Penske’s luxury sales, aggressive Internet presence boost Q1 results
DETROIT -- Penske Automotive Group Inc., the No. 2 U.S. dealership group, saw the sale of new vehicles rise nearly 12 percent and the sale of used vehicles jump 27 percent in the first quarter compared with a year ago.
CEO Roger Penske credits much of the boost to the continued demand for luxury vehicles and the company’s use of the Internet to market its vehicles as well as procure used vehicles.
“With the Internet our market is worldwide,” said Penske in an interview today with Automotive News. “How we market those vehicles and the way we’re setting up wing-to-wing, how fast can we get the car on the lot” is critical.
And given that about 98 percent of Penske’s revenue in the United Kingdom comes from premium luxury brand sales, the rise in that part of the market is helping Penske’s profits grow.
“The luxury outperformed the market,” said Penske. “Go back three years, luxury brands had about 18 percent of the market. Today, they have almost 23 percent. So we’ve been riding a tide there.”
Strong U.S. sales
For 2012, Penske said it expects U.S. sales to be 14- to 14.5 million units with a 10 to 15 percent increase in retail sales versus a year earlier.
Penske, in a statement released earlier today, reported its first-quarter profits grew 38 percent, helped by an 18 percent jump in retail sales of vehicles in the United States and Britain.
The company reported record first quarter net income of $46.8 million, or 52 cents per share, compared to net income of nearly $34 million, or 39 cents per share, a year earlier.
Penske CEO Roger Penske said that despite a weakening economy in Europe, Penske stores, located mainly in Britain, did well in the first quarter there.
"In light of perceptions surrounding our international markets, I am particularly pleased with the performance," Penske said in a statement. "During the first quarter, our international-based same-store retail revenue increased 5.9 percent."
Penske, which relies heavily on German brands including BMW, said its revenue rose about 18 percent to $3.2 billion.
Nearly half of Penske's revenue came from sales of new cars and 30 percent came from used vehicles. The company saw a 31 percent rise in vehicle sales to consumers outside the United States, and a 12.3 percent increase in the U.S. auto market.
Penske, based in suburban Detroit, has 168 franchises in the United States and Puerto Rico and 167 franchises outside the United States, primarily in Britain. It ranks No. 2 on the Automotive News list of the top 125 dealership groups in the United States with 154,829 in new-vehicle sales in 2011.
Reuters contributed to this report.
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