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David Hult

Thank you, Chris, and good morning, everyone. Welcome to our fourth quarter earnings call. The performance of our business is a direct reflection of the efforts of our team members, who come to work each and every day striving to improve the guest experience. Their hard work translated into strong results for the fourth quarter and I couldn't be more proud of the team.
After our recent election, we saw an increase in traffic and sales throughout Q4. Overall, volume for same-store new vehicle was up 7% year-over-year, 12% sequentially, and same-store gross profit per new vehicle was up $149 compared with the third quarter of 2024.
In 2025, we expect new vehicle gross profit per vehicle somewhere in the $2,500 to $3,000 range. Our performance in used vehicles is consistent with our shift in strategy in mid-2024. Prioritizing profitability over volume given the supply challenges in the used vehicle market. While overall volume was essentially flat, our gross profit per unit increased for the second quarter in a row.
These results are particularly impressive when set against the backdrop of rising new vehicle incentives, which create headwinds on used vehicle pricing. We expect inventory challenges to persist throughout 2025.
Shifting to our parts and service business. I couldn't be more proud of how the team came together to deliver outstanding results for the quarter. On a same-store basis, gross profit for our fixed operations business was up 11%. And the all-important customer pay segment was up 13%. Looking ahead, we remain confident in a mid-single-digit growth rate for customer pay is sustainable. In parallel with our operational success, we remain keenly focused on cost discipline.
Our SG&A cost as a percent of gross profit fell for the second consecutive quarter, coming in at 63% on an adjusted basis. While we are proud of our results to make the business more efficient, our work here is not done. We continue to evaluate other opportunities to deliver a guest experience in a more efficient manner.
Our 4-store pilot with Tekion went live in October, and we're encouraged by the early feedback from our operators. From sales to service, this new platform has the potential to simplify the guest experience, improve team member efficiency, all at a lower cost per transaction.
Now for our consolidated results for the fourth quarter. We generated a record $4.5 billion in revenue, up 18% year-over-year, had a gross profit of $750 million, up 11% and a gross profit margin of 16.6%. Our same-store adjusted SG&A as a percentage of gross profit was 62%, and it was 63% on an adjusted all-store basis. We delivered a same-store adjusted operating margin of 6%. And an all-store adjusted operating margin of 5.7%.
Our adjusted earnings per share was $7.26 and our adjusted EBITDA was $254 million. Finally, thank you to our team members who continue to deliver and find innovative solutions to make our company better. I'm excited about the momentum we've built heading into 2025.
Now Dan will discuss our operational performance. Dan?

Daniel Clara

Thank you, David, and good morning, everyone. I would also like to thank our hard work and team members. You make a difference by providing a high level of service that powers our strong results. Thank you.
Now I'm going to give some updates on our same-store performance which includes dealerships and TCA on a year-over-year basis unless stated otherwise. Starting with new vehicles, same-store revenue was up 8% year-over-year and units were up 7%, driven by strong performance from a number of our luxury brands as well as Hyundai, Kia, General Motors and Ford.
New average gross profit per vehicle was $3,661, a sequential increase from the last time we spoke and in line with the typical seasonality and strength of luxury brands in the fourth quarter. A broad solid performance across our portfolio helped overcome the pressure on gross per unit as it relates to Stellantis, which was down substantially year-over-year. Our same-store new day supply was 47 days at the end of December.
Turning to used vehicles. Fourth quarter unit volume was down slightly versus prior year results. Used retail gross per unit was $1,584 which was $19 higher than third quarter 2024. We believe in prioritizing unit profitability at this point for the used car supply cycle.
At the same time, we are monitoring market conditions that may shape our strategy within the preowned business. Our same store used DSI was 37 days supply at the end of the quarter.
Shifting to F&I. We earned an F&I per vehicle retail of $2,238 improving sequentially over the third quarter 2024. The deferred revenue headwind of TCA contributed $40 of the $72 decrease in the same-store F&I PVR year-over-year.
For the past several quarters, we've discussed the timing of the rollout of Koons in Florida in the first half of 2025 and the impact it would have. Michael will walk you through the additional details on the financial impact regarding TCA. In the third quarter, our total front-end yield per vehicle was $5,040, reflecting the healthy gross per unit in F&I PVR.
Moving to parts and service. As David mentioned, our parts and service business excelled in the quarter. Our same-store parts and service gross profit was up 11%. For the quarter, we generated a gross profit margin of 57.9%, an expansion of 224 basis points. This expansion was driven by increased profitability of our higher-margin segments, which contributed 124 basis points for the growth.
In addition, I'd like to provide further visibility on the progress being made in our fixed operations by breaking out the components of our parts and service business.
Our largest portion and most profitable piece of the business, Customer Pay generated gross profit growth of 13%. In warranty, we were up 26%, driven by increased recalls. Wholesale parts and collision were down 5% and 6%, respectively. Our Western stores built upon their momentum in customer pay, posting a 21% growth in gross profit year-over-year, and we continue to see strong performance in our Eastern stores as well.
And finally, we retailed approximately 12,000 sales through Clicklane in the fourth quarter, a 6% increase over last year. This brought our total units retail to over 51,000 units for the year 2024, which is a 13% increase versus 2023.
We sold approximately 6,200 new units an 8% increase year-over-year. New vehicles made up 52% of our Clicklane sales. We view this ability to sell new as an important differentiating factor in the marketplace. I will close by once again expressing my gratitude for our hard-working team members as we focus our efforts to be the most guest-centric automotive retailer.
I will now hand the call over to Michael to discuss our financial performance. Michael?

