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Revenues | 12 Months Ended
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Dec. 31, 2020
Revenue from Contract with Customer [Abstract] |
REVENUES | REVENUES The Company’s material revenue streams are the sale of new and used vehicles; the sale of vehicle parts; the performance of maintenance and repair services; and the arrangement of vehicle financing and the sale of service and other insurance contracts. Revenue recognition for each of these streams is discussed below. With respect to the cost of freight and shipping from the Company’s dealerships to its customers, the Company’s policy is to recognize such cost within cost of sales in the Consolidated Statements of Operations. Also, with respect to taxes imposed by governmental authorities on new and used vehicle sales transactions that are collected by the Company and remitted on behalf of its customers to the government, the Company’s policy is to exclude such taxes from revenues. On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”) using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. The Company recognized an after-tax cumulative-effect adjustment to retained earnings of $4.8 million for maintenance and repair services and $6.6 million for the arrangement of associated vehicle financing and the sale of service and insurance contracts as of the date of adoption. The following tables present the Company's revenues disaggregated by its geographical segments (in millions):
|  | Year Ended December 31, 2020
|  | U.S. |  | U.K. |  | Brazil |  | Total
New vehicle retail sales |  | $ | 4,406.6 |  |  | $ | 1,021.8 |  |  | $ | 152.4 |  |  | $ | 5,580.8 |
Used vehicle retail sales |  | 2,348.5 |  |  | 707.2 |  |  | 50.0 |  |  | 3,105.7 |
Used vehicle wholesale sales |  | 169.4 |  |  | 126.4 |  |  | 12.3 |  |  | 308.1 |
Total new and used vehicle sales |  | 6,924.5 |  |  | 1,855.3 |  |  | 214.7 |  |  | 8,994.6 |
Parts and service sales (1) |  | 1,162.6 |  |  | 194.8 |  |  | 31.9 |  |  | 1,389.3 |
Finance, insurance and other, net (2) |  | 416.3 |  |  | 46.6 |  |  | 5.0 |  |  | 467.9 |
Total revenues |  | $ | 8,503.4 |  |  | $ | 2,096.8 |  |  | $ | 251.6 |  |  | $ | 10,851.8 |
|  | Year Ended December 31, 2019
|  | U.S. |  | U.K. |  | Brazil |  | Total
New vehicle retail sales |  | $ | 4,832.2 |  |  | $ | 1,195.1 |  |  | $ | 286.8 |  |  | $ | 6,314.1 |
Used vehicle retail sales |  | 2,509.9 |  |  | 771.3 |  |  | 85.4 |  |  | 3,366.6 |
Used vehicle wholesale sales |  | 174.5 |  |  | 162.3 |  |  | 18.3 |  |  | 355.2 |
Total new and used vehicle sales |  | 7,516.6 |  |  | 2,128.7 |  |  | 390.6 |  |  | 10,035.9 |
Parts and service sales (1) |  | 1,234.4 |  |  | 227.9 |  |  | 47.6 |  |  | 1,510.0 |
Finance, insurance and other, net (2) |  | 433.2 |  |  | 57.0 |  |  | 7.6 |  |  | 497.9 |
Total revenues |  | $ | 9,184.2 |  |  | $ | 2,413.7 |  |  | $ | 445.9 |  |  | $ | 12,043.8 |
|  | Year Ended December 31, 2018
|  | U.S. |  | U.K. |  | Brazil |  | Total
New vehicle retail sales |  | $ | 4,682.8 |  |  | $ | 1,217.1 |  |  | $ | 281.4 |  |  | $ | 6,181.4 |
Used vehicle retail sales |  | 2,307.0 |  |  | 771.7 |  |  | 87.4 |  |  | 3,166.1 |
Used vehicle wholesale sales |  | 178.9 |  |  | 173.8 |  |  | 16.9 |  |  | 369.6 |
Total new and used vehicle sales |  | 7,168.7 |  |  | 2,162.6 |  |  | 385.7 |  |  | 9,717.0 |
Parts and service sales (1) |  | 1,153.3 |  |  | 217.6 |  |  | 46.0 |  |  | 1,416.9 |
Finance, insurance and other, net (2) |  | 401.3 |  |  | 57.2 |  |  | 9.0 |  |  | 467.5 |
Total revenues |  | $ | 8,723.3 |  |  | $ | 2,437.4 |  |  | $ | 440.7 |  |  | $ | 11,601.4 |
(1) The Company has applied the optional exemption not to disclose revenues related to remaining performance obligations on its maintenance and repair services as the duration of these contracts is less than one year. (2) Includes variable consideration recognized of $27.6 million, $19.5 million and $18.7 million during the years ended December 31, 2020, 2019 and 2018, respectively, relating to performance obligations satisfied in previous periods on the Company’s retrospective commission income contracts. Refer to Arrangement of Vehicle Financing and the Sale of Service and Other Insurance Contracts section within this Note for further discussion of these arrangements. New and Used Retail Vehicle Sales Revenues from the sale of new and used vehicles is recognized upon delivery of the vehicle to the customer, which is the point at which transfer of control occurs and when the performance obligation is satisfied. In some cases, the Company uses a third-party transport company to facilitate delivery of used vehicles to the customer. The transaction price for new and used vehicle sales is the stand-alone sales price of each individual vehicle and is generally settled within 30 days of the satisfaction of the performance obligation. Used Vehicle Wholesale Sales When the Company uses a third-party auction to facilitate the delivery of used vehicles to the customer, the Company has determined that the auction acts as