrator at a time and a place agreed upon by the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the arbitrator shall designate a time and place in Broward Country, Florida after consultation with the parties. Within thirty (30) days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator's award.

In any arbitration hereunder, the Company shall pay all administrative fees of the arbitration and all fees of the arbitrator, except that the Participant or Beneficiary may, if he/she/it wishes, pay up to one-half of those amounts. Each party shall pay its own attorneys' fees, costs, and expenses, unless the arbitrator orders otherwise. The prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party's costs (including but not limited to the arbitrator's compensation), expenses, and attorneys' fees. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation.

The parties shall be entitled to discovery as follows: Each party may take no more than three depositions. The Committee may depose the Participant or Beneficiary plus two other witnesses, and the Participant or Beneficiary may depose the Company or the Committee, pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two other witnesses. Each party may make such reasonable document discovery requests as are allowed in the discretion of the arbitrator.

The decision of the arbitrator shall be final, binding, and non-appealable, and may be enforced as a final judgment in any court of competent jurisdiction.

This arbitration provision of the Plan shall extend to claims against any parent, subsidiary, or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, Participant, Beneficiary, or agent of any party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law or under this Plan.

Notwithstanding the foregoing, and unless otherwise agreed between the parties, either party may apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

------

AutoNation, Inc. Deferred Compensation Plan

Any arbitration hereunder shall be conducted in accordance with the Federal Arbitration Act: provided, however, that, in the event of any inconsistency between the rules and procedures of the Act and the terms of this Plan, the terms of this Plan shall prevail.

If any of the provisions of this Section 12.5 are determined to be unlawful or otherwise unenforceable, in the whole part, such determination shall not affect the validity of the remainder of this section and this section shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the provisions of this Section 12.5 are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact and treated as determinative to the maximum extent permitted by law.

The parties agree that such claim or controversy shall be adjudicated on an individual basis, and to the maximum extent permitted by law, each party waives the right to participate in a putative class action or other representative action with respect to such claim or controversy. Notwithstanding the previous paragraph, if this provision is found to be unenforceable, then any such class or other representative action shall be filed and adjudicated in accordance with Section 12.3. The parties agree to arbitrate only the claims(s) of a single Participant or Beneficiary.

**ARTICLE XIII** 

*General Provisions* 

13.1 &nbsp;&nbsp;&nbsp;&nbsp;<u>Assignment</u>. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)).

The Company may assign any or all of its liabilities under this Plan in connection with any restructuring, recapitalization, sale of assets or other similar transactions affecting a Participating Employer without the consent of the Participant.

13.2 &nbsp;&nbsp;&nbsp;&nbsp;<u>Accounts Taxable Under Code Section 409A</u>. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code Section 409A.

13.3 &nbsp;&nbsp;&nbsp;&nbsp;<u>No Legal or Equitable Rights or Interest</u>. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Company or an Employer. The right and power of the Company or an Employer to dismiss or discharge an Employee is expressly reserved. The Company and Committee make no representations or warranties as to the tax consequences to a Participant or a Participant's beneficiaries resulting from a deferral of income pursuant to the Plan.

13.4 &nbsp;&nbsp;&nbsp;&nbsp;<u>No Employment Contract</u>. Nothing contained herein shall be construed to constitute a contract of employment between an Employee and an Employer.

13.5 &nbsp;&nbsp;&nbsp;&nbsp;<u>Notice.</u> Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:

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AutoNation, Inc. Deferred Compensation Plan

**AUTONATION, INC.**

**ATTN: SR. MANAGER, RETIREMENT PLANS**

**200 SW 1ST AVENUE, SUITE 1400**

**FT. LAUDERDALE, FL 33301**

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing or hand-delivered, or sent by mail to the last known address of the Participant.

13.6 &nbsp;&nbsp;&nbsp;&nbsp;<u>Headings</u>. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

13.7 &nbsp;&nbsp;&nbsp;&nbsp;<u>Invalid or Unenforceable Provisions</u>. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

13.8 &nbsp;&nbsp;&nbsp;&nbsp;<u>Lost Participants or Beneficiaries</u>. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored.

13.9 &nbsp;&nbsp;&nbsp;&nbsp;<u>Facility of Payment to a Minor</u>. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its discretion, make such distribution (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Committee, the Company, and the Plan from further liability on account thereof.

13.10 &nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. To the extent not preempted by ERISA, the laws of the State of Florida shall govern the construction and administration of the Plan.

**IN WITNESS WHEREOF, the undersigned executed this Plan as of the 15**<sup>th</sup> **day of July, 2022 to be effective as of the Effective Date.**

**AutoNation, Inc.**

By:&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ C. Coleman Edmunds</u>

Its:&nbsp;&nbsp;&nbsp;&nbsp;<u>EVP, General Counsel and Corporate Secretary, and Committee Chairman</u>