Michael Welch

Thanks, Dan, and happy birthday. We are pleased with our fourth quarter results. Our teammates executed a high level and put the guest first, a great way to finish the year and head into 2025. And now I will discuss our financial performance in the quarter, along with some full year figures.
For the fourth quarter, adjusted net income was $143 million, and adjusted EPS was $7.26 for the quarter. Adjusted net income for the fourth quarter 2024 excludes net of tax, $11 million of noncash asset impairments, $5 million of losses related to Hurricane Milton and $1 million of income related to the proceeds from the termination of a franchise.
Adjusted SG&A as a percentage of gross profit came in at 63%, a sequential improvement over the third quarter. We were pleased by the team's discipline and agility to contain cost. We anticipate 2025 SG&A on a percentage basis to be in the mid-60s. Given the projected glide path of new vehicle GPUs and the investments in our business.
The adjusted tax rate for the quarter was 24.8%, and we estimate the full year adjusted tax rate for 2025 to be 25.3%. TCA generated $20 million of pretax income in the fourth quarter and $79 million for full year. The noncash deferral impact for the year was a benefit of $6 million or $0.22 per diluted share.
We anticipate offering TCA in our Florida market in Q1 and in the Koons platform in Q2. These rollouts, along with the increasing vehicle volume levels are likely to be a headwind to earnings. We anticipate 2025 TCA pretax income to be approximately $8 million, which includes a noncash deferral hit of $62 million or $2.35 per diluted share.
We expect the first half of the year to have a small deferral benefit before flipping to a negative deferral impact after the rollout of Florida and Koons. We expect the peak deferral to occur in 2026. We have outlined the estimated impact on EPS over the next several years on Slide 17 of the presentation posted to our website this morning.
In addition, we have included an example of a single TCA product life cycle and the effect it has on cash and GAAP. Please see the appendix for more detail. We hope this will better illustrate the mechanics of how to deal with TCA flows through our financials.
Now moving back to our results. We generated $688 million of adjusted operating cash flow for the full year 2024. Excluding real estate purchases, we spent $163 million on capital expenditures in 2024. We anticipate approximately $250 million in CapEx spend for both 2025 and 2026, depending on the timing of several significant investments, projects and permitting.
Free cash flow was $526 million for the year. We ended the quarter with $828 million of liquidity comprised of floor plan offset accounts, availability on both our used line and revolving credit facility, and cash, excluding cash and total care auto. Our transaction adjusted net leverage ratio was 2.85 times at the end of December.
Finally, effective capital allocation remains one of our top priorities, and we continually evaluate opportunities to grow the business in a disciplined approach.
I will close with saying thank you again to all of our teammates who are working to ensure both our current and long-term success.
This concludes our prepared remarks. We will now turn the call over to the operator and take your questions. Operator?

