REVENUE RECOGNITION
Disaggregation of Revenue
Revenue from contracts with customers consists of the following: | | | | | | | | | | | | | | | | | |
| For the Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (In millions) |
| Revenue: | | | | | |
| New vehicle | $ | 9,496.2 | | | $ | 8,849.7 | | | $ | 7,630.7 | |
| Used vehicle retail | 4,549.6 | | | 4,605.9 | | | 4,017.5 | |
| Used vehicle wholesale | 675.7 | | | 612.3 | | | 396.7 | |
| New and used vehicle | 14,721.5 | | | 14,067.9 | | | 12,045.0 | |
| Sale of vehicle parts and accessories | 511.5 | | | 516.2 | | | 496.3 | |
| Vehicle repair and maintenance services | 1,995.3 | | | 1,838.5 | | | 1,585.3 | |
| Parts and service | 2,506.8 | | | 2,354.7 | | | 2,081.5 | |
| Finance and insurance, net | 770.6 | | | 766.0 | | | 676.2 | |
| Total revenue | $ | 17,999.0 | | | $ | 17,188.6 | | | $ | 14,802.7 | |
Contract Assets
Changes in contract assets during the period are reflected in the table below. Contract assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer. Certain incremental sales commissions payable to obtain an F&I revenue contract with a customer have been capitalized and are amortized using the same pattern of recognition applicable to the associated F&I revenue contract.
| | | | | | | | | | | | | | | | | | | | | | | |
| Vehicle Repair and Maintenance Services | | Finance and Insurance, net | | Deferred Sales Commissions | | Total |
| (In millions) |
| Contract Assets, December 31, 2023 | $ | 20.5 | | | $ | 13.8 | | | $ | 68.4 | | | $ | 102.7 | |
| Transferred to receivables from contract assets recognized at the beginning of the period | (20.5) | | | (13.8) | | | — | | | (34.3) | |
| Amortization of costs incurred to obtain a contract with a customer | — | | | — | | | (19.5) | | | (19.5) | |
| Costs incurred to obtain a contract with a customer | — | | | — | | | 41.2 | | | 41.2 |
| Increases related to revenue recognized, inclusive of adjustments to constraint, during the period | 17.8 | | | 12.8 | | | — | | | 30.5 | |
| Contract Assets, December 31, 2024 | $ | 17.8 | | | $ | 12.8 | | | $ | 90.1 | | | $ | 120.7 | |
| Transferred to receivables from contract assets recognized at the beginning of the period | (17.8) | | | (12.8) | | | — | | | (30.6) | |
| Amortization of costs incurred to obtain a contract with a customer | — | | | — | | | (29.3) | | | (29.3) | |
| Costs incurred to obtain a contract with a customer | — | | | — | | | 52.0 | | | 52.0 | |
| Increases related to revenue recognized, inclusive of adjustments to constraint, during the period | 22.9 | | | 11.8 | | | — | | | 34.7 | |
| Contract Assets, December 31, 2025 | $ | 22.9 | | | $ | 11.8 | | | $ | 112.8 | | | $ | 147.5 | |
| | | | | | | |
| Contract Assets (current), December 31, 2025 | $ | 22.9 | | | $ | 11.8 | | | $ | 30.7 | | | $ | 65.4 | |
| Contract Assets (long-term), December 31, 2025 | $ | — | | | $ | — | | | $ | 82.1 | | | $ | 82.1 | |
Deferred Revenue
The consolidated balance sheet reflects $828.2 million and $766.0 million in deferred revenue as of December 31, 2025 and 2024, respectively. Approximately $255.0 million and $239.3 million of deferred revenue at December 31, 2024 and 2023, was recorded in finance and insurance, net revenue in the consolidated statements of income for the years ended December 31, 2025 and 2024, respectively.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.