## Exhibit 21.1

<u>Exhibit 21.1</u>

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| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| 7 Rod Real Estate North, A Limited Liability Company |  | Wyoming |
| 7 Rod Real Estate South, A Limited Liability Company |  | Wyoming |
| Abraham Chevrolet-Miami, Inc. | AutoNation Chevrolet Coral Gables | Delaware |
| Abraham Chevrolet-Tampa, Inc. |  | Delaware |
| ACER Fiduciary, Inc. |  | Delaware |
| ACP Auto Parts, LLC |  | Delaware |
| ACP Holding Corp. |  | Delaware |
| AL F-L Motors, LLC |  | Delaware |
| AL Fort Payne Motors, LLC |  | Delaware |
| Albuquerque ANUSA, LLC | AutoNation USA Albuquerque | Delaware |
| Allen Samuels Chevrolet of Corpus Christi, Inc. | AutoNation Chevrolet North Corpus Christi; AutoNation Collision Center North Corpus Christi | Texas |
| Allen Samuels Chevrolet of Waco, Inc. | AutoNation Chevrolet Waco; Mercedes-Benz of Waco; AutoNation Collision Center Waco | Texas |
| Allison Bavarian | BMW of Mountain View | California |
| Allison Bavarian Holding, LLC |  | Delaware |
| American Way Motors, Inc. | AutoNation Honda 385 | Tennessee |
| AN AutoParts, Inc. |  | Delaware |
| AN Cadillac of WPB, LLC | AutoNation Cadillac West Palm Beach | Delaware |
| AN Central Region Management, LLC |  | Delaware |
| AN Chevrolet - Arrowhead, Inc. | AutoNation Chevrolet Arrowhead | Delaware |
| AN CJ Valencia, Inc. |  | Delaware |
| AN Collision Center FTL South, Inc. | AutoNation Collision Center Fort Lauderdale South | Delaware |
| AN Collision Center of Addison, Inc. | AutoNation Collision Center Addison | Delaware |
| AN Collision Center of Las Vegas, Inc. | AutoNation Collision Center Las Vegas | Nevada |
| AN Collision Center of North Houston, Inc. | AutoNation Collision Center North Houston | Delaware |
| AN Collision Center of Tempe, Inc. | AutoNation Collision Center Tempe | Delaware |
| AN Corporate Management Payroll Corp. |  | Delaware |
| AN Corpus Christi GP, LLC |  | Delaware |
| AN Corpus Christi Imports Adv. GP, LLC |  | Delaware |
| AN Corpus Christi Imports Adv., LP |  | Texas |
| AN Corpus Christi Imports GP, LLC |  | Delaware |
| AN Corpus Christi Imports II GP, LLC |  | Delaware |
| AN Corpus Christi Imports II, LP |  | Texas |
| AN Corpus Christi Imports, LP |  | Texas |
| AN Corpus Christi Motors, Inc. | AutoNation Hyundai Corpus Christi | Delaware |
| AN Corpus Christi T. Imports GP, LLC |  | Delaware |
| AN Corpus Christi T. Imports, LP | AutoNation Toyota Corpus Christi | Texas |
| AN County Line Ford, Inc. | AutoNation Ford Burleson | Texas |
| AN Dealership Holding Corp. |  | Florida |
| AN F. Imports of Atlanta, LLC |  | Delaware |
| AN F. Imports of Hawthorne Holding, LLC |  | Delaware |
| AN F. Imports of Hawthorne, LLC |  | Delaware |
| AN F. Imports of North Denver, LLC |  | Delaware |
| AN F. Imports of North Phoenix, Inc. |  | Delaware |
| AN F. Imports of Roseville Holding, LLC |  | Delaware |
| AN F. Imports of Roseville, Inc. |  | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| AN Fort Myers Imports, LLC | AutoNation Toyota Fort Myers; AutoNation Collision Center Fort Myers | Delaware |
| AN Fremont Luxury Imports, Inc. | BMW of Fremont | Delaware |
| AN H. Imports of Atlanta, LLC | AutoNation Hyundai Mall of Georgia | Delaware |
| AN Imports of Ft. Lauderdale, Inc. | Jaguar Land Rover Fort Lauderdale; Jaguar Fort Lauderdale; Land Rover Fort Lauderdale | Delaware |
| AN Imports of Seattle, Inc. | | Delaware |
| AN Imports of Spokane, Inc. | AutoNation Honda Spokane Valley | Delaware |
| AN Imports of Stevens Creek Holding, LLC | | Delaware |
| AN Imports of Stevens Creek, Inc. | MINI of Stevens Creek | Delaware |
| AN Imports on Weston Road, Inc. | AutoNation Toyota Weston | Florida |
| AN Luxury Imports GP, LLC | | Delaware |
| AN Luxury Imports Holding, LLC | | Delaware |
| AN Luxury Imports of Coconut Creek, Inc. | Mercedes-Benz of Coconut Creek | Delaware |
| AN Luxury Imports of Marietta, LLC | Mercedes-Benz of Marietta | Delaware |
| AN Luxury Imports of Palm Beach, Inc. | Mercedes-Benz of Delray | Delaware |
| AN Luxury Imports of Pembroke Pines, Inc. | Mercedes-Benz of Pembroke Pines | Delaware |
| AN Luxury Imports of Phoenix, Inc. | Audi Peoria | Delaware |
| AN Luxury Imports of San Diego, Inc. | BMW Encinitas | Delaware |
| AN Luxury Imports of Sanford, LLC | Mercedes-Benz of North Orlando | Delaware |
| AN Luxury Imports of Sarasota, Inc. | Mercedes-Benz of Sarasota | Delaware |
| AN Luxury Imports of Spokane, Inc. | AutoNation Acura Spokane Valley | Delaware |
| AN Luxury Imports of Tucson, Inc. | BMW of Tucson | Delaware |
| AN Luxury Imports, Ltd. | BMW of Dallas; MINI of Dallas | Texas |
| AN Motors of Brooksville, Inc. | AutoNation Ford Brooksville | Florida |
| AN Motors of Dallas, Inc. | | Delaware |
| AN Motors of Delray Beach, Inc. | | Delaware |
| AN Motors of Ft. Lauderdale, Inc. | | Florida |
| AN Motors of Memphis, Inc. | AutoNation GMC Mendenhall | Tennessee |
| AN Motors of Pembroke, LLC | AutoNation Chevrolet Pembroke Pines; AutoNation Collision Center Pembroke Pines | Delaware |
| AN Motors of Scottsdale, LLC | AutoNation Ford Scottsdale | Delaware |
| AN Motors on Federal Highway, LLC | | Delaware |
| AN Motors on South Padre, LP | AutoNation Chevrolet South Corpus Christi; AutoNation Cadillac Corpus Christi; AutoNation Buick GMC Corpus Christi | Texas |
| AN North Phoenix Collision, Inc. | | Delaware |
| AN Pontiac GMC Houston North GP, LLC | | Delaware |
| AN Pontiac GMC Houston North, LP | | Texas |
| AN San Jose Luxury Imports Holdings, LLC | | Delaware |
| AN San Jose Luxury Imports, Inc. | Mercedes-Benz of Stevens Creek; AutoNation Volvo Cars San Jose; AutoNation Collision Center Stevens Creek | California |
| AN Seattle Motors, Inc. | | Delaware |
| AN Subaru Motors, Inc. | AutoNation Subaru Scottsdale | Delaware |
| AN T. Imports of Atlanta, LLC | AutoNation Toyota Mall of Georgia; AutoNation Collision Center Mall of Georgia | Delaware |
