Penske Automotive Group posted an increase of 9 percent in net income during the third quarter of 2010. Penske attributed the improvement to the performance of its luxury franchises, strong used-vehicle sales and its drive to cut long-term debt.
The second-largest auto retailer in the United States said that its used-vehicle unit sales had double-digit increases. In particular, it recorded a 16.5 percent increase overall and a 20.6 percent surge at its US dealerships for the third quarter of 2010.
However, used-vehicle margins decreased when compared to the previous year. The publicly held retailer had $29.98 million in net earnings, as revenues in the third quarter of 2010 increased by 7 percent to $2.76 billion in when compared to the year-earlier period.
From January to September 2010, net earnings rose by 38 percent to $79.77 million as revenues increased by 12 percent to $7.95 billion.
In a statement, Chairman Roger Penske describes the new vehicle retail environment as “challenging.” Penske also said that the performance of its premium and luxury franchises and its focus on raising used-vehicle sales “drove [its] same-store retail revenue growth.”
Penske has been granted new dealerships and it is adding dealerships through acquisition. Penske anticipates that its new stores will deliver about $350 million in annual revenue for 2010.
In August 2009, Penske Automotive Group withdrew from negotiations to acquire Saturn, a segment of General Motors. GM had already said that the brand will be discontinued. The termination of the talks has taken Saturn dealers by surprise since it was expected that the Penske and GM would reach an agreement, with the Saturn brand to be revived under Penske's management.
Penske decided to stop the negotiations because it would be unable to source new products beyond what it had asked GM to build on contract.
GM will then be winding down the Saturn brand as well as its dealership network according to the wind-down agreements that dealers recently signed with the carmaker. Saturn had declined due to the economic downturn, the lack of relevant products as well as the shifting attitudes of parent GM. From 435 dealerships in 2008, there were only 350 Saturn franchises left at the start of 2009. Penske owns 160 dealerships in the US and the UK.
Founded as United Automotive Group in 1990, the automotive dealership company was acquired by Penske Corporation and Roger Penske in May 1999. The change of corporate name from United Automotive Group to Penske Automotive Group was made On July 2, 2007.