v3.25.2
Leases
 6 Months Ended
Jun. 30, 2025
Leases [Abstract]  
Leases
NOTE 15 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of June 30, 2025, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, inspection and reconditioning centers, auction locations, storage, parking and corporate offices. The initial terms expire at various dates between 2025 and 2038. Many of the leases include one or more renewal options ranging from one to
twenty years and some contain purchase options. The Company leases and subleases certain of its real estate to third parties. Lease and sublease income for the three months ended June 30, 2025 and 2024 was $2 million and $1 million, respectively, and for the six months ended June 30, 2025 and 2024 was $4 million and $3 million, respectively, is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

Refer to Note 6 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in current portion of long-term debt and long-term debt on the accompanying unaudited condensed consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the three and six months ended June 30, 2025 and 2024 were as follows:

Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets$23 $25 $46 $51 
Interest obligations under finance leases2 3 5 7 
Total finance lease costs$25 $28 $51 $58 
Operating leases:
Fixed lease costs to non-related parties$16 $14 $32 $30 
Fixed lease costs to related parties1 1 2 2 
Total operating lease costs$17 $15 $34 $32 
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties$49 $46 
Operating lease liabilities to related parties$2 $2 
Interest payments on finance lease liabilities$5 $7 
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities$42 $41 
Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of June 30, 2025:

Operating Leases (1)
Finance Leases
Related Party (2)
Non-Related PartyTotal OperatingTotal
(in millions)
Remainder of 2025$44 $1 $51 $52 $96 
202673 2 99 101 174 
202737 2 93 95 132 
202810 2 84 86 96 
20293 2 66 68 71 
Thereafter1 — 210 210 211 
Total minimum lease payments168 9 603 612 780 
Less: amount representing interest(12)(1)(138)(139)(151)
Total lease liabilities$156 $8 $465 $473 $629 
(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.
(2) Related party lease payments exclude rent payments due under the DriveTime lease agreements for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of June 30, 2025 and December 31, 2024, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of June 30, 2025 and 2024 were as follows, excluding short-term operating leases:

As of June 30,
20252024
Weighted-average remaining lease terms (years)
Operating leases6.87.5
Finance leases2.43.0
Weighted-average discount rate
Operating leases7.0 %7.2 %
Finance leases6.0 %6.0 %
Leases
NOTE 15 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of June 30, 2025, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, inspection and reconditioning centers, auction locations, storage, parking and corporate offices. The initial terms expire at various dates between 2025 and 2038. Many of the leases include one or more renewal options ranging from one to
twenty years and some contain purchase options. The Company leases and subleases certain of its real estate to third parties. Lease and sublease income for the three months ended June 30, 2025 and 2024 was $2 million and $1 million, respectively, and for the six months ended June 30, 2025 and 2024 was $4 million and $3 million, respectively, is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

Refer to Note 6 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in current portion of long-term debt and long-term debt on the accompanying unaudited condensed consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the three and six months ended June 30, 2025 and 2024 were as follows:

Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets$23 $25 $46 $51 
Interest obligations under finance leases2 3 5 7 
Total finance lease costs$25 $28 $51 $58 
Operating leases:
Fixed lease costs to non-related parties$16 $14 $32 $30 
Fixed lease costs to related parties1 1 2 2 
Total operating lease costs$17 $15 $34 $32 
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties$49 $46 
Operating lease liabilities to related parties$2 $2 
Interest payments on finance lease liabilities$5 $7 
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities$42 $41 
Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of June 30, 2025:

Operating Leases (1)
Finance Leases
Related Party (2)
Non-Related PartyTotal OperatingTotal
(in millions)
Remainder of 2025$44 $1 $51 $52 $96 
202673 2 99 101 174 
202737 2 93 95 132 
202810 2 84 86 96 
20293 2 66 68 71 
Thereafter1 — 210 210 211 
Total minimum lease payments168 9 603 612 780 
Less: amount representing interest(12)(1)(138)(139)(151)
Total lease liabilities$156 $8 $465 $473 $629 
(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.
(2) Related party lease payments exclude rent payments due under the DriveTime lease agreements for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of June 30, 2025 and December 31, 2024, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of June 30, 2025 and 2024 were as follows, excluding short-term operating leases:

As of June 30,
20252024
Weighted-average remaining lease terms (years)
Operating leases6.87.5
Finance leases2.43.0
Weighted-average discount rate
Operating leases7.0 %7.2 %
Finance leases6.0 %6.0 %