| AN Texas Region Management, Ltd. | AutoNation Shared Service Center | Texas |
| AN Tucson Imports, LLC | | Delaware |
| AN Valencia Auto Imports, Inc. | | Delaware |
| AN Western Region Management, LLC | | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| AN/CF Acquisition Corp. | AutoNation Ford Littleton | Delaware |
| AN/KPBG Motors, Inc. |  | Washington |
| AN/MF Acquisition Corp. |  | Delaware |
| AN/MNI Acquisition Corp. | AutoNation Nissan Memphis | Delaware |
| AN/PF Acquisition Corp. | AutoNation Ford Bellevue | Delaware |
| ANSC-RE, Inc. |  | Delaware |
| ANUSA Holding, LLC |  | Delaware |
| Appleway Chevrolet, Inc. | AutoNation Chevrolet Spokane Valley; AutoNation Subaru Spokane Valley; AutoNation Toyota Spokane Valley; AutoNation Volkswagen Spokane; Audi Spokane; Jaguar Spokane; Land Rover Spokane; AutoNation Collision Center Spokane; AutoNation Parts Center; AutoNation Towing Spokane | Washington |
| ASE Motors Holding Corp. |  | Texas |
| Auto Car Holding, LLC |  | Delaware |
| Auto Car, Inc. | AutoNation Honda Roseville; AutoNation Honda Roseville Pre-Owned | California |
| Auto Company IX, Inc. |  | Delaware |
| Auto Company VI, Inc. | Audi Plano | Delaware |
| Auto Company VII, Inc. | Porsche Plano | Delaware |
| Auto Company VIII, Inc. |  | Delaware |
| Auto Company XI, Inc. | AutoNation Chrysler Dodge Jeep Ram Spring | Delaware |
| Auto Company XII, Inc. |  | Delaware |
| Auto Company XIII, Inc. | AutoNation Honda Chandler | Delaware |
| Auto Company XIV, Inc. | AutoNation Hyundai Tempe | Delaware |
| Auto Company XIX, Inc. | Porsche Irvine | Delaware |
| Auto Company XVII, Inc. | AutoNation Chrysler Dodge Jeep Ram Mobile | Delaware |
| Auto Company XXI, Inc. | Audi Bellevue; Mercedes-Benz of Bellevue; Porsche Bellevue | Delaware |
| Auto Company XXII, Inc. | Mercedes-Benz of San Jose | Delaware |
| Auto Company XXIII, Inc. | AutoNation Chrysler Dodge Jeep Ram Valencia | Delaware |
| Auto Company XXV, Inc. | Mercedes-Benz of Reno | Delaware |
| Auto Company XXVII, Inc. | BMW of Delray Beach | Delaware |
| Auto Company XXVIII, Inc. |  | Delaware |
| Auto Dealership 2016-1, LLC |  | Delaware |
| Auto Dealership 2016-2, LLC |  | Delaware |
| Auto Dealership 2016-5, LLC |  | Delaware |
| Auto Dealership 2016-6, LLC |  | Delaware |
| Auto Dealership 2016-7, LLC |  | Delaware |
| Auto Dealership 2017-26, LLC |  | Delaware |
| Auto Dealership 2017-27, LLC |  | Delaware |
| Auto Dealership 2017-28, LLC |  | Delaware |
| Auto Dealership 2017-30, LLC |  | Delaware |
| Auto Dealership 2023-01, LLC |  | Delaware |
| Auto Dealership 2023-02, LLC |  | Delaware |
| Auto Dealership 2023-03, LLC |  | Delaware |
| Auto Dealership 2023-04, LLC |  | Delaware |
| Auto Dealership 2023-05, LLC |  | Delaware |
| Auto Dealership 2023-06, LLC |  | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Auto Dealership 2023-07, LLC |  | Delaware |
| Auto Dealership 2023-08, LLC |  | Delaware |
| Auto Dealership 2023-09, LLC |  | Delaware |
| Auto Dealership 2023-10, LLC |  | Delaware |
| Auto Dealership III, LLC | AutoNation Honda O'Hare | Delaware |
| Auto Dealership IV, LLC | AutoNation Hyundai O'Hare | Delaware |
| Auto Dealership IX, LLC |  | Delaware |
| Auto Dealership V, LLC | Mercedes-Benz of Wesley Chapel | Delaware |
| Auto Dealership VI, LLC | AutoNation Volkswagen Mall of Georgia | Delaware |
| Auto Dealership VII, LLC |  | Delaware |
| Auto Dealership VIII, LLC |  | Delaware |
| Auto Dealership X, LLC |  | Delaware |
| Auto Dealership XXIII, LLC |  | Delaware |
| Auto Holdings, LLC |  | Delaware |
| Auto Mission Holding, LLC |  | Delaware |
| Auto Mission Ltd. | AutoNation Toyota Hayward | California |
| Auto Motors of Englewood, LLC | AutoNation Chrysler Jeep Arapahoe | Delaware |
| Auto TechLabs, Inc. |  | Delaware |
| Autohaus Holdings, Inc. |  | Delaware |
| AutoNation Benefits Company, Inc. |  | Florida |
| AutoNation Cayman Insurance Company, Ltd. |  | Cayman Islands |
| AutoNation Corporate Management, LLC |  | Delaware |
| AutoNation Enterprises Incorporated |  | Florida |
| AutoNation Financial Services, LLC |  | Delaware |
| AutoNation Fort Worth Motors, Ltd. | AutoNation Chevrolet North Richland Hills | Texas |
| AutoNation GM GP, LLC |  | Delaware |
| AutoNation Holding Corp. |  | Delaware |
| AutoNation Imports of Katy GP, LLC |  | Delaware |
| AutoNation Imports of Katy, L.P. |  | Texas |
| AutoNation Imports of Lithia Springs, LLC | AutoNation Toyota Thornton Road | Delaware |
| AutoNation Imports of Longwood, Inc. | AutoNation Honda Sanford | Delaware |
| AutoNation Imports of Palm Beach, Inc. | Lexus of Palm Beach | Delaware |
| AutoNation Imports of Winter Park, Inc. | AutoNation Toyota Winter Park | Delaware |
| AutoNation Motors Holding Corp. |  | Delaware |
| AutoNation Motors of Lithia Springs, Inc. |  | Delaware |
| AutoNation North Texas Management GP, LLC |  | Delaware |
| AutoNation Orlando Venture Holdings, Inc. |  | Delaware |
| AutoNation Realty Corporation |  | Delaware |
| AutoNation Suite 101, Inc. |  | Delaware |
| AutoNation USA of Perrine, Inc. |  | Delaware |
| AutoNation V. Imports of Delray Beach, LLC |  | Delaware |
| AutoNation.com, Inc. | AutoNation Direct; AutoNation Express | Delaware |
| Bankston Auto, Inc. |  | Texas |
| Bankston Chrysler Jeep of Frisco, L.P. |  | Texas |
| Bankston CJ GP, LLC |  | Delaware |
| Bankston Ford of Frisco, Ltd. Co. | AutoNation Ford Frisco | Texas |
| Bankston Nissan in Irving, Inc. |  | Texas |
| Bankston Nissan Lewisville GP, LLC |  | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Bankston Nissan Lewisville, Ltd. | | Texas |
| Bargain Rent-A-Car | Lexus of Cerritos | California |
| Batfish, LLC | | Colorado |
| BBCSS, Inc. | | Arizona |
| Beach City Chevrolet Company, Inc. | | California |
| Beach City Holding, LLC | | Delaware |
| Beacon Motors, Inc. | AutoNation Chevrolet Doral; AutoNation Collision Center Miami | Florida |
| Bell Motors, LLC | AutoNation Chrysler Dodge Jeep Ram and FIAT North Phoenix | Delaware |
| Bellevue Automotive, Inc. | AutoNation Chrysler Dodge Jeep Ram Bellevue | Delaware |