Question and Answer Session

Operator

Thank you. At this time, we'll be conducting a question-and-answer session. (Operator Instructions)
John Murphy, Bank of America.

John Murphy

Good morning, guys. A lot of good data points to ask questions about here. But David, just wanted to focus on GPUs. Obviously, you got the seasonal benefit sequentially here. But I don't know if you can tease out how much of that is the seasonality and how much of this strength in new GPU specifically is a result of the market kind of bottoming out here on pricing and GPUs and maybe we're seeing much more resilience than I think people were fearing. So I mean how do you think about that? How much was seasonality, how much it is reaching this leveling off point?

David Hult

Thanks, John. It's a great question. And obviously, it's complicated to answer. If you look at our day supply, we're around a 49-day supply and new. Within that, we have some brands that have a seven-day supply and some that have almost a 90-day supply. What I would tell you, and I'll speak specifically to Asbury and referenced the past for this, everyone's focused on 2019 numbers and kind of comparing off of that.
I stated it before, I'll state it again, Asbury is a different company today than in '19, our model mix is different. Our brand mix is different, and we're in different markets. Almost all the acquisitions we've made over the years in the last five years, their GPUs were accretive to what Asbury was doing. So I think we'll always stay above that number for lack of a better term.
As we enter into this year, I think we had the biggest impact with Stellantis based on our size and the number of rooftops we have. It was still a huge material hit to us in the fourth quarter would have been significantly better if they just performed average for us. We do believe that they're going to get their act together and improve, which should actually give us a little bit of a tailwind in the future when that happens. It's not there yet.
But it's just all brands are not floating the same, and it's difficult to predict what the future is going to be. We're being optimistic with some of the brands that we have. (inaudible) and Lexus have a very low day supply, a good gross profit but so do a lot of other brands. And we have some import brands that were up 40% year-over-year in the quarter and some that were backwards 2%. So it's really mixed right now. And I think there has to be a lot of work put into each of our peers and looking at the brand segments and what they have to really calculate what the future holds.
But as we sit here today, we think we're entering a more stable market. I mean with the new administration, it's a little bit more pro business with the shift from EVs coming back to ICE we see these are all benefits. And again, we're in a situation where the average age of the car is 12.5 to 13 years old, and you can see in our slide deck, the average miles on a car that we're servicing is over 71,000 now keeps creeping up and we have some stores over 90, which means we're doing a great job at retaining them after the warranty is over.
So we're optimistic about '25. There will certainly be some headwinds coming our way for sure. We're excited that every month, we get closer to the Stellantis fixing the issues, which will have an impact on our business.

John Murphy

That's very helpful. And then just a second question on Tekion in the 4-store test. You mentioned a couple of things I'll paraphrase efficiency is improved, consumer experience has improved, and it's all at a lower cost. So I don't know, maybe you can maybe get into a little bit more specifics about like what the delta is versus your other DMS. And what the potential savings are and then maybe business opportunity to drive top line with Tekion?

David Hult

Yes. I would tell you, without getting into too much particulars, switching from Tekion to CDK, one large pickup is we reduce our plug ons by about 70%. So you reduce those costs and you reduce the toll fees that the DMS charge for plug on. So that's one large cost savings there. The other one is, it's a heck of a lot easier to onboard and train someone with Tekion because of the way the software is designed. It just makes you far more efficient and more transparent with the guests.
Our productivity numbers, even in the pilot in the first few months, where you expect things to be a little bit rocky our productivity per employee went up in all the stores, some slight, some more than others, but a positive sign.
At the end of the day, which is close to two years from now, 1.5 years anyhow, when we're fully rolled out on Tekion, there will be a material savings in SG&A costs just because of the -- what I mentioned earlier with the software application. So too early to say only 4-store product right now. We're very encouraged. We're getting great feedback from our associates. Some of the leaders said, it used to take us five days to onboard a service adviser. We can do it in a day now because the technology is so efficient.
It also empowers our teammates more to handle the guests without going anywhere else. So transparency efficiency is going to raise our level of service. Easy use is going to make it a big differentiator for our teammates. And to us, the exciting part is the software is going to increase our productivity and make us more efficient, allowing our folks to really create the experience.

