Driveway Vehicle Solutions (LMO) Q3 2026 Earnings Report

The call was predominantly positive. Earnings, used vehicle profitability, DFC income and credit performance, U.K. operations, cash flow, capital allocation, and operating-efficiency initiatives all improved or remained strong. The main challenges were lower new vehicle revenue and units, reduced F&I per unit, soft U.S. after-sales volumes, a remaining used vehicle pricing gap, fourth-quarter seasonality, and unfavorable economics for potential Canadian Chinese-OEM expansion.

Management said Pinewood integration should happen “by the end of 2028,” with the drive to “a sub 60% SG&A” trailing the rollout by “12 to 24 months,” while the long-term target remains “below 60% of gross profit” and “$2 of EPS for every $1 billion of revenue.” DFC penetration is climbing toward “20% or more,” with “continued year-over-year growth and profitability” expected; management also said it produces “almost $1.5 billion in free cash flows a year,” likes leverage “less than three times,” and remains comfortable in the “3x leverage range.” Used GPUs should continue to climb “above the $2,000 GPU level” into 2027, although the used car market “typically does soften in Q4,” and Q4 inventory was “close to 60 days,” with “no abnormalities” expected.