艾斯伯里汽车集团 (ABG) 2026年第三季度业绩电话会议：Tekion部署完成

核心要点

• 阿斯伯里汽车集团（Asbury Automotive Group）2026财年第三季度实现营收44亿美元，毛利润7.32亿美元，调整后每股收益为6.16美元。若扣除非现金性质的 Total Care Auto (TCA) 递延影响，调整后每股收益本应为6.85美元。
• 公司已在所有运营中的阿斯伯里经销店完成 Tekion 系统的上线部署。第三季度共有47家门店完成系统切换，最后10家经销店已于10月完成转换。
• 二手车零售毛利润同比增长3%，而二手车单车零售毛利（PVR）上涨10%至1,777美元。全门店二手车零售销量环比增长4.5%。
• 受高基数影响，同店新车销量同比下降8%。电动汽车（EV）销量同比骤降76%，仅占2026财年第三季度总销量的2.1%。
• 管理层预计，考虑到约六个月的磨合期，Tekion 系统带来的生产力提升效应将在2027财年第一季度末至第二季度初更加显现。
• 截至本季度末，经交易调整后的净杠杆率为3.5倍。管理层的目标仍是在2027年中期前将杠杆率降至3倍以下，随后再优先考虑股票回购和补充性并购。

核心财务数据

调整后净利润扣除了税后600万美元的 Tekion 实施费用、100万美元的重复 DMS 关联费用，并计入了100万美元的资产剥离净收益。TCA 产生税前利润500万美元，低于上年同期的1,400万美元。

业务与运营表现

Tekion 系统与运营效率

阿斯伯里旗下所有运营中的门店现均已使用 Tekion 系统。公司表示，门店通常需要大约六个月的时间充分熟悉该平台，随后生产力效益才会逐渐显现。

使用 Tekion 系统时间最长的 Koons 和佐治亚州（Georgia）市场在第三季度实现了7%的客户自费业务毛利增长，而公司整体同店表现持平。这两个市场的固定业务（售后服务）毛利润总额增长了5%，而公司整体同店固定业务毛利则下降了2%。

管理层还报告称，在已熟练应用 Tekion 的门店中，每位服务顾问日均维修工单量增长了约9%，每位技术人员带来的收入增长了高单位数至低双位数，每位销售人员的售车台数提升了中单位数。截至季度末，已有约35至40家门店跨过了六个月的磨合期。

新车业务

全门店新车单车毛利（PVR）为2,949美元，环比下降6%，但仍处于管理层预期区间内。同店新车销量同比下降8%，部分反映出2025年联邦及州级电动汽车税收抵免资格到期的影响。

电动汽车销量同比下降76%，占总销量的2.1%。管理层表示，新车单车毛利的压力主要来自包括现代汽车（Hyundai）在内的进口品牌，而斯特兰蒂斯（Stellantis）依然构成逆风。本季度末，新车库存供应天数为53天。

二手车业务

二手车零售毛利润增长3%，二手车单车零售毛利（PVR）增长10%至1,777美元。全门店二手车零售销量较第二季度增长4.5%，季度末库存维持在41天供应量。

管理层预计第四季度二手车销量将实现同比增长，同时保持盈利能力。约70%至75%的零售二手车源自旧车置换、直接向客户收购或代步车，约15%至20%通过拍卖渠道获取。

金融保险（F&I）及 Total Care Auto

财报公布的单车金融保险毛利（F&I PVR）为2,177美元，同比减少19美元。这一下滑完全归因于138美元的非现金 TCA 递延影响。若剔除该递延影响，单车金融保险毛利为2,453美元，同比增加119美元。

TCA 在阿斯伯里全体系（包括 Herb Chambers 门店）的推广现已完成。管理层正在评估是保留现有架构、通过阿斯伯里经销店以外的渠道拓展 TCA，还是将其设立为独立的外部公司。公司强调了 TCA 出色的现金流创造能力及其有限的资本需求。

零部件与售后服务

客户自费业务营收增长2%，客户自费业务毛利润持平。保修业务毛利润下降1%。客户自费维修工单量下降1.9%，但管理层表示客单价保持稳定，且未观察到客户拒绝维修项目的情况有所增加。

管理层将部分毛利率压力归因于 Tekion 上线期间的临时折扣及员工生产力下降。管理层预计，随着门店度过六个月的过渡期，毛利率和业务吞吐量将会提升。

管理层展望

• 管理层预计2027年新车销量将总体保持平稳，新车单车毛利（PVR）将在约2,750美元至3,000美元的范围内。
• 由于公司重点关注销量增长，预计二手车单车毛利将维持在目前约1,750美元的水平附近。
• 管理层相信，2027年固定业务（售后服务）增速可重回中单位数区间。
• 预计与 TCA 相关的会计递延在2027年仍将是影响财报列示金融保险（F&I）业绩的逆风因素，部分抵消经销店层面的潜在改善。
• 预计调整后 SG&A 占毛利润的比重将逐步改善，在2027年底前降至60%出头的水平。管理层表示，约有一半的改善将来自毛利润增长，另一半来自直接的 SG&A 费用节省。
• 公司预计2026财年全年有效税率约为24.8%。
• 管理层预计在2027年中期前将经交易调整后的净杠杆率降至3倍以下。