| Bellevue Collision, Inc. | AutoNation Collision Center Bellevue | Delaware |
| Bengal Motor Company, Ltd. | AutoNation Honda Miami Lakes | Florida |
| Bengal Motors, Inc. | | Florida |
| Bethesda Luxury Imports, LLC | Jaguar Land Rover Bethesda; Jaguar Bethesda; Land Rover Bethesda | Delaware |
| Bill Ayares Chevrolet, LLC | AutoNation Chevrolet Laurel | Delaware |
| Bledsoe Dodge, LLC | | Delaware |
| Bob Townsend Ford, Inc. | | Delaware |
| Body Shop Holding Corp. | | Delaware |
| Boise ANUSA, LLC | | Delaware |
| Brown & Brown Chevrolet - Superstition Springs, LLC | AutoNation Chevrolet Mesa | Arizona |
| Brown & Brown Chevrolet, Inc. | AutoNation Chevrolet Gilbert; AutoNation Parts Center Phoenix | Arizona |
| Brown & Brown Nissan Mesa, L.L.C. | AutoNation Nissan Chandler; AutoNation Collision Center Chandler | Arizona |
| Brown & Brown Nissan, Inc. | AutoNation Nissan Tempe | Arizona |
| Buena Park Luxury Imports, Inc. | BMW Buena Park | Delaware |
| Bull Motors, LLC | AutoNation Ford Miami | Delaware |
| C. Garrett, Inc. | | Colorado |
| Carlisle Motors, LLC | AutoNation Ford St. Petersburg; AutoNation Lincoln Clearwater | Delaware |
| Carwell Holding, LLC | | Delaware |
| Carwell, LLC | Mercedes-Benz of South Bay; Jaguar South Bay; Land Rover South Bay; Jaguar Land Rover South Bay | Delaware |
| Centennial Automotive, LLC | AutoNation Dodge Ram Arapahoe | Delaware |
| Centennial Collision, Inc. | | Delaware |
| Cerritos Body Works Holding, LLC | | Delaware |
| Cerritos Body Works, Inc. | | California |
| Champion Ford, Inc. | | Texas |
| Chandler Collision, Inc. | | Delaware |
| Charleston ANUSA, LLC | AutoNation USA Charleston | Delaware |
| Charlie Hillard, Inc. | AutoNation Ford Fort Worth | Texas |
| Charlie Thomas Chevrolet GP, LLC | | Delaware |
| Charlie Thomas Chevrolet, Ltd. | AutoNation Chevrolet Gulf Freeway; AutoNation Collision Center NASA; AutoNation Chevrolet Gulfgate | Texas |
| Charlie Thomas Chrysler-Plymouth, Inc. | | Texas |
| Charlie Thomas' Courtesy Ford, Ltd. | AutoNation Ford Corpus Christi | Texas |
| Charlie Thomas' Courtesy GP, LLC | | Delaware |
| Charlie Thomas F. GP, LLC | | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Charlie Thomas Ford, Ltd. | AutoNation Ford Gulf Freeway | Texas |
| Charlotte ANUSA, LLC | AutoNation USA Charlotte | Delaware |
| Chesrown Chevrolet, LLC | AutoNation Chevrolet North | Delaware |
| Chesrown Collision Center, Inc. | AutoNation Collision Center Denver | Colorado |
| Chesrown Ford, Inc. |  | Colorado |
| Chevrolet World, Inc. | AutoNation Chevrolet Airport | Florida |
| Chuck Clancy Ford of Marietta, LLC | AutoNation Ford Marietta; AutoNation Collision Center Marietta | Delaware |
| CIG Auto Funding 2016-A, LLC |  | Delaware |
| CIG Auto Funding 2022-A, LLC |  | Delaware |
| CIG Auto Receivables Trust 2019-1 |  | Delaware |
| CIG Auto Receivables Trust 2020-1 |  | Delaware |
| CIG Auto Receivables Trust 2021-1 |  | Delaware |
| CIG Auto Receivables, LLC |  | Delaware |
| CIG Financial, LLC | AutoNation Finance | California |
| CJ Valencia Holding, LLC |  | Delaware |
| CO CDJR Motors, LLC | AutoNation Dodge Ram Colorado Springs; AutoNation Dodge Ram Broadway; Autonation Chrysler Dodge Jeep Ram Canon City | Delaware |
| Coastal Cadillac, Inc. | AutoNation Cadillac Port Richey | Florida |
| Colorado Springs ANUSA, LLC |  | Delaware |
| Consumer Car Care Corporation |  | Tennessee |
| Contemporary Cars, Inc. | Mercedes-Benz of Orlando | Florida |
| Cook-Whitehead Ford, Inc. | AutoNation Ford Panama City | Florida |
| Corporate Properties Holding, Inc. |  | Delaware |
| Corpus Christi ANUSA, LLC | AutoNation USA Corpus Christi | Delaware |
| Corpus Christi Collision Center, Inc. | AutoNation Collision Center Corpus Christi | Delaware |
| Costa Mesa Cars Holding, LLC |  | Delaware |
| Costa Mesa Cars, Inc. | AutoNation Honda Costa Mesa | California |
| Courtesy Auto Group, Inc. |  | Florida |
| Covington Pike Motors, Inc. | AutoNation Honda Covington Pike | Tennessee |
| Creekside Imports, Inc. | AutoNation Hyundai Valencia | Delaware |
| CT Intercontinental GP, LLC |  | Delaware |
| CT Intercontinental, Ltd. | BMW of Houston North; MINI of the Woodlands | Texas |
| CT Motors, Inc. | AutoNation Acura Gulf Freeway | Texas |
| D/L Motor Company | AutoNation Honda Clearwater; AutoNation Collision Center Clearwater; AutoNation Collision Center Clearwater South | Florida |
| Dealership Realty Corporation |  | Texas |
| Delray Luxury Imports, Inc. |  | Delaware |
| Denver 104 ANUSA, LLC | AutoNation USA Denver 104 | Delaware |
| Denver Broadway ANUSA, LLC | AutoNation USA Denver Broadway | Delaware |
| Desert Buick-GMC Trucks, L.L.C. | AutoNation Buick GMC West Sahara | Delaware |
| Desert Chrysler-Plymouth, Inc. |  | Delaware |
| Desert Dodge, Inc. |  | Nevada |
| Desert GMC, L.L.C. | AutoNation Buick GMC Henderson | Delaware |
| Dobbs Ford of Memphis, Inc. | AutoNation Ford Wolfchase | Delaware |
| Dobbs Ford, Inc. | AutoNation Ford Memphis; AutoNation Collision Center Memphis | Florida |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Dobbs Mobile Bay, Inc. | AutoNation Ford Mobile | Alabama |
| Dobbs Motors of Arizona, Inc. | AutoNation Honda Tucson Auto Mall | Arizona |
| Don Mealey Chevrolet, Inc. | AutoNation Chevrolet West Colonial; AutoNation Collision Center West Colonial | Florida |
| Don Mealey Imports, Inc. | AutoNation Acura North Orlando | Florida |
| Don-A-Vee Jeep Eagle, Inc. | | California |
| Driver's Mart Worldwide, Inc. | | Virginia |
| Eastern Region Management, LLC | | Delaware |
| Eastgate Ford, Inc. | | Ohio |
| Ed Mullinax Ford, LLC | AutoNation Ford Amherst; AutoNation Collision Center Amherst | Delaware |
| Edgren Motor Company, Inc. | AutoNation Honda Fremont | California |
| Edgren Motor Holding, LLC | | Delaware |
| El Monte Imports Holding, LLC | | Delaware |
| El Monte Imports, Inc. | | Delaware |
| El Monte Motors Holding, LLC | | Delaware |
| El Monte Motors, Inc. | | Delaware |
