Penske Automotive Group's first-quarter net income was cut nearly in half from a year earlier as shelter-in-place orders in the U.S. and dealership closures in other countries stemming from the coronavirus dented March sales.
Revenue dropped 10 percent to $5.01 billion for the nation's second-largest new-vehicle retailer, as net income slid 48 percent to $51.5 million.
In a statement Wednesday, the company said it furloughed 15,000 employees globally — or 57 percent of its work force — during the coronavirus pandemic. The retailer in late March said it was freezing hiring and postponing $150 million in capital expenditures, and that CEO Roger Penske and President Robert Kurnick wouldn't accept salaries for the duration of the coronavirus outbreak while other executives and managers took pay cuts to stem the financial impact from COVID-19.
Penske said Wednesday the moves will help the company overcome challenges and that he is optimistic about improving business conditions being seen in many markets.
"I am encouraged by the many positive actions taken by our team to address the changing marketplace," Penske said in a statement. "Our digital initiatives continue to grow our online sales."
He cited more focus on online sales, video messaging, curbside or home delivery, pickup and drop-off for the service business and remote finance-and-insurance capabilities.
"We have seen business improve from week to week, as we believe customers have become more comfortable with these new processes," Penske said in the statement.
The retailer earlier said it furloughed 5,300 U.S. employees, or about 43 percent of its U.S. dealership work force, at the end of March following significant declines in business as a result of the coronavirus.
Those declines came suddenly in the last month of the quarter. Penske said its U.S. operations in January and February posted increases of 6.1 percent in same-store new-vehicle sales, 8.8 percent in same-store used-vehicle sales and 8.3 percent in revenue. Then in March, U.S. same-store new-vehicle sales dropped 42 percent, while same-store used-vehicle sales fell 41 percent and revenue tumbled 38 percent.
Penske's 16 used-vehicle supercenters in the U.S. and U.K. sold 16,312 vehicles, down 9.6 percent, and revenue at the supercenters dipped 2.8 percent to $305.5 million. Same-store sales for U.S. supercenters rose 4.1 percent through February but fell 56 percent in March because of dealership closures resulting from shelter-in-place orders.
Retail automotive revenue declined in all markets. Penske also saw lower profits from its ownership stake in Penske Transportation Solutions and lower revenue from its smaller Australian commercial vehicles and power systems businesses. Same-store revenue in Penske's commercial truck operations division slid, but the unit's overall revenue rose because of the company's 2019 acquisition of Warner Truck Centers.
Shares of Penske closed Wednesday's trading down 2.3 percent to $33.11.
Sales: New-vehicle unit sales fell 21 percent to 43,187. Used-vehicle unit sales declined 13 percent to 63,050.
Same-store sales: New-vehicle unit sales on a same-store basis tumbled 18 percent to 43,151. U.S. same-store new-vehicle unit sales fell 13 percent to 26,565. That compares with a drop of 12 percent in new light-vehicle sales across the U.S. during the first quarter, according to the Automotive News Data Center. Total used-vehicle unit sales on a same-store basis declined 12 percent to 61,719. U.S. used-vehicle unit sales on a same-store basis fell 10 percent to 28,117.
Penske, of Bloomfield Hills, Mich., ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 222,800 new vehicles in 2019.