Lithia Motors : 2023 Corporate Responsibility Report

Corporate

Sustainability

Report 2023

1

T H E M I S S I O N

Growth Powered by People.

Driven by our employees and preferred by our customers,

Lithia & Driveway is the leading automotive retailer in each of our markets.

O U R VA L U E S

The fuel behind Lithia & Driveway

Earn Customers for Life	Improve Constantly
Create welcoming and trustworthy	Champion one another's growth to
experiences for our customers.	achieve more together.

Take Personal Ownership	Have Fun!
Enjoy the freedom to make the right	Connect as a team through celebration,
choices and own our results.	positivity, passion, and purpose.

Leading the modernization of personal transportation solutions

wherever, whenever, and however consumers desire.

© 2024 Lithia Motors, Inc. All rights reserved. Revised 0424

A Message from Bryan

At Lithia & Driveway, our mission and core values ground us as a winning team and sustain us as an organization.

Since 1946, Lithia & Driveway has been building relationships with-and value for-our customers, communities, and associates. Our rise as one of the largest global automotive retailers has been fueled by our mission, Growth Powered by People, and living our core values daily so we can meet consumers wherever, whenever, and however they desire.

As we move forward with our growth strategy, we want to ensure the sustainability of our environment and communities-as well as our company, which supports tens of thousands of associates and their families across an expanding international footprint.

To accomplish this goal, we Improve Constantly to deploy sustainable technologies, offerings, and practices that are good for the environment and good for business-as outlined in the 2023 Corporate Sustainability Report.

Highlights in this report illustrate how we're putting our environmental and social goals into action-from our online resource, GreenCars, assisting and educating the public to make the switch to a more sustainable ride to our ongoing efforts to support a welcoming workplace for our valued associates and enrich the communities we serve. I hope you're inspired by the spotlight stories and metrics showcasing how we're weaving sustainability into our operations.

As you review the 2023 Corporate Sustainability Report, I encourage you to Take Personal Ownership of a more sustainable course at work and home. Let's join forces for a healthier environment and a more sustainable organization.

Better Together!

Bryan DeBoer

President & CEO

A Message from Bryan 01

Table of Contents

At Lithia & Driveway, we focus on robust sustainability goals as we drive positive change through our talented teams, vast retail network, and community partnerships.

Bryan DeBoer

President & CEO

A Message from Bryan	01
Lithia & Driveway's Sustainability Approach	04
E N V I R O N M E N TA L G OA L S
Increase GreenCars on the Road	06
Operate Sustainable Stores	10
Extend Vehicle Lifecycles	12
S O C I A L G OA L S
Strengthen Our Communities	14
Maximize Employee Health, Wellness & Safety	18
Champion a Diverse, Inclusive
& High-Performance Culture	22

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Table of Contents 03

Lithia & Driveway's Sustainability Approach

Our corporate sustainability goals align with our core values to fuel our commitment towards a carbon-neutral future.

E N V I R O N M E N TA L G O A L S

C O R E VA L U E S

Lithia & Driveway strives to be an industry leader in responsible growth.

For us, sustainability is not about saving the world. Rather, it's about doing our part to consume resources respectfully, putting the right kinds of vehicles on the road, and reducing waste throughout our operations.

Increase GreenCars on the Road

Operate

Sustainable Stores

Extend Vehicle Lifecycles

S O C I A L G O A L S

Strengthen

Our Communities

Maximize Employee

Health, Wellness & Safety

Champion a Diverse, Inclusive & High-Performance Culture

Earn Customers for Life

Create welcoming and trustworthy experiences for our customers

Improve Constantly

Champion one another's growth to achieve more together

Take Personal Ownership

Enjoy the freedom to make the right choices and own

our results

Have Fun!