| Emich Subaru West, LLC | AutoNation Subaru West | Delaware |
| Empire Services Agency, Inc. | | Florida |
| Financial Services GP, LLC | | Delaware |
| First Team Automotive Corp. | | Delaware |
| First Team Ford of Manatee, Ltd. | AutoNation Ford Bradenton; AutoNation Collision Center Sarasota | Florida |
| First Team Ford, Ltd. | AutoNation Ford Sanford | Florida |
| First Team Management, Inc. | | Florida |
| Fit Kit Holding, LLC | | Delaware |
| Fit Kit, Inc. | AutoNation Toyota Buena Park | California |
| Florida Auto Corp. | | Delaware |
| Ford of Kirkland, Inc. | | Washington |
| Fort Myers ANUSA, LLC | | Delaware |
| Fox Chevrolet, LLC | | Delaware |
| Fox Motors, LLC | AutoNation Buick GMC Laurel | Delaware |
| Fred Oakley Motors, Inc. | | Delaware |
| Fremont Luxury Imports Holding, LLC | | Delaware |
| G.B. Import Sales & Service Holding, LLC | | Delaware |
| G.B. Import Sales & Service, LLC | | Delaware |
| GA CDJR Motors, LLC | AutoNation Chrysler Dodge Jeep Ram and FIAT Columbus; AutoNation Chrysler Dodge Jeep Ram South Columbus | Delaware |
| GA Columbus Imports, LLC | AutoNation Volkswagen Columbus | Delaware |
| GA F Imports, LLC | | Delaware |
| GA H Imports, LLC | AutoNation Honda Columbus | Delaware |
| GA HY Imports, LLC | AutoNation Hyundai Columbus | Delaware |
| GA-CC Columbus, Inc. | AutoNation Collision Center Columbus | Delaware |
| GA-HYG Imports, Inc. | AutoNation Hyundai Savannah | Delaware |
| GA-VW Imports, Inc. | AutoNation Volkswagen Savannah | Delaware |
| Gene Evans Ford, LLC | AutoNation Ford Union City | Delaware |
| George Sutherlin Nissan, LLC | AutoNation Nissan Marietta | Delaware |
| Germantown Luxury Imports, LLC | | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Gilbert Body Shop, Inc. | | Delaware |
| Government Boulevard Motors, Inc. | AutoNation Honda at Bel Air Mall | Alabama |
| Greensboro ANUSA, LLC | | Delaware |
| Gulf Management, Inc. | Lexus of Clearwater; Lexus of Tampa Bay | Florida |
| Harbor Boulevard Imports, Inc. | | Delaware |
| Hayward Dodge, Inc. | | Delaware |
| Henderson ANUSA, LLC | AutoNation USA Henderson | Delaware |
| Henderson Collision, Inc. | | Delaware |
| HH-A Luxury Imports, Inc. | Audi Hilton Head | Delaware |
| HH-CDJR Motors, Inc. | AutoNation Chrysler Dodge Jeep Ram Hilton Head | Delaware |
| HH-Collision, Inc. | AutoNation Collision Center Hilton Head | Delaware |
| HH-HYG Imports, Inc. | AutoNation Hyundai Hilton Head; Genesis of Hilton Head | Delaware |
| HH-JLR Luxury Imports, Inc. | Jaguar Land Rover Hilton Head; Jaguar Hilton Head; Land Rover Hilton Head | Delaware |
| HH-P Luxury Imports, Inc. | Porsche Hilton Head | Delaware |
| HH-S Imports, Inc. | AutoNation Subaru Hilton Head | Delaware |
| HH-VW Imports, Inc. | AutoNation Volkswagen Hilton Head | Delaware |
| Hillard Auto Group, Inc. | | Texas |
| Hollywood Imports Limited, Inc. | AutoNation Honda Hollywood; AutoNation Collision Center Hollywood | Florida |
| Horizon Chevrolet, Inc. | | Ohio |
| House of Imports Holding, LLC | | Delaware |
| House of Imports, Inc. | House of Imports | California |
| Houston ANUSA, LLC | AutoNation USA Houston | Delaware |
| Houston Auto M. Imports Greenway, Ltd. | Mercedes-Benz of Houston Greenway | Texas |
| Houston Auto M. Imports North, Ltd. | Mercedes-Benz of Houston North | Texas |
| Houston Imports Greenway GP, LLC | | Delaware |
| Houston Imports North GP, LLC | | Delaware |
| HV Body Shop, LLC | AutoNation Collision Center Hunt Valley | Delaware |
| HV York Road Imports, LLC | AutoNation Acura Hunt Valley | Delaware |
| HVA Imports, LLC | Audi Hunt Valley | Delaware |
| HVC Motors, LLC | | Delaware |
| HVJLR Luxury Imports, LLC | Jaguar Land Rover Hunt Valley; Jaguar Hunt Valley; Land Rover Hunt Valley | Delaware |
| HVM Imports, LLC | Mercedes-Benz of Hunt Valley | Delaware |
| HVP Luxury Imports, LLC | Porsche Hunt Valley | Delaware |
| HVS Motors, LLC | AutoNation Subaru Hunt Valley | Delaware |
| HVVW Motors, LLC | | Delaware |
| Imports on Automotive Drive, LLC | AutoNation Acura Colorado Springs | Delaware |
| Imports on PCH, Inc. | | Delaware |
| Irvine Imports Holding, LLC | | Delaware |
| Irvine Imports, Inc. | AutoNation Toyota Irvine | California |
| Jacksonville ANUSA, LLC | | Delaware |
| Jemautco, Inc. | | Ohio |
| Jerry Gleason Chevrolet, Inc. | | Illinois |
| Jim Quinlan Chevrolet Co. | AutoNation Chevrolet South Clearwater; AutoNation Part Center | Delaware |
| JLR Luxury Imports of Fremont, Inc. | | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Joe MacPherson Ford | AutoNation Ford Tustin | California |
| Joe MacPherson Imports No. I |  | California |
| Joe MacPherson Infiniti | AutoNation Infiniti Tustin | California |
| Joe MacPherson Infiniti Holding, LLC |  | Delaware |
| John M. Lance Ford, LLC | AutoNation Ford Westlake; AutoNation Collision Center Westlake | Delaware |
| J-R Motors Company North | AutoNation Honda 104 | Colorado |
| J-R Motors Company South | AutoNation Toyota Arapahoe | Colorado |
| JRJ Investments, Inc. | Audi Las Vegas; BMW of Henderson; BMW of Las Vegas; MINI of Las Vegas; AutoNation Volkswagen Las Vegas | Nevada |
| Katy ANUSA, LLC | AutoNation ANUSA Katy | Delaware |
| Kennesaw ANUSA, LLC | AutoNation USA Kennesaw | Delaware |
| Kenyon Dodge, Inc. |  | Florida |
| King's Crown Ford, Inc. | AutoNation Ford Jacksonville | Delaware |
| L.P. Evans Motors WPB, Inc. | Mercedes-Benz of Miami | Florida |
| L.P. Evans Motors, Inc. | AutoNation Nissan Miami | Florida |
| Lance Children, Inc. |  | Ohio |
| Las Vegas ANUSA, LLC |  | Delaware |
| Leesburg Imports, LLC | AutoNation Honda Dulles | Delaware |
| Leesburg Motors, LLC | AutoNation Toyota Leesburg | Delaware |
| Les Marks Chevrolet, Inc. |  | Texas |
| Lew Webb's Ford, Inc. |  | California |
| Lew Webb's Irvine Nissan Holding, LLC |  | Delaware |
| Lew Webb's Irvine Nissan, Inc. |  | California |
| Lewisville Collision, Inc. |  | Delaware |
| Lewisville Imports GP, LLC |  | Delaware |