John Murphy

I'm sorry, if I could just sneak one in. You mentioned the sort of the Trump bump in showroom traffic and business just in general. A lot of concern if that might burn out over time, and that might just be somewhat transitory. What are you seeing in January? I mean maybe without even giving exact numbers, but just trying to understand if you're seeing that momentum continue into January.

David Hult

January is kind of mixed and kind of like the days supply, it really depends upon the brand. And then just from our geographics, this January has been worse than most January in the last four or five years with weather. We've had a lot of stores and a lot of our states shut down for multiple days with weather. So that's going to impact us. If you take those days out, which you can't, we're seeing an increase over prior year. Not dramatic, but an increase.
But I think January traditionally is a slower month. But we're encouraged with what we're seeing in parts and service and sales so far. I don't think it's going to burn out with the new administration. They seem to have an agenda. They seem to be very business-friendly. Going back to that average age of the car where it is, this has the potential to be a fairly, I would say, strong but certainly a stable year for us in the automotive industry.

John Murphy

Yes. I guess you probably have a few more of those in front of you, at least in my opinion.

David Hult

Thank you.

Operator

Raj Gupta, JP Morgan.

Raj Gupta

Great. Thanks for taking the question. Firstly, just on the SG&A, the 63% level was definitely a very solid number. I was curious if there's any way to unpack that a little bit. If you look at third quarter versus fourth quarter, our gross profit went up $40 million, SG&A got up $10 million. I'm assuming it's primarily given due to some of the CDK related payments that you had to still make your sales force for the lost sales that you did not have to in the fourth quarter. But curious like if you could unpack that on what drove that sequential leverage. And then I just have a follow-up on TCA. Thanks.

David Hult

Raj, this is David. I'll start and then Michael can come in. We mentioned prior quarter that we're working on cost reductions. So I think part of it is you're seeing the cost reductions, part of it is the increase in gross profit and the incremental benefit we get for every incremental dollar. I would tell you and just not picking on them, but Stellantis was a major headwind to us materially in the fourth quarter that absolutely hurt SG&A. So there's an opportunity for us when the Stellantis writes itself, if you will, that we could improve even more.
We've been very focused on cost discipline. We think we have our personnel expense at a pretty good number. We have an opportunity to increase our efficiency per associate, which leaves a little bit of savings there as well. And we've been pretty disciplined over time regarding our operating cost and being conservative.
So while it was a nice job in the quarter, looking out from our side, looking at the detail, there was a lot of opportunity there that just with a little bit different brand mix would have had better results.

Michael Welch

Raj, to your other question, second quarter had the impact and a little bit in the third quarter for CDK, but not a whole lot. So really, it's just the cost savings and the increase in both fixed ops and new vehicle margins that helped the number.

Raj Gupta

Got it. And just a follow-up on the TCA. Just looking at what you had provided us last quarter, it looks like the deferral headwinds are a lot higher. Now for '25 and '26, curious what's driving that? Is it just a higher expectation for unit growth or this rollout cadence having higher claims. I'm just curious why that drag is higher than what you had like three months ago?

Michael Welch

Yes. So it's kind of a perfect storm of the roll off of '18 and '19 from the legacy LHM stores is kind of at the end, early this year. And as volume comes back up, we're kind of at the low point for the 5-year kind of cumulative SAAR. And so now you're adding that volume back.
So you have higher expectations on SAAR and used vehicle growth, the ending of those good years from LHM and then Florida and Koons rolling on. And so you basically lose the good news from the old years, and all you have is kind of a deferral hit for growing SAAR, growing used cars and Florida and Koons coming fully on.

Raj Gupta

Got it. Got it. And just as a follow-up, just last one. The F&I numbers excluding like the headwind was a pretty nice acceleration. Was that just mix? Was there like penetration increase on contracts or like the non-service contract more ancillary stuff? I'm just curious what drove that because it's a pretty solid number.

Daniel Clara

Hey, good morning, Raj. We just continue to focus on our bottom 20%. We continue to focus on the training and believe that to the extent that we continue to make improvements there, the number moves. So a great job to the training team, great job to the field team, but this is history, and we've got to continue to trend.

