Penske Automotive Group Inc. posted a 67% jump in first-quarter profits and immediately, its shares rose to record levels in four years, closing up 12.3% at $23.06. An increase in new- and used-vehicle sales had contributed to the rise in profits. This is the highest level yet that the stock has risen since 2007, which is when industrywide U.S. vehicle sales have exceeded 16 million.
In 2009, sales fell to a low of 10.4 million. Recovery had been slow since then. Its net income totaled $33.9 million for the quarter, a considerable increase from $20.3 million the previous year.
Penske said that its revenues in the quarter increased by about 16% to $2.9 billion. New-vehicle sales revenue had gone up to $1.4 billion from $1.2 billion.
Meanwhile, its used-vehicle sales revenue increased to $823 million from $696 million. Penske anticipates that production cuts related to the Japan disaster will have an impact later this year on the availability of new vehicles from certain brands.
About a third of Penske’s revenues come from sales from Toyota, Honda, and Nissan. Investors in related U.S. retailers have been concerned about the uncertainty surrounding the performance of the Japanese automakers.
Penske Automotive CEO Roger Penske believes that the effects of the Japan disaster are “temporary.” While announcing the quarterly earnings, he told reporters that he is “more concerned” about the people affected by the quake rather than auto supply disruptions. Penske said that the new-vehicle shortages will start in June and will persist until the third quarter.