| Lewisville Imports, Ltd. | AutoNation Honda Lewisville | Texas |
| Lot 4 Real Estate Holdings, LLC |  | Delaware |
| Luxury Imports of Portland, Inc. |  | Delaware |
| Luxury Orlando Imports, Inc. | Audi South Orlando | Delaware |
| Luxury Woodlands Imports, Inc. | BMW of the Woodlands | Delaware |
| Lynnwood ANUSA, LLC |  | Delaware |
| MacHoward Leasing |  | California |
| MacHoward Leasing Holding, LLC |  | Delaware |
| MacPherson Enterprises, Inc. |  | California |
| Magic Acquisition Corp. | AutoNation Ford Valencia | Delaware |
| Magic Acquisition Holding, LLC |  | Delaware |
| Maitland Luxury Imports, Inc. | Porsche of Orlando | Delaware |
| Marks Family Dealerships, Inc. |  | Texas |
| Marks Transport, Inc. | AutoNation Toyota Gulf Freeway | Texas |
| MC/RII, LLC |  | Ohio |
| Mealey Holdings, Inc. |  | Florida |
| Mesa Collision, Inc. | AutoNation Collision Center Mesa | Delaware |
| Midway Chevrolet, Inc. |  | Texas |
| Mike Hall Chevrolet, Inc. |  | Delaware |
| Mike Shad Chrysler Plymouth Jeep Eagle, Inc. |  | Florida |
| Mike Shad Ford, Inc. | AutoNation Ford Orange Park; AutoNation Lincoln Orange Park; AutoNation Collision Center Orange Park | Florida |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Mission Blvd. Motors, Inc. |  | California |
| Mobile Imports, LLC |  | Delaware |
| Mobility B2B, LLC |  | Delaware |
| Mobility B2C, LLC |  | Delaware |
| Mobility Holding, Inc. |  | Delaware |
| Mortimer Collision, LLC |  | Delaware |
| Mr. Wheels Holding, LLC |  | Delaware |
| Mr. Wheels, Inc. | AutoNation Toyota Cerritos | California |
| Mullinax East, LLC | AutoNation Ford East | Delaware |
| Mullinax Ford North Canton, Inc. | AutoNation Ford North Canton; AutoNation Collision Center North Canton | Ohio |
| Mullinax Ford South, Inc. | AutoNation Ford Margate; AutoNation Collision Center Margate | Florida |
| Mullinax Insurance Agency |  | Ohio |
| Mullinax Used Cars, Inc. |  | Ohio |
| Naperville Imports, Inc. | Mercedes-Benz of Naperville | Delaware |
| Newport Beach Cars Holding, LLC |  | Delaware |
| Newport Beach Cars, LLC | Newport Auto Center; Porsche Newport Beach; Bentley Newport Beach | Delaware |
| Nichols Ford, Ltd. | AutoNation Ford South Fort Worth; AutoNation Collision Center Fort Worth | Texas |
| Nichols GP, LLC |  | Delaware |
| Nissan of Brandon, Inc. |  | Florida |
| North Austin ANUSA, LLC | AutoNation USA Austin | Delaware |
| Northpoint Chevrolet, LLC |  | Delaware |
| Northwest Financial Group, Inc. | BMW of Bellevue | Washington |
| NY LNR Luxury Imports, Inc. | Jaguar Land Rover New Rochelle; Jaguar New Rochelle; Land Rover New Rochelle | Delaware |
| NY Luxury Motors of Mt. Kisco, Inc. | Jaguar Land Rover Mt. Kisco; Jaguar Mt. Kisco; Land Rover Mt. Kisco | Delaware |
| NY MT. Kisco Luxury Imports, Inc. |  | Delaware |
| NY Palisades Luxury Imports, Inc. |  | Delaware |
| NY White Plains Luxury Imports, Inc. | Jaguar Land Rover White Plains; Jaguar White Plains; Land Rover White Plains | Delaware |
| Orlando Sanford ANUSA, LLC |  | Delaware |
| Owings Mills Luxury Imports, LLC |  | Delaware |
| Oxnard European Motors, LLC |  | Delaware |
| Oxnard Venture Holdings, Inc. |  | Delaware |
| Payton-Wright Ford Sales, Inc. |  | Texas |
| Pembroke Motors, Inc. | AutoNation Chrysler Dodge Jeep Ram Pembroke Pines | Delaware |
| Peyton Cramer Automotive | AutoNation Acura South Bay | California |
| Peyton Cramer Automotive Holding, LLC |  | Delaware |
| Peyton Cramer F. Holding, LLC |  | Delaware |
| Peyton Cramer Ford | AutoNation Ford Torrance | California |
| Peyton Cramer Infiniti |  | California |
| Peyton Cramer Infiniti Holding, LLC |  | Delaware |
| Peyton Cramer Jaguar |  | California |
| Peyton Cramer LM Holding, LLC |  | Delaware |
| Phoenix ANUSA, LLC | AutoNation USA Phoenix | Delaware |
| Phoenix Avondale ANUSA, LLC | AutoNation USA Phoenix Avondale | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Pierce Automotive Corporation | | Arizona |
| Pierce, LLC | AutoNation Toyota Tempe | Delaware |
| Pitre Chrysler-Plymouth-Jeep of Scottsdale, Inc. | | Delaware |
| Plains Chevrolet GP, LLC | | Delaware |
| Plains Chevrolet, Ltd. | AutoNation Chevrolet Amarillo | Texas |
| Plano ANUSA, LLC | | Delaware |
| Plano Collision, Inc. | AutoNation Collision Center Plano | Delaware |
| Port City Imports, Inc. | AutoNation Honda South Corpus Christi | Texas |
| Prime Auto Cosmetics, Inc. | AutoNation Reconditioning Services | Delaware |
| Prime Auto Resources, Inc. | AutoNation Auto Auction; AutoNation Auto Auction Orlando; AutoNation Auto Auction Houston; AutoNation Auto Auction Atlanta | California |
| Quality Nissan GP, LLC | | Delaware |
| Quinlan Motors, Inc. | | Florida |
| R. Coop Limited | | Colorado |
| R.L. Buscher II, Inc. | | Colorado |
| R.L. Buscher III, Inc. | | Colorado |
| Raleigh ANUSA, LLC | | Delaware |
| Real Estate Holdings, Inc. | | Florida |
| Renton H Imports, Inc. | AutoNation Honda Renton | Delaware |
| RepairSmith, Inc. | RepairSmith | Delaware |
| Republic Resources Company | | Delaware |
| Republic Risk Management Services, Inc. | | Florida |
| Resources Aviation, Inc. | | Florida |
| RI Merger Corp. | | Colorado |
| RI/BB Acquisition Corp. | AutoNation Collision Center East Colonial; AutoNation Collision Center Oviedo; AutoNation Collision Center North; AutoNation Collision Center Airport | Delaware |
| RI/BBNM Acquisition Corp. | | Arizona |
| RI/Hollywood Nissan Acquisition Corp. | AutoNation Nissan Pembroke Pines | Delaware |
| RI/LLC Acquisition Corp. | | Colorado |
| RI/RMC Acquisition GP, LLC | | Delaware |
| RI/RMC Acquisition, Ltd. | AutoNation Chevrolet West Austin | Texas |
| RI/RMT Acquisition GP, LLC | | Delaware |
| RI/RMT Acquisition, Ltd. | AutoNation Toyota South Austin; AutoNation Collision Center Austin | Texas |
| RI/WFI Acquisition Corporation | | Delaware |
| RKR Motors, Inc. | Mercedes-Benz of Pompano | Florida |
| Rockville Luxury Imports, LLC | BMW of Rockville; AutoNation Collision Center Rockville | Delaware |