风险与关注事项

• 第三季度完成 Tekion 切换的47家经销店预计在第四季度仍处于过渡期，这将推迟生产力和毛利率效益的充分释放。
• 疫情期间购买车辆的负净值现象正影响部分交易，对于信用状况较弱或首付款有限的客户尤为明显。
• 管理层提及某些进口车企带来的新车单车毛利持续压力，以及斯特兰蒂斯（Stellantis）方面的持续逆风。
• 高油价开始影响消费者偏好，部分买家正从大型 V8 SUV 转向混合动力 SUV。
• TCA 的非现金递延使第三季度调整后每股收益减少了0.69美元，预计在2027年将继续拖累财报列示的金融保险（F&I）业绩。

分析师问答精选

分析师高度关注 Tekion 带来效益的时间节点和幅度。管理层表示，最近完成切换的门店应在2027财年第一季度末至第二季度初开始展现更强劲的业绩。最近跨过六个月磨合期的佛罗里达州在9月份录得3%的固定业务毛利增长，而 Koons 和佐治亚州则取得了更强劲的增幅。

在消费者支付能力方面，管理层表示售后服务单价保持稳定，放弃维修的情况并未增加。然而，车贷负净值问题使部分车辆交易变得更加困难，融资结果取决于客户信用状况和可用的首付款。

关于资本配置，管理层重申降低债务是首要任务。结合业绩会期间提及的当前股价，一旦杠杆率降至公司目标以下，股票回购的优先级将高于补充性收购。

管理层还表示，预计经销店的服务手续费（documentation fees）不会下降。历史上，阿斯伯里将这些费用定在当地市场的中游水平，并始终强调透明定价。

业绩电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Greetings. Welcome to Asbury Automotive Group Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Parin Patel, Vice President of Finance and Treasurer. Thank you. You may begin.

Parin Patel

Thanks, operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's Third Quarter 2026 Earnings Call. The press release detailing Asbury's third quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com.

Participating with me today are Dan Clara, our President and Chief Executive Officer; and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call up for questions and will be available later for any follow-up questions.

Before we begin, we must remind you that the discussion during the call today is likely to contain forward-looking statements. Forward-looking statements are statements then those which are historical in nature, which may include financial projections, forecasts and current expectations, each of which are subject to significant uncertainties.

For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 31, 2025, any subsequently filed quarterly reports on Form 10-Q and our earnings release issued earlier today. We expressly disclaim any responsibility to update forward-looking statements.

In addition, certain non-GAAP financial measures as defined [Technical Difficulty] may be discussed on this call. As required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website. Comparisons will be made on a year-over-year basis unless we indicate otherwise.

We have also posted an updated investor presentation on our website, investors.asburyauto.com, highlighting our third quarter results.

And now it is my pleasure to hand over the call to our President and CEO, Dan Clara. Dan?

Dan Clara

Thank you, Parin, and good morning, everyone. Welcome to our third quarter earnings call. I am pleased to share that we have reached a defining milestone. Every Active Asbury store is now operating on Tekion, our single modern technology platform. After several years of planning and execution, we now run the entire company on one system, giving us a common foundation to operate more efficiently, make decisions faster and serve [Technical Difficulty].

This milestone is one part of a broader strategy, anchored in our 5 pillars, which aligns the organization on operational excellence within the following 5 priorities: growing new vehicle market share, driving profitable volume growth in used vehicles, reestablishing consistent growth in customer pay gross profit, disciplined management of SG&A and leveraging technology.

On the technology pillar, we converted 47 stores to Tekion in the third quarter, our largest single quarter ever and completed the final 10 dealerships in October. Our longest tenured Tekion stores in Georgia and at Koons are giving us an early read on the platform's impact. In the third quarter, customer pay gross profit grew 7% versus the total company same-store being flat.

Total fixed cost gross grew 5% versus total company same-store down 2%. Units per salesperson increased 4% and gross profit per technician improved by 9%, both outpacing the rest of the company.

As we have shared before, it takes time for team members to build the muscle memory that comes with the new platform before taking it to another level. These stores have had the time, and we believe the same opportunity exists across the rest of our stores to improve efficiency, enhance the guest experience and drive value for our shareholders.

This was a major lift for our organization. Our store teams learned a new system while continuing to sell, service and care for our guests every day, and our support teams worked alongside them at every step. I am grateful to them and to our partners at Tekion for getting us across the finish line. With the conversion behind us, the time and resources we dedicated to implementation can now go back into running and growing the business.

Our teams have done their hard work. Now it is time to put the technology to work. It has been a busy few months for our teams. In addition to converting 47 stores to Tekion in the third quarter, we also implemented Total Care Auto to our 30-plus Herb Chambers stores, which completed our TCA rollout to all of Asbury.

And now I will speak to our operational results on a same-store basis unless otherwise noted. I will note that our Herb Chambers stores are included in same-store results for August and September only.

Starting with new vehicles. Our new vehicle business continued to perform in line with our expectations this quarter. On an all-store basis, new PVRs were $2,949, down 6% sequentially. These PVRs are well within the range, where we expect them to remain going forward.

Same-store new units were down 8% against a tough prior year comparison as we were lapping the expiration of federal and state dev tax credit eligibility in 2025. The sharp decrease in EV volume accounted for 5% of this 8% change year-over-year, mostly driven by Colorado, which had a robust state EV incentives last year. We closed the quarter with a well-managed inventory position of 53 days supply, in line with the second quarter and setting us up well for the fourth quarter.

