NYSE: LAD

•Annualized revenues from acquired stores or achieving target returns

•The growth and performance of our Driveway e-commerce home solution and DFC, their synergies and other impacts on our business and our ability to meet Driveway and DFC-related targets

•The impact of sustainable vehicles and other market and regulatory changes on our business, including evolving vehicle distribution models

•Our capital allocations and uses and levels of capital expenditures in the future

•Expected operating results, such as improved store performance, continued improvement of SG&A as a percentage of gross profit and any projections

•Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facilities, unfinanced real estate, and other financing sources

•Our continuing to purchase shares under our share repurchase program

•Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements

•Our programs and initiatives for team member recruitment, training, and retention

•Our strategies and targets for customer retention, growth, market position, operations, financial results, and risk management

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition, and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this Annual Report. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, the factors as discussed in Part I, Item 1A. Risk Factors, and in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and, from time to time, in our other filings we make with the SEC.

Any forward-looking statement made by us in this Annual Report is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Business Overview

Lithia and Driveway (NYSE: LAD) is the largest global automotive retailer providing an array of products and services throughout the vehicle ownership lifecycle. Simple, convenient and transparent experiences are offered through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet

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management offerings, and other synergistic adjacencies. We have delivered consistent profitable growth in a massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever, and however consumers desire. As of December 31, 2025, we operated 455 locations representing 54 brands in the United States, the United Kingdom, and Canada.

We offer a wide array of products and services fulfilling the entire vehicle ownership lifecycle including new and used vehicles, financing and insurance products, and aftersales automotive repair and maintenance services. We strive for diversification in our products, services, brands, and geographic locations to reduce dependence on any one manufacturer, reduce susceptibility to changing consumer preferences, manage market risk and maintain profitability. Our diversification, along with our operating structure, provides a resilient and nimble business model.

Founded in 1946 and incorporated in Oregon in 1968, we completed our initial public offering in 1996.

Business Strategy

We seek to provide customers choice with a seamless, blended online and physical retail experience, broad selection, and access to specialized expertise and knowledge. Our comprehensive network provides convenient touch points for customers and provides services throughout the vehicle life cycle. We seek to increase market share and optimize profitability by focusing on the consumer experience and applying proprietary performance measurement systems fueled by data science. Our Driveway and GreenCars brands and online customer portal complement our in-store experiences in the United States and provide convenient, simple, and transparent platforms that serve as our e-commerce home solutions and allow us to deliver differentiated, proprietary digital experiences. Enhancing our business, our captive auto financing division allows us to provide financing solutions for customers and diversify our business model with adjacent products.

Our long-term strategy to create value for our customers, team members, and shareholders includes the following elements:

Driving operational excellence, innovation, and diversification

LAD builds magnetic customer loyalty across our 455 stores, our Driveway and GreenCars e-commerce platforms, and our entire omnichannel ecosystem by focusing on convenient and transparent experiences supported by proprietary data science. Our entrepreneurial model that emphasizes personal accountability for our team powers efficient operations and allows dynamic responsiveness to each of our local markets. Our best-in-class performance management reporting provides the foundation to enable high-performing teams to drive our platform’s full potential.

Investments across our ecosystem built a framework that is responsive to evolving consumer preferences, providing a foundation that supports our current business and our ongoing expansion. These investments, particularly in our digital strategies, connect our experienced, knowledgeable team members with our expansive inventory and physical network of stores to ensure we are agile and adaptable. Additionally, we systematically explore and invest in transformative adjacencies that are synergistic and complementary to our existing business, such as our captive auto finance and fleet management offerings.

These investments support the foundational elements of our strategy. We seek to create durable customer loyalty in our stores and our digital platforms, such as our My Driveway customer portal. These experiences and offerings, backed by our extensive physical network, broad geographic reach, and customized digital offerings, empower our people to provide transparent, flexible, and simple retail experiences.

Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our personnel. We develop pay plans that measure factors such as customer satisfaction, profitability, and individual performance metrics. These plans reward team members for creating customer loyalty, achieving store potential, developing high-performing talent, meeting and exceeding manufacturer requirements, and living our core values.

We centralize many administrative functions to drive efficiencies and streamline store-level operations. These efficiencies allow our local managers to focus on serving customers to increase revenues and gross profit. Our operations are supported by regional and corporate management, as well as dedicated training and personnel development programs which allow us to share best practices across our network and develop talent.