Connect as a team through celebration, positivity, passion, and purpose

04 Corporate Sustainability Report 2023

Lithia & Driveway's Sustainability Approach 05

E N V I R O N M E N TA L G O A L

Increase GreenCars on the Road

Spotlight: Promoting Electric Vehicles

David Kohan, General Manager

Keyes European (California)

Years with Lithia & Driveway: 13

By encouraging consumers to switch to an electrified vehicle (EV)-or another alternate-fuel vehicle- when they are ready for their next ride, we can reduce the emissions impact of hundreds of thousands of vehicles annually. In 2023, our U.S.-based stores sold over 16,000 zero-emissions vehicles (ZEVs), and one of our top-selling general managers of EVs was David Kohan of Keyes European:

With nearly 500 international locations, our scale puts us in a unique position to drive the adoption of more sustainable mobility options as consumers enjoy our wide range of brands, the expertise of our thousands of associates, and our inviting showrooms. By responding to consumer demands for greener vehicles, we Earn Customers for Life.

To increase our share of sustainable vehicles sold, we have invested in GreenCars- our online resource center on electric and hybrid vehicles. The website educates hundreds of thousands of visitors every month with a library of informative articles, an innovative Buyer's Guide, tools to research available financial incentives, and resources to investigate charging options.

Fast		In December 2023, our online hub for electric and hybrid vehicles,
	GreenCars, eclipsed one million unique visitors for the first time
Fact
	since its launch in 2021.

QWhat do you consider the most impactful behaviors in selling a high volume of sustainable vehicles?

• Acquire in-depth product knowledge.
• Build the right sales team with the comprehensive knowledge of the EV lineup.
• Appoint brand ambassadors who can convey the technical and luxury aspects of a Mercedes Benz EQ and other brand EVs. 
• Use GreenCars.com-It's a great resource. 
• Develop comprehensive and targeted marketing campaigns to create awareness about your store and vehicles.
• Utilize various channels-such as social media and online platforms-to reach a wide audience and demographics.
• Simplify the sales process to reduce friction for customers and ensure a seamless online and offline buying experience.
• Offer competitive pricing.
• Be a leader.

Note:

The LPG logo above stands for "Lithia & Driveway Partners Group," which recognizes our highest-performing stores that maximize their profit potential and embody our core values.

QWhat are some challenges you've experienced and overcome when selling green cars?

• Inventory Availability-Myteam and I purchase vehicles from dealers all over the United States.
• Customer Range Anxiety for EVs-Ourcustomers were concerned about the limited range of EVs and availability of charging infrastructure. To solve this roadblock,
  we partnered with a few companies that installed home chargers and educated our clients on how to navigate finding charging stations when needed.

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Environmental Goal: Increase GreenCars on the Road 07

Spotlight: Promoting Electric Vehicles (Continued)

QHow has each department and employee played a part in your store's success? Our dealership fosters strong communication and coordination between the sales, service, and parts departments. This coordination ensures a seamless customer experience, from the initial sale to ongoing maintenance and repairs.

• The sales department is crucial for acquiring new customers and selling vehicles.  Our successful sales team focused on understanding customer needs, providing excellent product knowledge, and offering a positive buying experience. They also play a big role in building and maintaining strong customer relationships, which leads to repeat business and beneficial word-of-mouth referrals.
• Our service department, led by Bryan Radin, is essential for retaining customers by ensuring the vehicles remain in optimal condition. Providing quality maintenance and repair services contributes to long-term customer satisfaction.  
• Efficient management of parts inventory ensures the availability of essential components for repairs and maintenance. John Smith, our parts manager, played a crucial role in optimizing inventory levels and minimizing costs.

Advice to Improve Constantly

Know your market. Educate yourself and others. Lead by example. Be innovative. Don't be afraid.

David Kohan, General Manager

We Earn Customers for Life by responding to

demands for greener cars and more responsible business practices.

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Environmental Goal: Increase GreenCars on the Road 09

Advice to Improve Constantly

Thank and recognize employees for their efforts and ideas.