Next, turning to used vehicles. Our used vehicle business continued to build momentum this quarter, and we are encouraged by the progress. Used retail gross profit grew 3% over last year, and we grew used retail PVR by 10% to $1,777, reflecting our focus on growing volume profitably.

Our strategy and retailing process improvements are taking hold and driving a stronger pre-owned business. On an all-store basis, our used retail volume increased 4.5% over the second quarter.

With our disciplined processes in place, we anticipate used volume to increase on a year-over-year basis as we move into the fourth quarter. And we ended the quarter with a 41-day supply, keeping us well positioned heading into the fourth quarter.

Moving to F&I, our F&I business performed well at the dealership level this quarter, where F&I PVR was up year-over-year. On a reported basis, F&I PVR was $2,177, down $19 from the prior year, but that decline was driven entirely by the non-cash TCA deferral, which represented $138 of impact. Excluding the TCA deferral, our F&I PVR was $2,453, up $119 year-over-year. Our front-end yield per vehicle was $4,583 in the third quarter.

Next, parts and service. Our customer pay revenue was up 2%, with gross profit flat year-over-year. Warranty gross profit was down 1%. Overall, parts and service was not where we wanted it to be. But now with the heavy lift of rolling out a new DMS behind us, we are optimistic in our ability to get back to consistent growth, while delivering an exceptional guest experience.

And quickly on operational efficiencies. Our same-store adjusted SG&A as a percentage of gross profit was 67% in the quarter. With the Tekion conversion now complete, we believe our SG&A can reach the low 60% range by the end of 2027, driven by efficiency gains as our teams become more productive on the platform.

As we enter the fourth quarter, I am encouraged by what I see. Our used business has improved for several quarters in a row. And with our Tekion rollout now behind us, our teams can turn their full attention to serving our guests and executing our 5-pillar strategy. We will remain disciplined in allocating capital. Our priority is to bring net leverage below 3x.

We believe we are well positioned to finish the year strong and look forward to one platform to achieve our goals in 2027. Most of all, I want to thank our team members. They took on one of the largest changes in our company's history and delivered it while keeping our guests at the center of everything we do. We are now positioned to see the benefits of their hard work.

And before I pass to Michael, one additional item worth noting. In early October, the FTC administrative proceeding against the company was dismissed. The outcome is consistent with our long-held view that our F&I sales practice have been and continue to be sound, lawful and in compliance with applicable regulations. We remain focused on serving our guests with the integrity and transparency that we have always defined how we do business.

And with that, I'll now hand the call over to Michael to discuss our financial results for the quarter.

Michael Welch

Thank you, Dan, and good morning, everyone. I'll start with our high-level financial results for the third quarter. We generated $4.4 billion in revenue, earned a gross profit of $732 million and gross profit margin of 16.6%, and we delivered an adjusted operating margin of 4.9%.

Our adjusted net income was $111 million. Our adjusted EBITDA was $218 million, and adjusted EPS was $6.16 for the quarter. In addition, the non-cash deferral headwind due to TCA this quarter was $0.69 per share. Our adjusted EPS would have been $6.85 without the deferral impact.

Adjusted net income for the third quarter of 2026 excludes net of tax, $6 million related to the Tekion implementation expenses, $1 million related to duplicate DMS-related expenses and $1 million related to the net gain on divestitures.

Adjusted SG&A as a percentage of gross profit on an all-store basis was 67.4%. This reflected the peak of our Tekion conversions with 47 stores converting in the quarter and a number of stores still early in the adoption. We expect SG&A leverage to improve in the fourth quarter with cost savings continuing into 2027.

Next, the adjusted tax rate for the quarter was 24.5%. We estimate our effective tax rate for the full year to be approximately 24.8%.

TCA generated $5 million of pretax income in the third quarter versus $14 million in the prior year. The negative non-cash deferral impact for the quarter net of tax was about $12 million compared to $4 million in the third quarter of 2025.

TCA's rollout to Chambers Group has been completed and our all Asbury platforms are enabled with this differentiated asset. As previously noted, we are assessing the next phase for TCA following its full rollout.

We generated $525 million of adjusted operating cash flow year-to-date. Excluding real estate purchases, we spent $190 million on capital expenditures in the first 3 quarters of this year. We are updating our view for the full year CapEx in 2026 to be approximately $27 million or $275 million.

Adjusted free cash flow was $336 million through the end of September. We ended the quarter with $1 billion of liquidity comprised of floor plan offset accounts, availability on both our used line and revolving credit facility and cash, excluding cash at Total Care Auto.

Our transaction adjusted net leverage ratio was 3.5x at the end of the third quarter. Our target of 3x remains a priority for us, and we plan to reach it by mid-2027 driving operational excellence and reducing leverage is our focus. Once there, we will look for opportunities for share buybacks and tuck-in acquisitions.

And with that, this concludes our prepared remarks. We will now turn the call over to the operator and take your questions. Operator?

Operator

[Operator Instructions] Our first question is from Jeff Lick with Stephens Inc.

分析师问答

Jeffrey Lick

Congrats on getting the Tekion installation out of the way. Dan and Michael, I was wondering if maybe you could just -- you've given some Tekion stats in terms of SG&A of the stores that are starting to see the benefit or productivity of technicians or salespeople. I was wondering maybe you could just break apart a little bit more what the Tekion stores look like versus the non-Tekion stores? And then what the rollout or when we'll start to see the benefit of the stores that were still within that, call it that 6 to 12-month time frame of installation?