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Growth through acquisition and network optimization

Our acquisition growth strategy has been financially and culturally successful. Our disciplined approach focuses on acquiring new vehicle franchises in markets ranging from mid-sized regional markets to metropolitan markets. Acquisition of these businesses increases our proximity to consumers throughout North America and the United Kingdom. While we target annual after tax return of more than 15% for our acquisitions, we have averaged over a 25% return by the third year of ownership due to a disciplined approach focusing on accretive, cash flow positive targets at reasonable valuations. In addition to being financially accretive, acquisitions aim to drive network growth that improves our ability to serve customers through vast selection, greater density, easy access, and the ability to leverage national branding and advertising.

As we focus on expanding our physical network, one of the criteria we evaluate is a valuation multiple between 3x to 6x of investment in intangibles to estimated annualized adjusted EBITDA, with various factors including location, ability to expand our network and talent considered in determining value. We also target an investment in intangibles as a percentage of annualized revenues in the range of 15% to 30%.

During 2025, we acquired 17 stores and divested 12 stores. We invested $751.0 million, net of floor plan debt, to acquire these stores and we anticipate these acquisitions to add nearly $2.4 billion in annualized revenues.

We regularly optimize and balance our network through strategic divestitures to ensure continued high performance. We believe our disciplined approach provides us with attractive acquisition opportunities and expanded coast-to-coast coverage.

Thoughtful capital allocation

We manage our liquidity and available cash to support our long-term plan focused on growth through acquisitions and investments in our existing business, technology, and adjacencies that expand and diversify our business model. Our current free cash flow deployment strategy includes a target allocation of 25% to 35% investment in acquisitions, 25% investment in capital expenditures, innovation, and diversification and 40% to 50% in shareholder return in the form of dividends and share repurchases due to current valuation trends in acquisitions relative to stock price performance. During 2025, we utilized $350.9 million for capital expenditures investing in our existing business and paid $55.3 million in dividends. As of December 31, 2025, we had available liquidity of approximately $1.5 billion, which was comprised of $109.2 million in unrestricted cash, $56.4 million in marketable securities, and $1.4 billion availability on our credit facilities.

Marketing

Lithia & Driveway’s core value, “Earn Customers for Life,” drives our marketing strategy to empower consumers throughout the vehicle ownership lifecycle. To place ease and value at our customers’ fingertips, we are constantly evolving the retail experience so customers can choose transparent, convenient ways to buy, sell, or service their vehicles wherever, whenever, and however they desire.

Our national, regional, and local brands connect with consumers through advertising tailored to the individual brand and market. Utilizing data and omnichannel communications, we strive to create deeper and richer offerings to build lifelong loyalty throughout the vehicle ownership lifecycle.

With a vast selection represented by the largest U.S. new and preowned vehicle inventory for sale online, we employ search engine optimization, search engine marketing, online display, retargeting, social advertising, traditional media, and direct marketing to reach current owners and new consumers.

Most consumers begin their shopping, buying, or selling activity on our store websites, Driveway.com, and GreenCars.com. Our proprietary customer lifecycle communication platform targets specific stages in the shopping process or ownership lifecycle. In an industry where the competition often relies on third parties to manage their customer data, we manage our data internally. This strategy allows us to leverage our customer insights across many revenue streams and goes beyond automotive needs.

These online channels provide customers with simple, transparent ways to search new and used inventories, view current pricing, apply incentives and offers, calculate payments for purchase or lease, apply for financing, buy online, sell their vehicle online and/or in-store, schedule service appointments both in store or at home, schedule vehicle pick-up and delivery, and provide us feedback about their experience.

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Driveway.com, our online experience, puts customers in control of every aspect of their car ownership. They can browse a vast nationwide inventory of new, used, and certified pre-owned (CPO) vehicles, and get their vehicle shipped straight to their driveway or pick it up at one of Lithia’s 300+ U.S. stores in the Lithia & Driveway network. In 2025, we reduced our marketing cost per retail delivery by 21% and our marketing cost per purchase pickup by 51%, through relentlessly testing our media efficiency in conjunction with operational gains. Driveway provides a differentiated retail experience for customers who prefer the simplicity and convenience of online shopping and the optionality of home delivery. This platform allows us to significantly increase the geographic reach of our network.

With the industry transitioning to more sustainable practices and alternative-fuel vehicles, we are excited that GreenCars, our online education resource for sustainable mobility, had approximately 9.0 million unique visitors in 2025 at GreenCars.com, of which we saw a 50% increase in direct and organic traffic. GreenCars is a leading source of knowledge designed to promote the acceleration of electric vehicle and alternative powertrain offerings like Hybrid adoption by educating the consumer on such topics as fuel-efficient offerings from model comparisons, personalized incentives, and local rebates to charging network. GreenCars connects consumers with the largest new-and-preowned inventory when they are ready to purchase a sustainable vehicle. GreenCars.com was an important part of the shopping and selection process for over 10,000 vehicles across our dealer network in 2025.