an agent under the arrangement. Therefore, the Company recognizes revenues and cost of sales on a gross basis upon delivery of the vehicle by the auction to the customer, which is the point at which transfer of control occurs and when the performance obligation is satisfied. The transaction price for wholesale vehicle sales is established by the winning bid under the auction process and is generally settled within 30 days of the satisfaction of the performance obligation. Parts Sales Revenues from the sale of vehicle parts is recognized upon delivery of the parts to the customer, which is the point at which transfer of control occurs and when the performance obligation is satisfied. The transaction price for vehicle parts sales is the stand-alone sales price of each individual part and is generally settled within 30 days of the satisfaction of the performance obligation. Service Sales The Company performs maintenance and repair services, including collision restoration. In certain jurisdictions, the Company has an enforceable right to payment for performance completed to date on open work orders and as such, the transfer of control of vehicle maintenance and repair services and satisfaction of the performance obligation to its customer occurs over time. For these contracts that qualify for revenue recognition over time, the Company uses the input method for the measurement of progress and recognition of revenues, utilizing labor cost incurred to estimate the services performed for which the Company has an enforceable right to payment. The Company believes this method is the most objective measure of progress and provides a faithful depiction of the Company’s transfer of services to the customer. The transaction price for maintenance and repair services is the total of the labor and, if applicable, vehicle parts used in the performance of the service, as well as the margin above cost charged to the customer. Arrangement of Vehicle Financing and the Sale of Service and Other Insurance Contracts The Company receives commissions from F&I providers for the arrangement of vehicle financing and the sale of service and other insurance products. Within the context of these contracts with the F&I providers, the Company has determined that it is an agent for the F&I providers. The Company has a single performance obligation associated with the F&I contracts, which is the facilitation of the financing of the vehicle or sale of the insurance product. Revenues from these contracts is recognized when the facilitated contract between the F&I provider and the customer is executed, which is when the performance obligation is satisfied. With regards to the upfront commission for these contracts, the transaction price is the amount earned for each individual contract executed and is generally collected within 30 days of the satisfaction of the performance Charge Backs The Company may be charged back in the future for commissions received on F&I contract or vehicle service contract fees in the event of early termination of the contracts by customers. A reserve for future amounts estimated to be charged back, representing variable consideration, is recorded as a reduction to Finance, insurance and other, net in the Consolidated Statements of Operations. The reserve is estimated based on the Company’s historical charge back results and the termination provisions of the applicable contracts, and was $47.1 million a nd $49.7 million at December 31, 2020 and 2019, respectively. Retrospective Commissions and Associated Contract Assets In some cases, the Company also earns retrospective commission income by participating in the future profitability of the portfolio of product contracts sold by the Company. This contingent consideration is variable and is generally settled over five to seven years from the satisfaction of the performance obligation. The Company utilizes the “expected value” method to predict the amount of consideration to which the Company will be entitled, subject to constraint in the estimate. The estimated amount under the expected value method is accrued upfront when the facilitated contract between the F&I provider and the customer is executed, which is when the performance obligation is satisfied. The estimated amount is reflected as a contract asset within Other current assets and Other long-term assets in the Consolidated Balance Sheets until the right to such consideration becomes unconditional, at which time amounts due are reclassified to accounts receivable. Changes in the estimated amount of variable consideration are adjusted through revenues. The change in contract assets during the year ended December 31, 2020 is reflected in the table below (in millions):
|  | F&I, Net
Contract Assets, January 1, 2020 |  | $ | 21.6 |
Changes related to revenue recognition during the period |  | 27.6 |
Amounts invoiced during the period |  | (13.9) |
Contract Assets, December 31, 2020 |  | $ | 35.3 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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