Dan Clara

Yes. Thank you for the call -- thank you for the question. Yes, as I stated, the customer pay gross profit grew 7% in the Koons and the Georgia stores. And the reason why I'm focusing on that is consistent with what we have been stating in the past, which it takes 6 months for the muscle memory to kick in, and those stores have definitely been in the 6-month time frame. So we're excited what we see.

I will give you a little bit more color as well. When you look at ROs per adviser per day, in the -- we're seeing about a 9% increase. When you look at dollars per technician, we're seeing about a high single-digit growth to a low double-digit growth. And then from a unit per salesperson standpoint, we're seeing about a mid-single-digit improvement from an efficiency standpoint.

As I stated at the beginning of the call, we rolled 47 stores in the quarter. So it's going to take us 6 months to get the muscle memory in those stores to be able to see the efficiencies that I just mentioned, but we are very excited with what we see, the hard work that the team members have put together alongside our partner, Tekion and excited for the future. And as you stated at the beginning, I appreciate your congrats. It's been a heavy lift, but excited that it is behind us.

Michael Welch

And Jeff, just one more thing on that. From an SG&A percentage of growth perspective, we were down 329 basis points in the quarter on a same-store basis. The 2 groups, Koons and Georgia, who have been on the longest, one of those platforms was actually improved on an SG&A percentage of gross basis. And the other one was with the decline in PVRs, it was down or increased on an SG&A percentage of gross basis, but about 1/3 of what the rest of the company did.

So we are seeing the impact on SG&A as well. And so it's a 2-sided coin. It's a gross profit item. So it helps on the gross profit, but it also helps on the efficiencies. And so we're seeing that on the SG&A side percentage of growth out of those 2 -- those 2 markets as well.

Jeffrey Lick

In terms of just the store composition, what's the number of stores that at this point, you'd say they were in the Tekion beneficiary column versus the Tekion, hey, we're still working through it or it's a net drag on productivity and SG&A measures?

Dan Clara

Yes. So Jeff, if I look at the Koons and the Georgia markets, we're probably talking 35 to 40 stores that have reached the 6-month threshold that is crucial for us to see that muscle memory kick in.

Jeffrey Lick

Okay. And then one last quick one for you, Michael. The dynamic of -- can you talk about the dynamic of SG&A -- it's obviously a little more noticeable when the GP dollars come from service and parts. Can you kind of get -- is there a bit of a double whammy impact on SG&A in terms of getting better? Because obviously, not only is Tekion going to help your SG&A in general, but it helps your service and parts growth as well. Can you talk about that a little bit?

Michael Welch

Yes, 100%. That's really our focus is as we get back to be able -- we're growing gross profit again coming out of Tekion, the goal is to be productive with our people and so don't put the cost back in to go with that gross profit growth. And so that's really where the focus is. It's some cost cuts, some benefits for AI, but it's really getting back to growing gross profit and maintaining the cost structure to go with that.

So if we're trying to chase reducing gross profit, it's just hard to get that SG&A number. So it's 2 pieces. And when we talk about low 60s, I'd say half of that comes from gross profit growth and the other half comes from true SG&A saves.

Operator

Our next question is from Rajat Gupta with JPMorgan.

Rajat Gupta

Just on the metrics you provided on the Koons and the Georgia stores, that is just on a same-store basis versus last year third quarter, correct just to clarify?

Dan Clara

Correct.

Rajat Gupta

And if you look at it on a dollar basis, pre-Tekion versus post Tekion seasoning, I mean, are those metrics still higher year-over-year? Or you're still working through more progress for those stores on the parts and services side? And I have a quick follow-up.

Michael Welch

So -- yes, parts and service is higher. We think there's still room to go. And we are seeing -- if you think about the layers, Koons is farther ahead than Georgia because it's been on it longer. And so as we see the stores work through the system, we are seeing those kind of improvements. And Dan kind of hit on those pieces because we have some -- Florida just kind of got over the 6-month mark at the very end of the quarter. So there's some numbers there that we're seeing. We're starting to see on Florida at the very end of the quarter as well.

Dan Clara

Yes, Rajat, on the -- on Michael's comment, I'll just give you a few more numbers on what we saw at the end of September from a fixed operations gross profit. Florida, which just hit the mark was up 3%. I'll give you Koons as well, which I've already mentioned before, but Koons just for September was up 9% and then Georgia was up 7%. So that gives you a pretty good indication of the efficiencies and the gains that we're getting once the muscle memory takes place.

Rajat Gupta

Understood. That's helpful. And then just on TCA, I know like in the past, there's been some chatter around maybe potentially disentangling that from the company. I'm curious, as you've spent more time evaluating if the business needs to be core and in-house, what's been the outcome? Do you still think like TCA is better as an in-house captive or a hybrid model would serve us better?

Michael Welch

We -- I mean, we really love the TCA business. We love what it does for us long term and the cash flow that it provides. And so -- and also just owning the guest experience all the way through the cycle. But once we get it fully -- we've rolled it out fully to all the groups, we have to evaluate, keep it as is grow it through other channels outside our dealerships or to your point, flip it out to have it be an outside company to kind of get rid of the accounting noise.

We're still in the evaluation phase of that. Again, we love the business, love what it does for us, love the cash flow, very, very solid business for us. But just, again, trying to think through the next steps for that company.