| Roseville Motor Corporation | AutoNation Chrysler Dodge Jeep Ram Roseville | California |
| Roseville Motor Holding, LLC | | Delaware |
| RS Holdings, Inc. | | Delaware |
| Sacramento Collision, Inc. | | Delaware |
| Sahara Imports, Inc. | AutoNation Honda East Las Vegas | Nevada |
| Sahara Nissan, Inc. | AutoNation Nissan Las Vegas | Nevada |
| Salt Lake ANUSA, LLC | | Delaware |
| San Antonio ANUSA, LLC | AutoNation USA San Antonio | Delaware |
| SC-HYG Imports, Inc. | AutoNation Hyundai Columbia | Delaware |
| SC-JLR Luxury Imports, Inc. | | Delaware |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Shamrock F. Holding, LLC |  | Delaware |
| Six Jays LLC |  | Colorado |
| SMI Motors Holding, LLC |  | Delaware |
| SMI Motors, Inc. |  | California |
| South Broadway Motors, LLC | AutoNation Chrysler Jeep Broadway | Delaware |
| Southwest Motors of Denver, LLC | AutoNation Chrysler Dodge Jeep Ram Southwest | Delaware |
| St. Louis ANUSA, LLC | AutoNation USA St. Louis | Delaware |
| Star Motors, LLC | Mercedes-Benz of Fort Lauderdale | Delaware |
| Steakley Chevrolet GP, LLC |  | Delaware |
| Steakley Chevrolet, Ltd. |  | Texas |
| Steve Moore Chevrolet Delray, LLC |  | Delaware |
| Steve Moore Chevrolet, LLC | AutoNation Chevrolet Greenacres; AutoNation Collision Center Greenacres | Delaware |
| Stevens Creek Holding, LLC |  | Delaware |
| Stevens Creek Luxury Imports Holding, LLC |  | Delaware |
| Stevens Creek Luxury Imports, Inc. | AutoNation Maserati Stevens Creek; AutoNation Alfa Romeo Stevens Creek | Delaware |
| Stevens Creek Motors, Inc. | AutoNation Acura Stevens Creek | California |
| Sunrise Nissan of Jacksonville, Inc. |  | Florida |
| Sunrise Nissan of Orange Park, Inc. |  | Florida |
| Sunset Pontiac-GMC Truck South, Inc. |  | Florida |
| Sunset Pontiac-GMC, Inc. |  | Michigan |
| Sutherlin Chrysler-Plymouth Jeep-Eagle, LLC |  | Delaware |
| Sutherlin H. Imports, LLC | AutoNation Honda Thornton Road | Delaware |
| Sutherlin Imports, LLC | AutoNation Toyota Pinellas Park; AutoNation Collision Center St. Petersburg | Delaware |
| Sutherlin Nissan, LLC |  | Delaware |
| Tasha Incorporated |  | California |
| Tempe Auto Imports, Inc. |  | Delaware |
| Tempe Body Shop, Inc. |  | Delaware |
| Terry York Motor Cars Holding, LLC |  | Delaware |
| Terry York Motor Cars, Ltd. | Jaguar Land Rover Woodland Hills; Jaguar Woodland Hills; Land Rover Woodland Hills | California |
| Texan Ford Sales, Ltd. | AutoNation Ford Arlington | Texas |
| Texan Ford, Inc. | AutoNation Ford Katy; AutoNation Collision Center Katy | Texas |
| Texan Sales GP, LLC |  | Delaware |
| Texas Management Companies LP, LLC |  | Delaware |
| The Pierce Corporation II, Inc. |  | Arizona |
| Tier2 Corporation |  | Delaware |
| Tinley Park A. Imports, Inc. |  | Delaware |
| Tinley Park J. Imports, Inc. |  | Delaware |
| Tinley Park V. Imports, Inc. |  | Delaware |
| TMDLR Motors, Inc. |  | Delaware |
| TN CDJR Motors, LLC | AutoNation Chrysler Dodge Jeep Ram and FIAT Johnson City | Delaware |
| TN F Imports, LLC |  | Delaware |
| Torrance Nissan Holding, LLC |  | Delaware |
| Torrance Nissan, LLC |  | Delaware |
| Tousley Ford, Inc. | AutoNation Ford White Bear Lake | Minnesota |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Towson Luxury Imports, LLC | BMW of Towson; BMW of Bel Air; MINI of Towson; AutoNation Collision Center Towson | Delaware |
| Triangle Corporation | | Delaware |
| TSDLR Imports, Inc. | | Delaware |
| Tucson Collision, Inc. | | Delaware |
| T-West Sales & Service, Inc. | AutoNation Toyota Las Vegas | Nevada |
| Twin Cities Luxury Imports, Inc. | | Delaware |
| TX Alliance Motors, Inc. | AutoNation Chrysler Dodge Jeep Ram North Fort Worth; AutoNation Collision Center Alliance | Texas |
| TX Ennis Autoplex Motors, Inc. | | Texas |
| TX Motors of North Richland Hills, Inc. | AutoNation Chrysler Dodge Jeep Ram North Richland Hills; AutoNation Hyundai North Richland Hills; AutoNation Collision Center North Richland Hills | Delaware |
| TX Motors on Katy Freeway, Inc. | AutoNation Chrysler Dodge Jeep Ram Katy; AutoNation Collision Center Katy West | Texas |
| TX Motors on Southwest Loop, Inc. | | Texas |
| TX West Houston Motors, Inc. | AutoNation Chrysler Dodge Jeep Ram Houston | Texas |
| TX-CC Dallas, Inc. | AutoNation Collision Center Maple | Delaware |
| TX-CC Galleria, Inc. | AutoNation Collision Center Galleria | Delaware |
| TX-CC Spring, Inc. | AutoNation Collision Center Spring | Delaware |
| Valencia Auto Imports Holding, LLC | | Delaware |
| Valencia B. Imports Holding, LLC | | Delaware |
| Valencia B. Imports, Inc. | Valencia BMW | Delaware |
| Valencia Dodge | | California |
| Valencia Dodge Holding, LLC | | Delaware |
| Valencia H. Imports Holding, LLC | | Delaware |
| Valencia H. Imports, Inc. | AutoNation Honda Valencia | Delaware |
| Valley Chevrolet, LLC | AutoNation Chevrolet Timonium | Delaware |
| Vanderbeek Motors Holding, LLC | | Delaware |
| Vanderbeek Motors, Inc. | AutoNation Subaru Roseville; BMW of Roseville | California |
| Vanderbeek Olds/GMC Truck, Inc. | | California |
| Vanderbeek Truck Holding, LLC | | Delaware |
| Village Motors, LLC | AutoNation Toyota Libertyville | Delaware |
| Vince Wiese Chevrolet, Inc. | AutoNation Chevrolet Valencia | Delaware |
| Vince Wiese Holding, LLC | | Delaware |
| VistaCal Luxury Imports, Inc. | BMW of Vista | Delaware |
| W.O. Bankston Nissan, Inc. | | Texas |
| Wallace Dodge, LLC | | Delaware |
| Wallace Ford, LLC | AutoNation Collision Center Delray | Delaware |
| Wallace Lincoln-Mercury, LLC | | Delaware |
| Wallace Nissan, LLC | | Delaware |
| Webb Automotive Group, Inc. | | California |
| Wesley Chapel ANUSA, LLC | | Delaware |
| West Colorado Motors, LLC | AutoNation Chrysler Jeep West; AutoNation Buick GMC Park Meadows; AutoNation Buick GMC West; AutoNation Subaru Arapahoe | Delaware |
| West Houston Luxury Imports, Inc. | Jaguar Land Rover West Houston; Jaguar West Houston; Land Rover West Houston | Delaware |
| West Side Motors, Inc. | AutoNation Honda West Knoxville | Tennessee |