Drew Holbrook

General Manager

Environmental Goal: Operate Sustainable Stores 11

E N V I R O N M E N TA L G O A L

Operate Sustainable Stores

To reduce our carbon footprint throughout our vast network of stores and service facilities, we strive to reduce energy usage, adopt cleaner energy, and prevent waste. To promote these sustainable goals within our industry, many auto manufacturers, such as Subaru and Honda/Acura, also offer participation in Green Dealer Programs. At Lithia & Driveway, we encourage stores to Improve Constantly with facility updates and ENERGY STAR certification.

To be certified as ENERGY STAR, a building must meet strict energy-performance standards. A partnership between the U.S. Environmental Protection Agency and the North American Dealers Association (NADA) survey, the ENERGY STAR score for car dealerships gathers detailed information-on building characteristics, energy use, and water use-and compares it to the expected use for a similarly sized building. In 2023, we launched an ENERGY STAR effort and expect a growing number of certifications in the future.

100% of our Honda/Acura dealerships are enrolled in the Honda Fast Environmental Leadership Award (Green Dealer) Program. DCH

Fact Honda of Oxnard received the 2023 Environmental Leadership Award for meeting strict energy thresholds.

Spotlight: Conserving Energy across Operations

Drew Holbrook, General Manager

Acura of Sherman Oaks (California)

Years with Lithia & Driveway: 9

For 2023, NADA recognized three Lithia & Driveway stores-Acura of Sherman Oaks, DCH Tustin Acura, and Island Honda-for being ENERGY STAR certified. In Canada, only seven dealerships in the entire country were certified and three of them were Lithia & Driveway locations. Acura of Sherman Oaks received a 95 out of 100 ENERGY STAR score primarily due to its showroom energy usage and the number of vehicles floored/sold compared to its overall size. 

QWhat would you consider the most impactful behavior you have taken to operate your building sustainably?

We utilize state and government programs to upgrade our facility. We also changed all our lights, interior and exterior, to LED. We investigate government programs for assistance when upgrading to a cleaner, greener facility. 

QWhat are some challenges you've

experienced and overcome in operating your facility?

We have Google Nest thermostats to intuitively adapt to our specific environment to save energy whenever possible. We also put timers on all lighting fixtures to maintain efficiency.  

QHow can employees contribute to store sustainability and efficiency? 

We make sure to create an overwhelming awareness, so everyone becomes energy conscious.  We're all aware-we all care! 

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E N V I R O N M E N TA L G O A L

Extend Vehicle Lifecycles

Spotlight: Celebrating Sustainable Innovation

Every year, we honor company associates who Take Personal Ownership to create and implement sustainability practices in their workplaces with our GreenCars Sustainability Award. In 2023, we honored three associates, nominated by their peers, for their creativity in sustainability efforts.

2023 GreenCars Sustainability Award Winner

Matthew Snipes, Service Manager

Lithia Toyota of Klamath Falls (Oregon)

Years with Lithia & Driveway: 19

Matt and his colleagues, Juan Maldonado and Tim Boozer, switched over their entire service rental/loaner fleet to electric vehicles! As part of this sustainable-mobility business model, customers received information educating them on the benefits of driving and owning an electric vehicle and how to conveniently charge them. The win-win benefits included lower gas emissions, fuel savings, and customer optionality.

At Lithia & Driveway, value autos, or vehicles with over 80,000 miles, play an integral part to our sustainability business model. The resale and servicing of value autos and used cars encourage a circular economy by extending the lifespan of automobiles and reducing waste. By offering refurbished vehicles and affordable servicing options, customers gain access to reliable transportation at a lower cost, and we promote increased sustainable mobility on the road.

Other key components of this operational goal reside within the service/office facilities across our network and include maximizing service retention; recycling solvents, oils, and tires; and using water reclamation systems.

Fast		In 2023, the Lithia & Driveway retail network sold over 125,000
Fact		value autos and serviced more than 825,000.

