Penske's Q2 net income soars to record

DETROIT -- Penske Automotive Group Inc.'s net income soared more than seven-fold as the retailer posted record second-quarter results driven by lower costs and increases in new- and used-vehicle sales, per-vehicle profits and service and parts revenue.

Revenue for the third-largest dealership group in the U.S. soared 91 percent to $6.99 billion. Net income totaled $340.4 million, higher than $44.8 million in the second quarter of 2020 and $118.5 million for the same period in 2019. The 2020 results were hampered by the beginning of the coronavirus pandemic.

Penske, in a statement Thursday, said its results in this year's second quarter included charges of $12.6 million related to debt redemption cost and $8.8 million for an increase in United Kingdom corporate taxes.

CEO Roger Penske said the results came from across its automotive business and commercial truck division and were aided by lower costs.

"Despite the ongoing disruption to new-vehicle supply, our performance in the quarter demonstrates the strength of the auto and commercial truck retail model and the benefit from our diversification," he said in the company statement.
 

Pretax earnings for the company's retail commercial trucks division more than doubled to $39.7 million. In April, Penske bought Kansas City Freightliner, which it expects will add $450 million in annual revenue.

Sales at Penske's standalone CarShop used-vehicle supercenters nearly tripled to 18,742 vehicles. CarShop revenue more than tripled to $408.2 million. During the quarter, Penske opened one CarShop outlet to expand to 19 locations in the U.S. and in the U.K. The company also is accelerating CarShop's expansion, with plans to open four more locations by the end of the year and to have 40 locations by the end of 2023.

In June, Penske bought Felix Sabates' Mercedes-Benz of South Charlotte in Pineville, N.C., its first U.S. dealership acquisition since late 2018. The store is expected to provide $150 million in annual revenues.

Shares of Penske closed Tuesday at $80.87, up 36 cents.

Records: All-time record for any quarter for net income; all-time record for any quarter for pretax earnings; and all-time record for any quarter for earnings per share.

Sales: New-vehicle sales surged 88 percent to 57,789 vehicles. Used-vehicle sales soared 75 percent to 74,708.

Same-store sales: New-vehicle sales on a same-store basis jumped 92 percent to 57,622. That is stronger than the 49 percent increase in U.S. new light-vehicle sales across the industry during the second quarter, according to the Automotive News Research & Data Center. Used-vehicle sales on a same-store basis rose 75 percent to 73,270 units.

Penske didn't give exact U.S. sales figures, but said U.S. same-store new-vehicle sales rose 79 percent while U.S. same-store used-vehicle sales were up 42 percent.

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 34 stores from Michigan's Suburban Collection.