---

------

<u>Exhibit 21.1</u>

---

| | | |
|:---|:---|:---|
| **Legal Entity** | **Current DBA(s)** | **State of Organization** |
| Westgate Chevrolet GP, LLC | | Delaware |
| Westgate Chevrolet, Ltd. | AutoNation Chevrolet West Amarillo; AutoNation Cadillac West Amarillo | Texas |
| Westmont A. Imports, Inc. | Audi Westmont | Delaware |
| Westmont B. Imports, Inc. | Laurel BMW of Westmont | Delaware |
| Westmont Collision, Inc. | AutoNation Collision Center Westmont | Delaware |
| Westmont M. Imports, Inc. | Mercedes-Benz of Westmont | Delaware |
| Woody Capital Investment Company II | | Colorado |
| Woody Capital Investment Company III | | Colorado |
| Working Man's Credit Plan, Inc. | | Texas |
| WPB Collision, Inc. | | Delaware |

---

## Exhibit 23.1

<u>Exhibit 23.1</u>

**Consent of Independent Registered Public Accounting Firm**

We consent to the incorporation by reference in the registration statements listed below, of our reports dated February 17, 2023, with respect to the consolidated financial statements of AutoNation, Inc. and subsidiaries and the effectiveness of internal control over financial reporting.

• Form S-3 Registration No. 333-262830;

• Form S-4 Registration Nos. 333-41505 and 333-17915; and

• Form S-8 Registration Nos. 333-216482, 333-214308, 333-195706, 333-170737, 333-150756, 333-143250, 333-130019, 333-29265, and 033-93742

/s/ KPMG LLP

Fort Lauderdale, Florida

February 17, 2023

## Exhibit 31.1

<u>Exhibit 31.1</u>

**CERTIFICATION**

I, Michael Manley, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K of AutoNation, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| /S/ MICHAEL MANLEY |
| Michael Manley |
| Chief Executive Officer and Director |

---

Date: February 17, 2023

## Exhibit 31.2

<u>Exhibit 31.2</u>

**CERTIFICATION**

I, Joseph T. Lower, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 10-K of AutoNation, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| /s/&nbsp;&nbsp;&nbsp;&nbsp;JOSEPH T. LOWER |
| Joseph T. Lower |
| Executive Vice President and Chief Financial Officer |

---

Date: February 17, 2023

## Exhibit 32.1

<u>Exhibit 32.1</u>

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 10-K of AutoNation, Inc. (the "Company") for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the "Report"), I, Michael Manley, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| |
|:---|
| /S/ MICHAEL MANLEY |
| Michael Manley |
| Chief Executive Officer and Director |

---

February 17, 2023

## Exhibit 32.2

<u>Exhibit 32.2</u>

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 10-K of AutoNation, Inc. (the "Company") for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the "Report"), I, Joseph T. Lower, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| |
|:---|
| /s/&nbsp;&nbsp;&nbsp;&nbsp;JOSEPH T. LOWER |
| Joseph T. Lower |
| Executive Vice President and Chief Financial Officer |

---

February 17, 2023

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