Dan Clara

And then Rajat, one thing I'd like to add to Michael's comment is to his point, we love the business. And when you think about the cash flow that it generates, it is also one part of the business that does not require heavy CapEx or any CapEx for that matter. So we really like what it generates from a cash flow standpoint. But as Michael mentioned, those are the 3 options on the table that we are always analyzing.

Operator

Our next question is from Glenn Chin with Seaport Research Partners.

Glenn Chin

Congrats on completing the rollouts of both Tekion and TCA. I'm glad to see all the benefits starting to come through. First, just on -- can you tell us what you saw with the consumer in the quarter? There was a lot of noise and chatter of volatility. And I mean, glad to see that parts and service still grew same-store, but margins compressed a bit. Can you tell us what happened there?

Dan Clara

Yes. I'll start with the last question, margin compression in the fixed operations. That is a product of what I just mentioned, the 6 months that it takes of muscle memory to be developed as we roll out Tekion. And to be more specific, think about this, you just got used to -- you're used for 20, 30 years as an adviser to process customers one way under CDK. Your world has turned upside down. You're learning a new system. You have 5, 6 customers waiting for you.

The path of least resistance, which I don't blame team members to take in, they start discounting just to make sure that we take care of the guests. As that muscle memory starts to come in, the discounts start to go away and then the margin starts to stabilize and get back to its normal course. So not concerned about that. That's going to get back to normal, and we're already seeing the progress being made.

On the first part of the question on consumer affordability, I will tell you that we saw from a customer pay standpoint, we measure both BEV -- I mean we'll measure all of them. We measure BEV, plug-in hybrid and internal combustion and the dollars per ticket have stayed flat. In some cases, they've gone up a little bit here and there. So that gives us good indication that things are working properly and the consumer is still spending money with us.

I will tell you that on a customer paid traffic, our customer paid traffic for the quarter, meaning the repair order count was down 1.9%. But I think I've answered your question. If you have any other follow-ups, happy to take them as well.

Michael Welch

And then one other thing on the margin. Internal is highly accretive to the gross margin on parts and service because there's no revenue for it, which is all gross profit. But as we continue to grow the used car business, especially in the fourth quarter and in 2027, that will also help the fixed ops margin as we get that used car volume back through and get that [ recon ] work through the fixed op side.

Glenn Chin

Okay. Very good. And then just on used, I mean, good to see the progress there, the improvement in comps. Can you just tell us what we might expect going forward just with respect to the balance between volume versus GPUs?

Dan Clara

Yes. We at the end, I cannot remember when it was, it might have been May or June, but we announced that our strategy was shifting. For years, we had been protecting gross profit and not chasing the volume. And as a reminder, we shifted that strategy in May because we knew that these returns were coming, and it was a good time to start going after a little bit of the volume while protecting the profitability of the used car department.

So when you think about 70% to 75% of our cars that we retail come from either it is trade-ins or acquisition from guests or loaner cars. That puts us in a pretty good place to continue to grow that business. And then about 15%, 20% of them come from acquisition at the auction, which we have made a concerted effort to go after to grow the volume.

So I will tell you that we are fully committed to growing the volume while protecting the gross profit, and we expect in the fourth quarter to be ahead year-over-year compared to last year.

Operator

Our next question is from Alex Perry with Bank of America.

Alexander Perry

Just wanted to follow up on the last question actually. So just on the customer pay RO count being down, I think you said 2%. Do you think there is share loss happening the cheaper independence for some of the P&S work given some of the affordability constraints in the consumer right now? Are you seeing any sort of evidence of work deferrals given some of the affordability challenges?

Dan Clara

Alex, on the work deferral, the measurements that I had when I compare what we call decline work from our customers, I have not seen an increase in that. So that gives us some level of comfort that nothing is changing materially.

On the first question in regards to maybe a loss of share, I'll tell you that it's more than a fair question. But when you look at the average miles that are coming through our shop at 70,000 miles, I would argue that we do a pretty good job of retaining that guest after the manufacturer's warranty expires i.e., the 1.9%, like anything, I would not make a big deal about it. It is seasonality.

Obviously, when you roll 47 stores, in Tekion in the quarter. And I can't stress it enough, the heaviest lift of the entire rollout of Tekion, you will see an impact in traffic because people's muscle memory gets lost. They don't move as fast. The efficiency is not there, but that will all come as we have proven after 6 months of the muscle memory kicking back in.

Alexander Perry

That's really helpful. And then my follow-up was just on the FTC enforcement actions. Can you -- what impact are those enforcement actions sort of having on your business? Did you have to take advertised prices up at all? Do you think it's impacting your used volume sales? And then what do you think happens to some of those dock fees? Do you think they get dropped over time? Or how do you think this all sort of plays out?

Dan Clara

Yes. On the impact that we've had is more of a level playing field. We've always done things the legal, ethical way, full transparency. As a reminder, when the FTC came with this notification at the beginning of the year, Asbury did not receive a letter because we have always been compliant. And some of our major markets such as Georgia, Colorado and Massachusetts, it was already state law to have that dock fee included in the price. So we've been operating under that -- under those circumstances for years.

As far as what does it do, I think that it is great for the industry. I think that being transparent, no hitting charges is what the consumer deserves. It level sets the playing field for all of us out there. So I view this as very positive. It will continue to enhance the guest experience. And those that don't want to abide are going to be left behind.

