AUTONATION, INC.AN
AUTONATION, INC. Leases Disclosure
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 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 is 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 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.
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, 2025 and 2024:
| Leases | Classification | 2025 | 2024 | |||||||||||||||||
| Assets | ||||||||||||||||||||
| Operating | Operating lease assets | $ | 456.4 | $ | 391.1 | |||||||||||||||
| Finance | 339.8 | 325.1 | ||||||||||||||||||
| Total right-of-use assets | $ | 796.2 | $ | 716.2 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current | ||||||||||||||||||||
| Operating | $ | 44.3 | $ | 48.1 | ||||||||||||||||
| Finance | 111.1 | 94.1 | ||||||||||||||||||
| Noncurrent | ||||||||||||||||||||
| Operating | Noncurrent operating lease liabilities | 431.8 | 356.9 | |||||||||||||||||
| Finance | 279.5 | 281.3 | ||||||||||||||||||
| Total lease liabilities | $ | 866.7 | $ | 780.4 | ||||||||||||||||
| Lease Term and Discount Rate | 2025 | 2024 | ||||||||||||
| Weighted average remaining lease term | ||||||||||||||
| Operating | 13 years | 11 years | ||||||||||||
| Finance | 11 years | 12 years | ||||||||||||
| Weighted-average discount rate | ||||||||||||||
| Operating | 5.79 | % | 5.79 | % | ||||||||||
| Finance | 4.17 | % | 4.40 | % | ||||||||||
| Lease cost | Classification | 2025 | 2024 | |||||||||||||||||
| Operating lease cost | Selling, general, and administrative expenses | $ | 76.8 | $ | 71.1 | |||||||||||||||
| Finance lease cost: | ||||||||||||||||||||
| Amortization of ROU assets | Depreciation and amortization | 25.0 | 23.6 | |||||||||||||||||
| Interest on lease liabilities | Other interest expense and Floorplan interest expense | 16.7 | 17.0 | |||||||||||||||||
Short-term lease cost (1) | Selling, general, and administrative expenses | 11.8 | 13.0 | |||||||||||||||||
| Variable lease cost | Selling, general, and administrative expenses | 16.4 | 13.8 | |||||||||||||||||
| Sublease income | Selling, general, and administrative expenses | (4.8) | (4.6) | |||||||||||||||||
| Net lease cost | $ | 141.9 | $ | 133.9 | ||||||||||||||||
(1) Includes leases with a term of one month or less. | ||||||||||||||||||||
| Other Information | 2025 | 2024 | ||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||
| Operating cash flows from operating leases | $ | 74.9 | $ | 68.0 | ||||||||||
Operating cash flows from finance leases (1) | $ | 57.6 | $ | 62.4 | ||||||||||
| Financing cash flows from finance leases | $ | 17.0 | $ | 13.0 | ||||||||||
| Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new: | ||||||||||||||
| Operating lease liabilities | $ | 117.3 | $ | 45.9 | ||||||||||
| Finance lease liabilities | $ | 75.6 | $ | 38.0 | ||||||||||
(1) 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, | ||||||||||||||
| 2026 | $ | 65.6 | $ | 122.3 | ||||||||||
| 2027 | 66.7 | 29.9 | ||||||||||||
| 2028 | 63.0 | 28.9 | ||||||||||||
| 2029 | 61.4 | 26.2 | ||||||||||||
| 2030 | 53.2 | 25.2 | ||||||||||||
| Thereafter | 380.9 | 239.5 | ||||||||||||
| Total lease payments | 690.8 | 472.0 | ||||||||||||
| Less: interest | (214.7) | (81.4) | ||||||||||||
| Present value of lease liabilities | $ | 476.1 | $ | 390.6 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 18, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.