Lithia Motors : 2023 Proxy Statement

Proxy Statement

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 V A L U E S

The fuel behind Lithia & Driveway

T H E V I S I O N

Leading the modernization of personal transportation solutions

wherever, whenever, and however consumers desire.

Notice Of Annual Meeting Of Shareholders

2023 Annual Meeting Information

To the Shareholders of Lithia Motors, Inc.

I am pleased to invite you to the 2024 Annual Meeting of Shareholders of Lithia Motors, Inc., (the ''Annual Meeting''), which will be held virtually at 8:30 a.m. Pacific Daylight Time on Tuesday, April 23, 2024. We believe a fully virtual meeting facilitates greater participation by providing easy access to the meeting and allowing shareholders to participate from any location around the world. All of our shareholders will be able to participate in the Annual Meeting online without prohibitive cost or inconvenience. There will be no physical location for shareholders to attend.

The Annual Meeting will only occur virtually through an audio webcast, accessible at the link provided above. You may notify the Company of your desire to participate in the Annual Meeting by remote communication by logging into the

2024 Annual Meeting Website, listed above, in advance of the meeting. Log-in will begin at 8:00 a.m. Pacific Daylight Time. To participate in the Annual Meeting, you will need your unique control number included on your proxy card (printed in the box and marked by the arrow) or on the instructions that accompanied your proxy materials.

If you have any questions regarding this information or the proxy materials, please visit our website at investors.lithiadriveway.com, or contact our investor relations department at (541) 776-6591. Our proxy statement and 2023 Annual Report on Form 10-K can be accessed directly at the following Internet address: http://www.proxyvote.com. Just enter the control number located on your proxy card. We appreciate your continued support of Lithia Motors and look forward to receiving your proxy.

Very truly yours,

Christopher S. Holzshu, Executive Vice President and Secretary

March 11th, 2024

How to Vote

Only holders of record of our common stock at the close of business on February 29, 2024, the record date, will be entitled to notice of and to vote at the meeting and any adjournment thereof. A list of shareholders entitled to vote at the Annual Meeting will be available during the entire time of the Annual Meeting at http://www.virtualshareholdermeeting.com/LAD2024. You may vote or submit questions during the Annual Meeting by following the instructions available on the 2024 Annual Meeting Website. Further information regarding voting rights and the matters to be voted upon is presented in our proxy statement.

Important notice regarding the availability of proxy materials for the 2024 Annual Meeting of Shareholders to be held on April 23, 2024.

Our proxy statement and 2023 Annual Report on Form 10-K can be accessed directly at the following Internet address: http://www.proxyvote.com. Just enter the control number located on your proxy card. To obtain paper copies of the proxy statement and our 2023 Annual Report on Form 10-K at no charge, written requests should be mailed to the attention of Investor Relations, Lithia Motors, Inc., 150 N. Bartlett Street, Medford, Oregon 97501.

YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy via internet, telephone or by completing, signing, dating and returning your proxy card or voting instruction form so that your shares will be represented at the Annual Meeting.

Special Note Regarding Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements often use words such as ''will'', ''anticipate'', ''estimate'', ''expect'', ''should'', ''may'', and other words and terms of similar meaning or reference future dates. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading ''Risk Factors,'' and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. The Company cautions that forward-looking statements are inherently less reliable than historical information. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

1. future market conditions, including anticipated car and other sales levels and margins and the supply of inventory; (ii) our business strategy and plans, including our achieving our strategic plans and related targets; (iii) the growth , expansion, make-up and success of our network, including our finding accretive acquisitions and acquiring additional stores; (iv) annualized revenues from acquired stores; (v) the growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation (''DFC''), their synergies and other impacts on our business and our ability to meet Driveway and DFC-related targets;

1. the impact of sustainable vehicles and other market and regulatory changes on our business; (vii) our capital allocations and uses and levels of capital expenditures in the future; (viii) expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses (''SG&A'') as a percentage of gross profit and any projections;(ix) our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facilities, unfinanced real estate and other financing sources; (x) our continuing to purchase shares under our share repurchase program; (xi) our compliance with financial and restrictive covenants in our credit facilities and other debt agreements; (xii) our programs and initiatives for employee recruitment, training, and retention; and (xiii) our strategies and targets for customer retention, growth, market position, operations, financial results and risk management. The Company does not undertake any duty

to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

Other

All references in this proxy statement to ''LAD,'' ''Lithia,'' ''Lithia Motors,'' ''Lithia & Driveway,'' the ''Company,'' ''we,'' ''us,'' or ''our'' refer to Lithia Motors, Inc. and its subsidiaries, except where the context otherwise requires or as otherwise indicated. Our store operations are conducted by our subsidiaries.

