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Auto Loans Receivable | 3 Months Ended
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Mar. 31, 2025
Receivables [Abstract] |
Auto Loans Receivable | AUTO LOANS RECEIVABLE Auto loans receivable primarily consist of amounts due from customers related to retail vehicle sales financed through AutoNation Finance, our captive auto finance company. Auto loans receivable are presented net of an allowance for expected credit losses. Auto loans receivable represent a large group of smaller-balance homogeneous loans, which we consider to be part of one class of financing receivable and one portfolio segment for purposes of determining our allowance for expected credit losses. Auto Loans Receivable, Net The components of auto loans receivable, net of third -party unearned discounts and allowances for expected credit losses, at March 31, 2025, and December 31, 2024, are as follows:
| March 31, 2025 |  | December 31, 2024
Total auto loans receivable | $ | 1,451.3 |  |  | $ | 1,103.8 |
Accrued interest and fees | 9.6 |  |  | 8.2 |
Deferred loan origination costs | 4.3 |  |  | 4.2 |
Less: unearned discounts | (0.6) |  |  | (4.3) |
Less: allowances for expected credit losses | (66.9) |  |  | (54.8) |
Auto loans receivable, net | $ | 1,397.7 |  |  | $ | 1,057.1 |
Credit Quality We utilize proprietary credit scoring models to rate the risk of default for customers that apply for financing by evaluating customer credit history and certain credit application information, including information such as income, collateral, and down payment. The scoring models yield credit program tiers that reflect our internal credit risk ratings and represent the relative likelihood of repayment. The assigned credit tier influences the terms of the agreement, such as the required loan-to-value ratio and interest rate. After origination, credit tier assignments by customer are generally not updated. We monitor the credit quality of the auto loans receivable on an ongoing basis and also validate the accuracy of the credit scoring models periodically. Loan performance is reviewed on a recurring basis to identify whether the assigned credit tiers adequately reflect the customers’ likelihood of repayment, and if needed, adjustments are made to the scoring models on a prospective basis. Auto Loans Receivable by Major Credit Program The following tables present auto loans receivable as of March 31, 2025, and December 31, 2024, disaggregated by major credit program tier, in descending order of highest likelihood of repayment:
|  |  |  | Fiscal Year of Origination |  |
As of March 31, 2025 |  | Weighted Average FICO Score |  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior to 2021 |  | Total
Credit Program Tier(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Palladium |  | 734 |  | $ | 164.9 |  |  | $ | 174.6 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 339.5 |
Rhodium |  | 701 |  | 85.7 |  |  | 134.8 |  |  | 15.2 |  |  | 0.1 |  |  | — |  |  | — |  |  | 235.8 |
Platinum |  | 652 |  | 183.7 |  |  | 485.4 |  |  | 74.6 |  |  | 1.5 |  |  | 3.4 |  |  | 0.9 |  |  | 749.5 |
Gold |  | 624 |  | 9.3 |  |  | 60.3 |  |  | 22.3 |  |  | 0.9 |  |  | 6.1 |  |  | 1.3 |  |  | 100.2 |
Silver |  | 574 |  | 0.2 |  |  | 0.2 |  |  | 12.0 |  |  | 1.0 |  |  | 4.3 |  |  | 0.9 |  |  | 18.6 |
Bronze |  | 549 |  | 0.1 |  |  | 0.1 |  |  | 3.7 |  |  | 0.2 |  |  | 2.2 |  |  | 0.4 |  |  | 6.7 |
Copper |  | 562 |  | — |  |  | — |  |  | 0.1 |  |  | — |  |  | 0.8 |  |  | 0.1 |  |  | 1.0 |
Total auto loans receivable |  | $ | 443.9 |  |  | $ | 855.4 |  |  | $ | 127.9 |  |  | $ | 3.7 |  |  | $ | 16.8 |  |  | $ | 3.6 |  |  | $ | 1,451.3 |
Current-period gross write-offs |  | $ | 0.1 |  |  | $ | 8.5 |  |  | $ | 4.5 |  |  | $ | 0.4 |  |  | $ | 1.0 |  |  | $ | 0.2 |  |  | $ | 14.7 |
|  |  |  | Fiscal Year of Origination |  |
As of December 31, 2024 |  | Weighted Average FICO Score |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior to 2020 |  | Total
Credit Program Tier(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Palladium |  | 734 |  | $ | 194.0 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 194.0 |
Rhodium |  | 702 |  | 147.6 |  |  | 16.9 |  |  | 0.1 |  |  | — |  |  | — |  |  | — |  |  | 164.6 |
Platinum |  | 651 |  | 525.1 |  |  | 82.3 |  |  | 1.7 |  |  | 4.0 |  |  | 1.0 |  |  | 0.1 |  |  | 614.2 |
Gold |  | 623 |  | 64.9 |  |  | 25.0 |  |  | 1.3 |  |  | 7.3 |  |  | 1.6 |  |  | 0.1 |  |  | 100.2 |
Silver |  | 574 |  | 0.3 |  |  | 13.4 |  |  | 1.2 |  |  | 5.4 |  |  | 1.2 |  |  | 0.1 |  |  | 21.6 |
Bronze |  | 551 |  | 0.1 |  |  | 4.0 |  |  | 0.2 |  |  | 2.8 |  |  | 0.6 |  |  | — |  |  | 7.7 |
Copper |  | 562 |  | — |  |  | 0.2 |  |  | — |  |  | 1.1 |  |  | 0.2 |  |  | — |  |  | 1.5 |
Total auto loans receivable |  | $ | 932.0 |  |  | $ | 141.8 |  |  | $ | 4.5 |  |  | $ | 20.6 |  |  | $ | 4.6 |  |  | $ | 0.3 |  |  | $ | 1,103.8 |
(1) Classified based on credit grade assigned when customer was initially approved for financing.