Operator

Our next question is from Michael Ward with Citigroup.

Michael Ward

First, could you put some numbers on the BEV sales year-over-year?

Dan Clara

Sorry, you cut off a little bit on the electric sales.

Michael Ward

So you mentioned that was about half of the unit -- new unit decline. So could you put some actual numbers on the number of BEV units you sold last year and then this year?

Dan Clara

Yes. So I have your -- I have the -- yes, I can do that for you. In Q3 of 2026, my electric vehicles were 2.1% of the total units sold. I'll tell you that from a year-over-year basis, we were down 76% in EV sales Q3 of '25 versus Q3 of '26.

Michael Ward

Okay. And I always thought the BEV profitability was lower than ICE. So with that decline, you would expect to see a little stronger growth new vehicle growth than we saw -- was there something else in there in the quarter? Was there a sell-down on some light models that kind of compressed growth that maybe turns as we go into 4Q and into the first half?

Dan Clara

It's a great question, an excellent point. You are correct. The PVR in ICE is higher than EV. I will tell you that what impacted the drop in PVR quarter-over-quarter, it really came down from imports. We're seeing additional pressure with some of the OEMs, Hyundai being one of them. And then obviously, you can see at the domestic side of the equation as well, we still continue to have headwinds with Stellantis.

Although I will tell you that from an inventory management standpoint, we have really put ourselves in a good position. We have reduced about 1,000 units from what we used to carry on floor plan expense with Stellantis. Our ordering is -- it is at a much higher level from a turn rate standpoint. So really excited to see what I'm seeing out of the Stellantis stores that we are set up for a better quarter as we move into 2027.

Michael Ward

Very good color. I appreciate that. And just lastly on Tekion because I know we've hit it hard, but I think it is important. The muscle memory that you talked about, so about 1/3 of the stores just got converted in October. So some of that muscle memory lags then from November, December and into the first half, we should start to see some pretty good benefits, particularly since you have a good track record behind it. Is that the right way to look at it?

Dan Clara

Yes. I think you're looking at it right. I would just say that it will be more into the tail end of Q1, beginning of Q2. Listen, nobody is more anxious and wants to get the benefits of all the hard work than us. But we do know after rolling out 157 dealerships that it does take 6 months of the muscle memory to kick in. And we're just going to be there continuing to train, mentor and develop our team members to provide the best guest experience.

Operator

Our next question is from Rob Saltzman with UBS.

Robert Saltzman

So you mentioned that you expect to exit that low 60% range on SG&A to gross by end of Q4. So that's the exit rate. How are you thinking about the trajectory of that metric into 2027, assuming a stable operating environment? I mean, what could that number look like maybe in the back half of '26 after that 6-month transition period you mentioned starts to abide after the large Q3 rollout?

Michael Welch

Just to clarify, we expect to be in the low 60s by the end of '27. So we'll get a little better with the fourth quarter and then kind of progress through it as we go through next year. And to Dan's point, kind of 2Q is when we start getting most of the stores into that 6-month window. So you'll see it in the back half of the year next year when we get kind of fully on.

And again, it's both a combination of increasing the gross profit, which will help the SG&A and making sure we get the cost out that will help the SG&A. So both these -- it's low 60s by the end of '27 is the goal.

Robert Saltzman

And then just one follow-up would just be, obviously, SG&A, but any sort of high-level thoughts on the business here into 2027? How are you thinking about the trajectory? And kind of how are you thinking about the rest of the business heading into next year? Just some really high-level puts and takes you guys are thinking about [ as you start to plan ].

Michael Welch

Yes. So it's really hard right now. We're still -- it feels like from a new vehicle perspective, it's probably going to be similar in terms of volume. PVRs reaching earlier kind of $2,750 to $3,000 is kind of where we see the range, and we're kind of in that range now. So I think that's kind of a range for next year.

Used cars, we talked about we're going to push on the volume side of the equation. PVR should kind of be in the range that they're at now, somewhere in that $1,750 range. F&I from a TCA perspective, we'll see some continued headwinds in the next year. And so we think the dealerships will have some improvements in F&I, but TCA will kind of offset that and make, I'll call it, F&I a little bit of a drag next year.

And then fixed ops, we think we can get back to growing fixed ops in that mid-single-digit range next year, and that will put SG&A kind of in that -- it will move throughout the year, but by the end of the year in that low 60s, but starting off mid-60s and kind of working its way down.

Operator

Our next question is from Daniela Haigian with Morgan Stanley.

Daniela Haigian

I think that was a really helpful overview of thoughts into next year. I'll kind of step back and ask more of a macro question. Have you seen any change in consumer behavior, whether that's trade down or substitution from you into used or deferring some service work? I know we've talked a little bit about this, but any greater sensitivity than you've seen in prior quarters?

Dan Clara

Yes. We've seen a little bit of a change. I think the longer that it goes with the high gas prices that we have, I mentioned this in the last earnings call that based on prior history, it takes about 6 months for consumers to decide whether they're going to get rid of the gas customers or not. And we're starting to see a little bit more of that.

Ironically, they're trading for -- from a big SUV V8 or what have you into still an SUV, but maybe in this case, a hybrid SUV that affords them the size, but still a much better miles per gallon.