Total advertising expense, net of manufacturer credits, was $257.0 million in 2025, $250.7 million in 2024 and $248.2 million in 2023. Over 88% of our advertising spent in 2025 was on digital, social, listings, and one-to-one owner communications. In all of our communications, we seek to convey the promise of a positive customer experience, competitive pricing, and wide selection. Our manufacturer partners influence a significant portion of our advertising expense. Certain advertising and marketing expenditures are offset by manufacturer cooperative programs, which require us to submit requests for reimbursement to manufacturers for qualifying advertising expenditures. These advertising credits are not tied to specific vehicles and are earned as qualifying expenses are incurred. These reimbursements are recognized as a reduction of advertising expense. Manufacturer cooperative advertising credits were $62.5 million in 2025, $56.2 million in 2024 and $54.2 million in 2023.

Human Capital

Our human capital strategy is guided by our mission of Growth Powered by People, which reflects management’s focus on aligning workforce capability, leadership development, and performance with the execution of our business strategy.

As of December 31, 2025, our subsidiaries employed approximately 30,000 persons on a full-time equivalent basis across 455 retail locations worldwide.

Our success depends on the skills, experience, engagement, and performance of our workforce. We believe that a stable, skilled workforce supports operational performance and customer satisfaction. Management focuses on human capital practices that are material to the business, including workforce planning, leadership capability, employee development, engagement, and workplace safety.

Management seeks to attract, develop, and retain qualified team members by providing competitive compensation and benefits, opportunities for professional development, and pathways for internal advancement. A core focus of our talent strategy is the development and promotion of internal team members to support leadership continuity, operational excellence, and long-term growth.

We use structured talent and performance assessment approaches to inform workforce and leadership decisions. These include management frameworks designed to evaluate performance, potential, and readiness for expanded responsibility, as well as succession planning processes intended to identify and develop future leaders for key roles. These practices support continuity in leadership and informed talent investment across the organization.

We invest in learning and development initiatives designed to build technical, operational, and leadership capabilities aligned with business needs and job responsibilities. These efforts support internal mobility, leadership readiness, and the ongoing development of our workforce.

Management seeks to foster a workplace culture that emphasizes accountability, ethical conduct, collaboration, and respect. Workforce-related information and employee feedback are periodically reviewed to inform talent, organizational, and succession planning decisions.

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Safety and well-being are integral to our operations, particularly in retail and service environments. We maintain policies, training, and practices designed to promote a safe and healthy workplace for employees and customers.

We believe that our human capital resources, together with our management practices and culture, support the execution of our strategy and contribute to our long-term performance.

Franchise Agreements

Each of our stores operates under a separate franchise agreement with the manufacturer of the new vehicle brand it sells.

Typical vehicle franchise agreements specify the locations within a designated market area at which the store may sell vehicles and related products and perform approved services. The designation of the market areas and the allocation of new vehicles among stores are at the discretion of the manufacturer. Franchise agreements do not, however, guarantee exclusivity within a specified territory.

A franchise agreement may impose requirements on the store with respect to:

•facilities and equipment;

•inventories of vehicles and parts;

•minimum working capital;

•training of personnel; and

•performance standards for market share and customer satisfaction.

Each manufacturer closely monitors compliance with these requirements and requires each store to submit monthly financial statements. Franchise agreements also grant a store the right to use and display manufacturers’ trademarks, service marks and designs in the manner approved by each manufacturer.

We have determined the useful life of a franchise agreement is indefinite, even though certain franchise agreements are renewed after one to six years. In our experience, agreements are routinely renewed without substantial cost and there are legal remedies to help prevent termination. Certain franchise agreements have no termination date. In addition, state franchise laws protect franchised automotive retailers. Under certain laws, a manufacturer may not terminate or fail to renew a franchise without good cause or prevent any reasonable changes in the capital structure or financing of a store.

Our typical franchise agreement provides for early termination or non-renewal by the manufacturer upon:

•a change of management or ownership without manufacturer consent;

•insolvency or bankruptcy of the dealer;

•death or incapacity of the dealer/manager;

•conviction of a dealer/manager or owner of certain crimes;

•misrepresentation of certain sales or inventory information to the manufacturer;

•failure to adequately operate the store;

•failure to maintain any license, permit or authorization required for the conduct of business;

•poor market share; or

•low customer satisfaction index scores.

Franchise agreements generally provide for prior written notice before a franchise may be terminated under most circumstances. We also sign master framework agreements with most manufacturers that impose additional requirements. See