Allowance for Credit Losses The allowance for credit losses represents the net credit losses expected over the remaining contractual life of our auto loans receivable. The allowance for credit losses is determined using a vintage-level statistical model that captures the relationship between historical changes in gross losses and the lifetime loss curves by month on book, credit tiers at origination, and seasonality, adjusted for expected recoveries based on historical recovery trends. The credit loss model also incorporates reasonable and supportable forecasts about the future utilizing a forecast of a macroeconomic variable, specifically, the change in U.S. disposable personal income, which we believe is most strongly correlated to evaluating and predicting expected credit losses of our auto loans receivable. We utilize a reasonable and supportable forecast period of one year, after which we immediately revert to historical experience. We periodically consider whether the use of alternative variables would result in improved credit loss model accuracy and revise the model when appropriate. We also consider whether qualitative adjustments are necessary for factors that are not reflected in the quantitative methods but impact the measurement of estimated credit losses. Such adjustments include the expectations of the impact of recent economic trends on customer behavior. The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the auto loans receivable. The change in the allowance for credit losses is recognized through an adjustment to the provision for credit losses. Rollforward of Allowance for Credit Losses The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the three months ended March 31, 2025:
|  | Three Months Ended March 31,
|  | 2025 |  | 2024
Balance as of beginning of year |  | $ | 54.8 |  |  | $ | 46.3 |
Provision for credit losses |  | 19.2 |  |  | 10.2 |
Write-offs |  | (14.7) |  |  | (14.0) |
Recoveries(1) |  | 7.6 |  |  | 5.6 |
Balance as of end of period |  | $ | 66.9 |  |  | $ | 48.1 |
(1) Includes proceeds from the recovery of vehicle collateral, net of costs incurred. |  |
We also estimate expected credit losses related to unfunded loan commitments and record a liability within Other Current Liabilities in our Unaudited Condensed Consolidated Balance Sheet. The change in the liability is recognized through an adjustment to the provision for credit losses. The credit loss liability totaled $2.4 million at March 31, 2025 and $2.8 million at December 31, 2024. Past Due Auto Loans Receivable An account is considered delinquent if 95% of the required principal and interest payments have not been received as of the date such payments were due. All loans continue to accrue interest until repayment, write-off, or when a loan reaches 75 days past due. If payment is received after a loan has stopped accruing interest due to reaching 75 days past due, the loan will be deemed current and the accrual of interest resumes. When a write-off occurs, accrued interest is written off by reversing interest income. Payments received on nonaccrual assets are recorded using a combination of the cost recovery method and the cash basis method depending on whether the related loan has been written off. In general, accounts are written off on the last business day of the month during which the earliest of the following occurs: the receivable is 120 days or more delinquent as of the last business day of the month and the related vehicle has not been repossessed, the vehicle has been repossessed and liquidated, or the related vehicle has been in repossession inventory for at least 60 days. The following table presents past due auto loans receivable, as of March 31, 2025, and December 31, 2024:
| Age Analysis of Past-Due Auto Loans Receivable as of
| March 31, 2025 |  | December 31, 2024
31-60 Days | $ | 21.3 |  |  | $ | 20.6 |
61-90 Days | 5.1 |  |  | 5.5
Greater than 90 Days | 2.5 |  |  | 2.7
Total Past Due | $ | 28.9 |  |  | $ | 28.8 |
Current | 1,422.4 |  |  | 1,075.0 |
Total | $ | 1,451.3 |  |  | $ | 1,103.8 |

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