And then from a declined services, I mentioned this earlier, based on what I track, I have not seen a drop in declined services staying pretty consistent. So I'm not seeing a change there from a consumer behavior.

Daniela Haigian

That's very helpful. And then on the used vehicle side, you said pushing volumes more. Is that -- is that a function of more off-lease supply coming online, so now you have more access to trade-ins? Or are you seeing greater competition to try and access those volumes?

Dan Clara

It's more about tweaking the way that we appraise cars, improving our look to book, which basically what that means is if I appraise 100 cars, how many did I trade for? It's a metric that we pay close attention to working with our freight operators on improving that metric. And then obviously, taking full advantage of the cars that we can buy through the service drive with the internal processes that we have.

Operator

Our next question is from John Babcock with Barclays.

John Babcock

Just firstly on the used vehicle market, it generally sounds like the wholesale market has been pretty soft there. What impact did that have on the GPUs? And also if you can just broadly talk about what's driving that. That would be helpful.

Dan Clara

Yes. It didn't have much of an impact on our PVR. As I mentioned before, 75% to 80% of our inventory comes from -- it comes from trade-ins, loaner cars and cars that we acquire internally. I will tell you that it is a metric that I measure every single week, and it is how much PVR do we make on a car that we traded-in versus the car that we bought at the auction.

The one thing that is guaranteed when you buy a car at the auction is you're the one that pays the most money for the car because you're the last one standing with your arm up. So naturally, your PVR is not going to be the same, but we normally make about 50% less than we make on a car that we trade-in, but there's a benefit. You get the internal gross profit, you get another unit in operation, you get to certify the car and then you get also the opportunity to protect the investment by offering a vehicle service contract or any of the other products that we offer.

John Babcock

And then next on M&A, I was wondering if you might be able to talk about what you're seeing in the market right now, both in terms of prospects and valuations and also when we should expect you to get more active there?

Dan Clara

Like Michael and I stated earlier, our number -- we have 2 major priorities right now. Our #1 priority is operational excellence now that the rollout is behind us. The second priority is -- with the operational excellence comes additional EBITDA and free cash flow. We want to go ahead and pay down the debt to get below 3x.

In the M&A, I've been seeing some deals still hitting the market. As you can see those deals, I'm sure that you are -- that you see what they're bringing. And I'd like to expand a little bit on this one because I would say that the private market transactions in our industry, they continue to show the value that buyers place on high-quality dealership portfolios.

We believe that Asbury stacks up very well with a strong mix of luxury and import franchises. We have very attractive markets and very valuable owned real estate. And I can't stress it enough. We own over 80% of our real estate. And we have TCA, which gives us with a nice growing stream, which we believe the market does not give us full credit for that business.

So therefore, when you put all that together, we believe our current share price does not reflect the underlying value of the business that we're seeing in some of these private markets deals that are going out there.

John Babcock

And then just last question quickly. You mentioned operational excellence and obviously, you have the Tekion benefits rolling through next year. Could you maybe talk about what other opportunities you have here to help take costs out on the SG&A line and/or just broadly to help improve volumes within the business?

Michael Welch

Yes. So on the SG&A side, not only the Tekion just makes us more efficient, but also just a lot of stuff going on with AI really helps us with those efficiencies as well and being able to automate some functions with that technology. And Tekion allows us the ability to deploy that AI easier.

But really, it's -- we've been -- this sounds bad, but we've been devoting a lot of our resources to getting Tekion rolled out. And so being able to deploy all those resources back into the 5 pillars, where it's growing new vehicles, growing fixed ops, growing used cars, like that focus and not being -- I won't say distracted, but just we've been having to put a lot of resources towards just the rollouts. That's just going to allow us to push the volume on the gross profit growth.

And that's really -- if we get back to growing gross profit in solid numbers and keep the expenses lean, that has a big benefit on the SG&A number -- our SG&A percentage of gross number.

Operator

Our next question is from David Whiston with Morningstar.

David Whiston

Could you just talk a bit about what effect, if any, interest rates and negative equity is having both for buying used and used vehicles and for making additional purchases in the service line?

Dan Clara

Yes. I will tell you that the biggest impact that I have seen or the one that comes up the most is negative equity. There's -- we're starting to see cars that were sold during the pandemic that are starting to come in. And so there is that negative equity that definitely impacting some brands more than others.

From an interest rate perspective, we have not seen a major shift, although I'm curious to see when OEMs are going to start supporting more leasing just because of the affordability that it allows somebody to get a newer car for less of a monthly payment.

David Whiston

Then on the brands where it is having an issue, are you losing those sales? Are you able to figure something out?

Dan Clara

Listen, it's hard to tell because, as you know, it is based on the consumer credit. If the consumer credit is it's, call it, 700-plus FICO score, your loan-to-value is going to be a lot more flexible. You can put that deal together depending on how much negative equity we're talking about. But that's on a case-by-case scenario.

And in some cases, if you have somebody that maybe is subprime or does not have a lot of down payment, yes, you do miss that deal or always try to find a solution. Is there a car that came out of loaner car that maybe puts you in a better book position that you can trade them out of it, and we explore every option available for us.

David Whiston

And then on the balance sheet, you talked about wanting to do some tuck-in acquisitions, but also paying down debt to get the leverage ratio to your target. So would the tuck-in deals involve tucking the credit line? Or would it be entirely internally funded without debt?