Award Honorable Mention

Nick Desroches, Shop Foreman

Airstream Adventures (Fairfield, California) Years with Lithia & Driveway: 4

Nick engineered an ingenious Reclamation Station that recaptures the water used during pre-delivery inspections of new travel trailers, saving an average of 60 gallons per trailer.

Award Honorable Mention

Angela Sutton-McCartney, Clerk

Wilde Toyota (West Allis, Wisconsin) Years with Lithia & Driveway: 2

Angela initiated a paper-recycling system that reuses the blank sides of scanned docs for other printing needs. In 2023, her efforts saved approximately 40,000 sheets of new paper.

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Corporate Sustainability Report 2023

Environmental Goal: Extend Vehicle Lifecycles

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S O C I A L G O A L

Strengthen

Our Communities

Spotlight: Giving Powered by People

Evelin Williams, Community Relations Director

Wesley Chapel Regional Auto Group (Florida)

Years with Lithia & Driveway: 3

Most of our stores prioritize community partnerships with local or national nonprofits that matter most to them in their area. While we can't showcase each store's community contributions, the following stories are representative of how our hundreds of stores across Canada, the United Kingdom, and the United States give back to their communities.

Connecting with the communities where we live and work is a core pillar of Lithia & Driveway's social sustainability outlook. When we stand shoulder-to-shoulder with our neighbors, we cultivate strong bonds, build bridges, foster teamwork, and Have Fun!

Our Lithia 4Kids Program educates, advocates, and strengthens the youth in and around the cities, towns, and neighborhoods we serve. A "giving powered by people" mindset runs deep throughout our organization, and our stores' volunteerism and sponsorships make powerful social impacts.

QWhat are some social-impact events your teams did in 2023?

• Holiday Wish List Sponsorship Program- Our store group sponsored 200 children who live at Metropolitan Ministries (of Tampa Bay) by fulfilling each child's holiday gift wish list. On Christmas morning, employees became Santa helpers, delivering the gifts. It was a huge effort resulting in smiles all around.
• Birthday Celebration-OurMazda store hosted a foster child's birthday party. It was the first time any of our stores have done this type of event. Everyone is going to remember that party-awonderful, core memory for the young birthday boy and all the employees who celebrated with him.

QWhat is the best part about the community events or drives that you've been a part of?

It's the sense of TEAM-not only for work, but for something that serves the world we live in- and creating a ripple effect.

Advice to Improve Constantly

Do it! Go! Give! Tell your team how you felt and what you saw. The strongest tool is word of mouth.

Evelin Williams

Community Relations Director

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Social Goal: Strengthen Our Communities 15

Spotlight: Giving Powered by People (Continued)

QWhy do you think community involvement is so important?

When we provide outlets for our employees to give back to the community, employees can put their social passions into action, increase self-esteem, gain new perspectives, and develop empathy. By volunteering with other employees from different stores and walks of life, they expand their social and professional networks. Community involvement is an investment in our employees' well-being, helping them become more well-rounded and socially conscious.

Community Spotlights

Oil Change for Change

On May 24, 2023, 78 of our U.S. Pacific Northwest stores came together to honor veterans' organizations. For every oil change on that date, $25 went to a store's chosen community nonprofit. Together, their one-day donations totaled over $35,000.

Men-Wear-Pink Golf Tournament

In 2023, 12 of our U.S. dealerships participated in-and 24 more donated to-a "Men Wear Pink" golf tournament in Springfield, Oregon, to benefit breast cancer research. Matt Sidman, our U.S. Northwest Fixed Operations Director, and an ambassador for the American Cancer Society, hosted the event that raised over $38,000.

Advice to Improve Constantly

Find a charitable cause that touches your heart.
Put that passion into action, and watch others catch the spirit.
We Have Fun connecting with our communities.
Brittany Osterhout, Recruitment & Engagement Strategist
Our giving is truly powered by people.

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Social Goal: Strengthen Our Communities 17