Penske Automotive Group Inc.'s third-quarter net income soared to a record for any quarter on higher used-vehicle revenue and stronger new-vehicle margins, even as its new-vehicle sales dropped by 16 percent as inventory tightened.
CEO Roger Penske in a statement Wednesday credited the performance to strength in all areas of the company's business. Pretax earnings from Penske's retail commercial trucks division more than doubled, and its ownership stake in Penske Transportation Solutions generated 83 percent higher income.
Penske said that since the quarter ended, it bought the remaining 51 percent of a Japanese luxury dealership group in which it had previously invested. The company in January 2016 revealed it had purchased 49 percent of that group. The acquisition of the rest of the group is expected to add $250 million in annualized revenue. Penske also said Wednesday that it has acquisitions under contract that represent another $300 million in annualized revenue.
During the quarter, Penske opened a new U.K. supercenter in its growing CarShop standalone used-vehicle store network. In October, another store opened in the U.K., and one opened in Scottsdale, Ariz., marking Penske's eighth CarShop location in the U.S. Penske now has 22 CarShop locations on its way to a planned 40 outlets by the end of 2023.
Penske in the quarter bought back 2 million shares for $178.9 million.
Shares of Penske closed down 2.5 percent Tuesday to $110.74.
- Q3 revenue: $6.5 billion, up 8.8 percent from a year earlier.
- Q3 net income: $356.3 million, up 44 percent from a year earlier.
- Q3 adjusted income from continuing operations: $354.8 million, up 53 percent from a year earlier.
- Q3 vehicle sales: Penske sold 114,823 vehicles, new and used, down 6.9 percent. Penske didn't provide exact U.S. sales figures but said same-store U.S. new-vehicle sales fell 3 percent and same-store U.S. used-vehicle sales jumped 12 percent.
- Records: Pretax earnings and net income for any quarter.
- Ranking: Penske, of Bloomfield Hills, Mich., ranked No. 2 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., with retail sales of 178,437 new vehicles in 2020. However, Lithia — the third-largest group in the country in 2020 — vaulted past Penske to become the second-largest retailer going forward with its April acquisition of the Suburban Collection.