David Hult

And Rajat, just to add on to that. I would say nothing has changed as far as the mix. It's still one third finance reserve and two third product sales, probably with the lift in cost of sale a little bit and the down payments coming down a little bit. That gives you a little bit of a tailwind in your PVR.

Raj Gupta

Got it. Thanks.

David Hult

Thank you.

Operator

Jeff Lick, Stephens.

Jeff Lick

Good morning guys. Congrats on a fine quarter and extend my happy birthday wishes to Dan. I was wondering if you could just talk about in terms of the -- everyone's a little more excited about the SAAR environment, for 2025. And obviously, that's kind of spurred on by what happened in Q4. David, just to the extent that, obviously, to sell more units you are going to need more inventory.
I'm just curious kind of there's a relationship between the more inventory you add that could put pressure on GPUs because the marginal sale might not be as profitable as the last sale. Just any thoughts there just on the relationship as we build inventory in the GPU environment?

David Hult

Jeff, you're spot on. The direct correlations there, the higher the day supply, the lower the margin. A lot of the OEMs are still being more disciplined than in the years past, which is keeping it tighter, which is great. But certainly, some OEMs have been penalized with that. But even in our circumstance, let's just say, we don't go with the market in the sense that we're more disciplined on our days supply, and we have a lower day than the market.
It still impacts us because we have to compete within the market. So the key is really a balanced day supply in the markets that where we do business. And there's always conversations with our OEM partners to do the best job we can. And as a domestic General Motors is a great example of one that's done a fantastic job in managing the days supply over time.

Jeff Lick

I guess just a quick follow-up, David. I'd be curious, as you've listened to all the questions and kind of parse through everything that's being written, as you look at 2025, what do you think is the thing that the investment community just under-appreciate or maybe doesn't understand where there's the biggest chance for a variance relative to expectations in 2025?

David Hult

Sure. It's always subjective. But being an operator, you tend to be optimistic. There has been a depletion of the used vehicles that are out there because of what happened during COVID, we'll start to see a benefit in '26. Asbury has a headwind of TCA. But as you can look in our earnings -- our investor deck, there's a huge tailwind. A few years down the road that it's going to make us have a material difference, we believe, against our peers.
As it relates to '25, I would tell you the demand is still strong. There's a lot of positive momentum with the new administration. We believe that we can feel it and hear it in our markets. The average age of the car, our mile is going up, the high-margin business we have in parts and service. I think the revenue numbers of parts and service are less relevant than the gross profit numbers, and that's where the focus should be. But then we still have the potential to grow our fixed operations business.
So I would tell you, like usual, everyone seems to fear their space and always think they're worse. I would kind of invert that and look at it with consolidation that's happening with more consolidation coming with EVs being pushed out a little bit. The average age of the vehicle, this looks like a pretty sustainable market for a period of time. That can certainly be thrown off by a world war or something else going on that is not foreseen.
But generally speaking, the industry is upbeat about 2025. We're certainly upbeat with what we've done and what we've built. Selfishly, we know Stellantis will fix itself at some point when it does, it's really going to be a tailwind for us.

Jeff Lick

Great. Well, impressive quarter and best of luck in 2025.

David Hult

Thank you.

Operator

Ryan Sigdahl, Craig Hallum Capital Group.

Ryan Sigdahl

Hey, good morning guys. It sounds like a lot of optimism kind of with Q4 and seeing improved trends, Trump EV switching back to ICE, et cetera, et cetera, et cetera. Given new vehicle GPU, that glide path lower decelerated in the last 2 quarters were better than expected, flatlined a little bit.
I guess your commentary on the outlook for 2025, if I caught it right, it was $2,500 to $3,000 GPU. That implies a pretty big acceleration, I guess, lower on the GPU. So I guess, what are you currently seeing? Or what's the cause of that?

