Penske Automotive looks to sell some CarShop stores in UK, rebrand others

Penske Automotive Group Inc., through its Sytner Group business unit in the United Kingdom, is looking to rebrand and sell some of its used vehicle-only CarShop locations in the U.K. and is also considering closing one of them.

The auto retailer already is negotiating with a potential buyer for some of its U.K. locations, and the stores to be rebranded will use the Sytner Select name, Penske Automotive said in a statement.

"After conducting a strategic review, including a successful pilot at one former CarShop location, the Group is consulting with our CarShop team regarding the potential conversion of the majority [of] our CarShop locations to become Sytner Select branded stores, which will operate as part of our existing Sytner franchise operations," the statement said. "We are also in advanced negotiations with an interested party to sell a minority of the CarShop locations as a going concern, as well as potentially closing one location."

Penske Automotive has 12 CarShop locations in the U.K. after closing one there last year. The company also has six CarShop stores in the U.S., with five in Pennsylvania and one in New Jersey. The auto retailer in January closed a CarShop store in Monmouth Junction, N.J., citing lack of profitability.

CarShop last year retailed 69,605 used vehicles in the U.S. and U.K. combined, down from 71,242 in 2022. The used-vehicle retailer had $1.8 billion in revenue in 2023, up slightly from $1.7 billion in 2022.

Sourcing used vehicles at the right price to make strong profits has been a challenge for retailers industrywide.

"In some ways, they were last man standing after other franchised groups with dedicated used car brands closed or downsized those sub-brands," Steve Young, managing director of ICDP, a European and U.K. automotive research and consultancy firm, said in an email to Automotive News. "With the dip in three-to-four-year-old used cars now working through from COVID times, the availability on these cars is restricted, and they had the best profit opportunity in pure cash terms per unit."

Young said his firm believes CarShop "is a well-managed business and probably still producing a good return for Penske/Sytner."

Penske Automotive is not unique as it considers reducing its standalone used-vehicle store footprint. Sonic Automotive Inc. in the first quarter closed all its remaining Northwest Motorsport used vehicle-only locations, part of its EchoPark chain, in Washington, Idaho and Montana, and Sonic took a $4.2 million pretax charge for those closures. It has trimmed its EchoPark location count by more than half since early 2023.

Penske Automotive, of Bloomfield Hills, Mich., ranks No. 3 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 229,942 new vehicles in 2023. Sonic Automotive, of Charlotte, N.C., ranks No. 6, retailing 107,257 new vehicles in 2023.