Lithia Targets Service and Parts, Dealers Invest In Tech Funds, You Can’t Trade-In A Cybertruck

Automotive State of The Union

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Episode #1012: Today we’re talking about Lithia Motors’ internal challenge to boost service growth, FM Capital’s $240M bet on auto tech startups—with strong dealer backing, and the mounting issues facing Tesla’s Cybertruck.

Show Notes with links:

Facing underperformance in its service and parts growth, Lithia Motors is turning inward, challenging its frontline teams to raise the bar and reclaim momentum in a key revenue area.
- Lithia’s Q4 same-store service and parts revenue grew 3.4%, falling short of peers like Sonic (10%) and Penske (6.2%).
- CEO Bryan DeBoer emphasized it's not a technician shortage, but a “mindset issue” among service advisers and managers.
- The company is expanding its Partners Group program to include department managers, offering stock incentives tied to higher performance standards.
- COO Adam Chamberlain sees aftersales as a major 2025 growth driver, but warns current operations sacrifice customer pay for warranty work.
- DeBoer: “There’s been way too soft of management and lip service... Sixty to 90 days is our new mantra,”

Venture firm FM Capital has closed its fourth fund at $240 million, aiming to fuel retail and mobility tech across the auto industry—with major backing from dealership groups.
- The fund surpassed its $200M target despite a tough venture capital environment.
- Investments will target AI, fleet tech, autonomy, connectivity, and energy transition.
- 125 investors participated, including 56 dealership groups representing over 1,100 stores. Holman and Cox Automotive returned as key backers in this round.
- Chase Fraser, Managing Partner of FM Capital: “Dealerships really respect entrepreneurs because they are entrepreneurs themselves. They want to get involved. They want to mentor some of these entrepreneurs. They want to test their products. They want to give them feedback because who knows better than the user?”

Tesla’s Cybertruck is facing a brand-new problem—its maker doesn’t want it back. Owners looking to trade in their trucks are getting turned away, exposing deeper trouble for the high-profile pickup.
- Tesla is reportedly refusing to accept Cybertrucks as trade-ins, citing resale struggles and declining demand.
- The company has a backlog of nearly 2,400 unsold units worth $200M, with used values down 55% year-over-year.
- Some frustrated owners are resorting to Lemon Laws just to offload the vehicle.
- Other dealers are low-balling owners or avoiding Cybertrucks altogether due to market instability.
- A Cybertruck recall this year revealed that only 46K of the vehicles have been delivered so far.

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.
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