Penske sees opportunities to buy stores in U.S., abroad
Photo credit: JOE WILSSENS
DETROIT -- Penske Automotive Group plans to acquire more dealerships in the United States, western Europe and Brazil, while keeping an eye on China, CEO Roger Penske said.
Penske told the Automotive News World Congress that publicly owned automotive retailers -- such as his, the No. 2 dealership group in the United States in terms of 2011 new retail unit sales -- have the money to buy more stores as manufacturers put increased demands on dealers to spend millions for store improvements.
The cost to dealers to "cater to the new retail environment" can be $15 million to $20 million for facility investments. "It's very apparent to me that the public retailers have the capital and expertise to meet these requirements," Penske said.
"Many people are looking at what they have to spend to meet OEM requirements, and we're getting a lot of calls," said Penske, 75.
The publicly traded retailers had combined annualized revenues of approximately $50 billion last year, Penske said, with a "combined market capitalization of over $12 billion."
Public retailers that have the cash and are willing to buy more dealerships have a lot of choices. "The industry is still over 90 percent unconsolidated in the United States alone, and the worldwide opportunities are abundant," Penske said.
He also sees new opportunities for dealership ownership in China and Russia. Penske said he has traveled to China but has yet to find the right partner there. He expects public retail groups to be the first to expand aggressively in overseas markets.
In his speech, Penske recounted the tale of his retailing success. After acquiring a stake in a troubled automotive retailer called UnitedAuto Group in 1999, he quickly went to work improving the employee culture, factory relationships, brand mix offered and store locations. Penske also made store improvements and focused on customer satisfaction.
To attract and keep employees, he built a field network of human resource professionals. Penske started job-suitability testing and background checks and focused on improving compensation, benefits, workplace safety and training.
In 1999, the retailer's annual employee turnover surpassed 80 percent. In 2012, Penske said, that had tumbled to 19 percent.