David Hult

Ryan, it's a fair point, a fair question. And you're right, based upon the trend, it's probably a little draconian. We anticipate SAR growing a little bit this year. We don't have insight beyond 45, 60 days, what's coming for inventory and what people are building and how they're going to try and adjust to that new SAAR number. And what the fleet business is going to look like as well. So I would tell you it's probably a conservative number at this point in time and may not happen until later in the year than in the first half of the year.
But I think that potential lift in the fourth quarter that we see is really driven by luxury. And the one thing that's true about our space, it's seasonal. It just is. I mean January is a slower month. November is a slower month. March is a bigger month. There are certain months that you just go with the seasonality of it. So I think in the short term, the PVRs will hold up -- the gross per unit will hold up better. But over time, it may adjust a little bit.
And from our standpoint, we're about a 40% mix of the import. And about a 30% mix in domestic. And when you look at our domestic PVR in the tables, overall, it doesn't look bad. I would tell you two of the three brands are a real healthy number. And the other brand is really dragging that number down. So there's opportunity there.
And as I said earlier, with the acquisitions we made out west and the mountain states with some of these domestic franchises, the GPUs are just higher than what legacy Asbury was, and we think that will stay sustainable going into the future. So probably to sum it up, probably a little bit too aggressive in the comments for the first half of the year, really just trying to predict what's going to happen, which may or may not happen.

Michael Welch

Yes. I mean to me, that $2,500, $3,000 is kind of where we think we end up as kind of the new normal. The question is, when is it mid to late next year '25 or is an early '26, but that's more of a projection of where we think the PVR shake out at for kind of that new normal.

Ryan Sigdahl

So just to be clear, that is a new normal steady state versus that's what you expect on average for the year.

Michael Welch

Correct. That's where we end up at the end. Question mark on when that occurs during '25.

Ryan Sigdahl

Yes. But the average for the year will be higher just because the starting point where we are today is higher than that.

David Hult

Correct

Ryan Sigdahl

Very good. And then Stellantis, I know a lot of talk and don't want to get too specific on one OEM and what's going on. But it feels like they've made some nice improvements to help dealers out giving a little more incentives, pricing help, et cetera, but it sounds like a pretty big headwind in Q4. So I guess, given the changes that were made in the fall, what else needs to happen there? Or I guess was it just kind of churning through and cycling and getting those initiatives kind of running to get that in a better place?

David Hult

Ryan, this is David. I'll start and then Dan can jump in. I would tell you they brought the inventory day supply down, which was way out of control, which is great, still too high, but a big improvement. But they had to throw a lot more incentives and we had the wrong inventory on the ground and not just us, our peers as well, competitors. So you had to work through a lot of selling the vehicles that really weren't the right vehicles for the market with heavy incentives, so it's still very low GPUs.
As we move forward with better inventories more in the sense of the right models with the right equipment at the right price has the potential to help GPU. So there's upside there with them bringing the right vehicles and right equipment with more growth because it will be higher demand. Fourth quarter was more about getting the inventories down and pushing through with the incentives, but really selling a lot of inventory that wasn't highly desirable to the consumer.

Daniel Clara

Ryan, the only item that I would add is there were some restrictions any time that we had an allocation on what was available or not available to order. We're starting to see some of those restrictions lifted, which allows us to order the cars with the options that the consumer wants and the turns faster. So from a short term, as that starts to kick in, we're excited about that. The overall sentiment from the operators when I speak to them, the Stellantis stores, they feel a shift but it's not going to happen overnight. There's also -- they abandoned some products and models that were quick volume because of that we lost market share with Stellantis and all that is being talked about being brought back, but that is going to take some time. So now essentially just -- we just got to put to fruition everything that has been laid out by the Stellantis leadership team and we need to execute at the store level as it comes around.

Ryan Sigdahl

Helpful. Thanks David, Michael and Happy Birthday, Dan. That's it for us.

Daniel Clara

Thank you.

Operator

(Operator Instructions)
Brett Jordan, Jefferies. Please proceed with your question.

Bret Jordan

Hey. Good morning, guys. [Logs] Stellantis one more time. I guess following up on the last question, does it feel like the GPU is sort of bottomed here if their production mix is more in line with customer demand and volumes are coming down from an inventory standpoint. It's not continuing to step down, but kind of flatlining?