Michael Welch

Well, our first priority is getting the leverage down. And then at the current share price, it'd be share buybacks and then tuck-in acquisitions would be the last of what we use the capital for. But the goal is in the future, we should be able to do tuck-in acquisitions -- well, we should be able to do share buybacks and tuck-in acquisitions with our free cash flow. We want to get back to that below 3x just to have the optionality when something comes up to be able to go after it. Right now, we're just a little limited in terms of where the leverage is.

Operator

Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group.

Ryan Sigdahl

Two clarifications for us or follow-ons. But on the dock fees, I appreciate the more transparent approach relative to many of your peers. But curious from an absolute standpoint, if you expect dock fees to go lower from here for Asbury or if you think most of that is already built into at this moment? And then maybe just talk to the GPU $3000 from a new standpoint, normalization and if dock fees impact that from here?

Michael Welch

I don't expect dock fees to go down. Our approach has always been very simple with dock fees. We've never wanted to be the highest in the markets that we operate. We've always been in the middle for lack of a better term. So we're -- we're positioned the right way. I don't expect that to go down, and we'll continue to obviously -- to operate with full transparency.

The second part of the question, can you please remind me?

Dan Clara

The new vehicle. New vehicle PVR. Yes, at $3,000. For several quarters, we've been talking about our projection of anywhere between $2,750 to $3,000. You can see that actually, I believe new car PVR sequentially quarter-over-quarter went up $6 a car, if I remember correctly. So I believe that we're stabilizing there and it fits well within the range that Michael and I have been talking about it.

The one thing that is important to consider here is it doesn't mean that it's going to be a flat line. There's going to be ups and downs, seasonality, OEMs, incentives and what have you. But I think that, that target that you see is pretty much what we're seeing moving forward.

Ryan Sigdahl

Appreciate that. Then maybe just a quick one on SG&A to gross profit. I appreciate the commentary and kind of glide path from mid-60s to low 60s exiting next year. But are you willing to say at least directionally if you think '28 and beyond, you can go below the low 60s if it's kind of a linear improvement from there?

Michael Welch

Well, so I guess we're going to take it in stages. So we have, I'll call it, the AI and Tekion stuff that gets us into the low 60s. There are some things we're looking at in terms of, I'll call it, the digital vehicle transaction. And depending on where that goes, that could give us the ability to kind of push it below 60%. But that's -- I wouldn't say that's a linear path.

That's more of a next step path, and we just got to kind of figure out how that works with the software and the consumer and kind of how the consumer wants to behave on online and digital type transactions. So that's the low 60s with that new phase of digital vehicle sales transactions.

Ryan Sigdahl

So reasonable to assume kind of low 60s is the right run rate kind of in [ all years now ]?

Michael Welch

Yes. And again, until we kind of cross the bridge on -- I mean we're hoping '28, '29, but we got to do some homework and feeling out on how the consumer reacts to that and test it before we pull the trigger on that. But yes, I think low 60s until we can make that change.

Operator

Our next question is from Rajat Gupta with JPMorgan.

Rajat Gupta

Just wanted to follow up on parts and services. I think you talked about getting back to mid-single-digit range at some point next year. Are you already starting to see some signs of turnaround like in the fourth quarter here from down 2% same-store in the third quarter? Do you think you're going to be back in positive territory here in the fourth quarter? Just trying to understand the path towards that mid-single-digit range. Is it market-driven? Is it Tekion productivity driven? And then I have a very quick follow-up.

Michael Welch

Just a reminder, 47 stores went live this quarter. Fourth quarter will still have an impact for those stores. Like we're still in the -- I'll call it, fourth quarter is still in the heavy piece of Tekion. So I'll kind of -- I just want to put that up there, and I'll let Dan kind of answer the rest of it. But fourth quarter is still a pretty heavy Tekion impacted quarter just because the amount of stores that went live this quarter.

Dan Clara

Agree with Michael. And Rajat, just to give you more color again on -- yes, we're seeing progress in the stores or the markets that have been under Tekion for 6 months or more. And just as I repeated earlier, Florida, which just crossed the 6-month target, the market was up 3% in September. That's just for the month of September. And then Georgia was up for the month of September, 6.6%. So very encouraged by what we see, but I can't stress it enough.

Please don't forget that we rolled out 47 stores in the third quarter. all those stores are not going to be in the 6-month threshold that we require and that we have seen the progress being made until end of Q1. So you will see progress in Q4, meaning in the stores that continue to roll into the 6-month threshold, but we're not going to realize the full benefit of this as we go -- until we go into the end of Q1 and Q2 of 2027.

Rajat Gupta

Understood. And then just on F&I, we have been hearing at least from some private dealers that warranty attach rates are just taking a bit of like a hit given affordability pressures. I'm curious if you're observing any of that at your stores? Like how do you think F&I progresses, excluding obviously the TCA accounting noise, just on a core basis, what's your view there?

Michael Welch

Yes. So we have seen a little bit of a drop in terms of our mix of the products versus the financing side of the equation. But this quarter, we still grew F&I PVR at the store level, like excluding the TCA deferral, we grew at $119. So we're still able to grow the F&I number. We have the headwind of TCA deferral going through there, but we're still seeing nice progress at the store level on the F&I side. So we haven't seen a decrease on PVRs at the store level.

Dan Clara

This concludes today's call. Thank you very much, and we look forward to seeing you after Q4.

Operator

Thank you for your participation. You may now disconnect your lines.