Group 1 Automotive Inc.: GPI Investor Meetings: Everything's bigger in Texas, except for auto sales growth

Research evidence excerpt

Group 1 Automotive Inc.: GPI Investor Meetings: Everything's bigger in Texas, except for auto sales growth

as generated around $50mm in proceeds from these transactions. The

divestitures should also support an improved SG&A to gross profit ratio.

Chinese OEMs may not be big profit oppty in UK, but offers learnings for

US

GPI is starting to work with Chinese OEMs in the UK, with plans to open three Geely locations

and one with Leapmotor. Chinese OEMs have captured a growing portion of the UK market over

the last year (reaching ~13% market share in May 2026), and over time could account for up to a

25-30% share. Chinese brands may not provide a sizable profit opportunity, but GPI's

experience working with them in the UK could provide valuable learnings that may prove useful

should Chinese brands enter the US market. GPUs on Chinese vehicles have improved over the

last year-plus, and we believe are now around $3,000/vehicle. However, there is little

contribution on the Parts & Service side, which could take 3-4 years to materialize.

Capital allocation: Expect focus on buybacks and M&A

We expect GPI will continue to prioritize M&A and share buybacks. The M&A pipeline has

improved over the last few months, although commentary suggests valuations are relatively

high, which has likely held GPI back from a few deals this year. GPI seems most interested in

transactions that are in close proximity to its existing footprint (offering potential for greater

synergies) and in which there is an opportunity to own the land. GPI currently owns the land for

more than 80% of its dealerships, up significantly from ~20% two decades ago. Ultimately,

acquisitions are likely to be partially offset by dispositions, which we expect will largely be