David Hult

It's a great question. No way to know in the future. But in my opinion, yes, I would say the fourth quarter was the low point in pushing through the inventory that was overpriced and really not as desirable. So there should be some upside from there. Dan, do you?

Daniel Clara

I agree.

Bret Jordan

Okay. And then a question on the cost per pay service, obviously, really strong. It doesn't appear you're driving that with promotions given the margins are strong. But sort of what do you attribute the strength in customer pay to? Is it capacity expansion or somehow better reaching the customer post warranty?

Daniel Clara

I'll start Bret. Good morning. This is Dan. I'll start and then David can add whatever I missed. We talked about this in several quarters about the whole cycle of the guest experience, and it all starts with that proper multipoint inspection and then the tools that we installed about a year ago in our western stores that were already being utilized in the legacy stores.
So a big part of what you're seeing there is just a more efficient way to inspect the cars, a more efficient and a more guest-centric way to present the recommended services to the consumer in a more efficient way for them to approve or decline in that service.
In addition to that, the store level is doing a pretty good job retaining customers. As David mentioned, our average mileage are 71,000 miles. So that means they're doing a good job retaining the guest after the warranty expires. And with that higher mileage, it comes with a maintenance items that break and they need to be taken care of and repairs or what have you. So it's a combination of training, execution of the tools and then and ultimately delivering a much more efficient guest experience.

David Hult

And to add on top of that, I would tell you, we've been fortunate with our hiring over the last 1.5 years, adding some great leadership into our western stores, we've had it in our eastern stores all along and people make the difference in this business. And some of our new leadership that has come in has just made a material difference in really driving better results.
And the good news is there's still good upside for us. For the year overall, we had a 5% increase in tech headcount, which is a benefit to us but we still have a lot of opportunity to grow our space without adding brick-and-mortar. So again, it's on us to offer a higher level of service, get better at what we do. And I think we're making great strides in that. And you can see the material impact the team has had out west.

Bret Jordan

Thank you.

David Hult

Thank you.

Operator

David Whiston, Morningstar.

David Whiston

Good morning. Just on the possibility of Trump tariff threats, the 25% and whatnot. I mean as the dealer, you're the importer here or do you have any kind of contingency plan or have you had discussions with the OEMs on sharing the cost burden? Or are you just going to have to either eat it or pass it all through to the consumer if it happens?

David Hult

Yes. David, this is David and others can jump in. We haven't had any conversations with the manufacturers yet. I think it's too early to call. A lot of the products are made in the US, even on the import side. We have a healthy parts and service business with the average age of the car out there and the used car business is out there as well.
I think always at the end of the day, we fear something more than we should, and it tends to work itself out. And I don't pretend to have any inside knowledge because I don't. But I assume this is going to be one, it's going to get worked out. I'm sure the administration understands how important the retail automotive space is to the GDP number.

David Whiston

Thank you. And on affordability post election, have you noticed any kind of, I guess, reduction in consumers' concerns about affordability because they feel better post election? Or is affordability still a really major problem for both new and used?

Daniel Clara

David. Good morning. This is Dan. Back to David's comment, we did see an uptick after the election. And it feels like the affordability is question and issue is still up there, but the sentiment is much more positive and customers are, as we saw it, there was pent-up demand and it took place in the fourth quarter.

David Hult

And David, I would add to that in the fourth quarter because it's always strong with luxury. We had the opportunity to have a better quarter than what we did. We were limited by product availability. Our luxury customers are they can handle the adversity of a down market or anything else. The demand was there. In some cases, we just didn't have the product to sell them, and there was more opportunity, which really held up the margin, as you can see with luxury.

David Whiston

And what was the $11 million noncash impairment for?

Michael Welch

So each year, at the end of the year, we have to do our annual impairment test and go through some stores. And so we had some stores out west that we had some impairments on just as we went through kind of the cash flow model for those stores. So about five stores had impairments this year.

David Whiston

Thank you.

David Hult

Thank you.

Operator

We've reached the end of the question-and-answer session. I'd now like to turn the call back over to David Hult for closing comments.

David Hult

Thank you, operator. This concludes the call today. We appreciate your participation and look forward to talking -- discussing the Q1 with you in the future. Have a great day.

Operator

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.