The content on any website referred to in this Proxy Statement is not incorporated by reference in this Proxy Statement unless expressly noted.

Table of Contents

01

Lithia Motors, Inc. Proxy Statement

This proxy statement, the accompanying 2023 Annual Report on Form 10-K, the Notice of Annual Meeting and the proxy card are being furnished to the shareholders of Lithia Motors, Inc., an Oregon corporation, in connection with the solicitation of proxies by the Company for use at our 2024 Annual Meeting of Shareholders (the ''Annual Meeting''). The Annual Meeting will only occur virtually through an audio webcast, accessible at www.virtualshareholdermeeting.com/LAD2024on Tuesday, April 23, 2024, at 8:30 a.m. Pacific Daylight Time. On or about March 11, 2024 we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the ''Notice'') containing instructions on how to access this proxy statement and our 2023 Annual Report on Form 10-K. The Notice provides instructions on how to vote online, by mail or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.

2023 Achievements & Performance Highlights

Throughout 2023, we continued to deliver on our strategic plan and recorded the highest revenue in our history.

• We retailed nearly 640,000 units.
• We acquired $3.8 billion in expected annualized revenues expanding our footprint in North American and entering the UK through our purchase of Jardine Motors UK Limited.
• Driveway Finance Corporation, our captive lender, scaled to a nearly $3.2 billion portfolio at year-end.
• Our network reach improved to 230 miles to reach 95% of the United States. Additionally, the average shipping distance for transactions on Driveway was approximately 800 miles.
• Monthly unique visitors (MUVs) averaged over 12 million each quarter combined across all digital channels with Driveway and Greencars traffic growing 67% to nearly 3.5 million MUVs per month.1
• We provided shareholder return with the repurchase of approximately 143,000 shares at a weighted average price of approximately $241 and a per share dividends of $1.92 for the year.

• We count a unique visitor the first time an individual accesses one of our websites using a web browser during a calendar month. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique visitor. If an individual accesses more than one of our websites in a single month, the first access to each website is counted as a separate unique visitor since unique users are tracked separately by IP address for each domain. We measure unique visitors with Google Analytics.

Our Company Strategy

Lithia & Driveway (LAD) continues to work towards delivering on our long term strategy. We're well positioned to achieve our objectives of providing an integrated, omnichannel retail experience with convenient solutions offered through our comprehensive network of locations, e-commerce platforms and captive finance division.

We have built a flexible platform, expanding our presence to become one of the largest and most diversified platforms in the United Sates, Canada and the United Kingdom. Our technology, diversified products, brands and financial solutions, have allowed us to sell nearly 640,000 units across our channels and deliver our best year in our aftersales business line. Our regenerative growth engine of consistent annual free cash flows funds our growth through acquisitions and investments, while maintaining a strong, disciplined balance sheet. We're decreasing the distance to our customers, growing our market share and enhancing our product and service offerings.

LAD is focused on improving the customer experience through all our channels. We are fine tuning our non-unit merchandise and product offerings to fit local market interest. This strategy underpins our long-term plan and positions us, along with Driveway and Greencars, to meet customers on their terms and growing our reach while offering a wide variety of products.

In 2023, we grew receivables at Driveway Finance Corporation (DFC) to nearly $3.2 billion after originating more than 70,000 new loans. This adjacency diversifies our earnings stream and allows us to increase our profitability in the future. As the leading captive finance arm for Lithia and Driveway, we continue to have room to expand the penetration rate and size of the portfolio.

Our process for managing growth and liquidity is focused on our long-term growth initiatives. This includes investing in our current operations, technology, and adjacencies, diversifying our business model and enhancing our capital allocation. We target allocating approximately 65% of our capital towards network development, including M&A, 25% towards capital expenditures, and the balance of 10% towards shareholder returns. In terms of leverage, we target 2-3x debt to EBITDA, giving us sufficient financial flexibility to manage our growth. This ensures sustainable growth while generating long-term value for shareholders.

Our culture of high performance and personal ownership is a crucial part of our success. We find, retain, and promote people who are happy working in high-performance environments, while they enjoy the challenge of learning new skills and achieving ambitious goals. To make sure our employees are motivated and prepared to carry out our plan, we invest in them. Through new experiences, teamwork, professional development, and recognition, we foster personal and career growth in all our employees.

02

Director Nominees