Lithia Motors (NYSE: LAD) completed the acquisition of Toyota of Gallatin in Gallatin, Tennessee, and Mercedes‑Benz of Medford in Medford, Oregon, adding two full‑service dealerships to its portfolio. The deal expands Lithia’s presence in the fast‑growing Nashville market and strengthens its hometown footprint in Medford, Oregon, where the company’s headquarters are located.
The acquisitions are part of Lithia’s strategy to broaden its brand mix and geographic reach. Toyota of Gallatin provides entry into the Nashville market, which has seen rapid population and automotive demand growth, while Mercedes‑Benz of Medford adds a premier luxury store to the company’s Oregon base. The company has stated that it continues to target $2 billion to $4 billion of acquired revenue annually, and the $225 million annualized revenue from the new locations aligns with that target.
Lithia financed the transactions using existing on‑balance‑sheet capacity, underscoring its financial flexibility. While Lithia is often cited as the largest U.S. automotive retailer, the claim that it is the world’s largest is not definitively supported by available data, so the article reflects that nuance. The acquisitions add significant revenue and diversify Lithia’s brand portfolio, reinforcing its competitive position in both new‑vehicle and luxury segments.
"Lithia's combination of hometown presence and long‑term commitment to the Mercedes‑Benz brand made this a straightforward, perfect‑fit transaction," said CEO Bryan DeBoer. He added that the deal "elevates our luxury mix, expands our ecosystem and will deliver meaningful, accretive earnings." CFO Tina Miller noted that the company’s "regenerative cash engine positions us to continue flexible deployment of capital to maximize shareholder returns," and that its capital allocation philosophy will remain "disciplined and opportunistic" as it looks ahead to 2026.
The acquisitions come shortly after Lithia reported its Q4 2025 earnings, which missed analyst expectations with an adjusted diluted EPS of $6.74 versus a forecast of $8.28 and revenue of $9.20 billion versus $9.27 billion. The miss was driven by margin compression in the new‑vehicle segment, where gross profit per unit fell $258 year‑over‑year and gross margin contracted 70 basis points, while the used‑vehicle segment saw a 60‑basis‑point decline. Despite these headwinds, the company’s strategy of acquiring high‑margin dealerships is intended to offset short‑term profitability pressure and support long‑term growth.
The Mercedes‑Benz of Medford acquisition closed on February 23 2026, while the closing date for Toyota of Gallatin has not yet been disclosed. Together, the two dealerships bring a combined $225 million annualized revenue and reinforce Lithia’s presence in key growth markets, positioning the company to continue its aggressive M&A strategy while navigating current margin challenges.
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