Penske Automotive Group Profiil
Penske Automotive Group, Inc. operates as a diversified international transportation services company. The company is the world's premier automotive and commercial truck retailer. The company operates dealerships in the United States, the United Kingdom, Canada, Germany, Italy, and Japan. The company is one of the largest retailer of commercial trucks in North America for Freightliner. The company also distributes and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand.
Additionally, the company owns 28.9% of Penske Transportation Solutions, a business that employs over 41,500 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 414,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.
Segments
The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments.
Retail Automotive
Retail Automotive consists of the company’s retail automotive dealership operations.
The company is diversified geographically with 58% of its total retail automotive dealership revenues in 2022 generated in the U.S. and Puerto Rico and 42% generated outside of the U.S. The company offers over 35 vehicle brands with 71% of its retail automotive franchised dealership revenue in 2022 generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of December 31, 2022, the company operated 21 used vehicle dealerships, with eight dealerships in the U.S. and 13 dealerships in the U.K., which retailed used vehicles under a one price, no-haggle methodology under the CarShop brand. The company retailed and wholesaled more than 539,000 vehicles in 2022.
Each of the company’s franchised dealerships offers a wide selection of new and used vehicles for sale. In addition to selling new and used vehicles, the company generates higher-margin revenue at each of its dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of its locations, collision repair services. The company operates its franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Beginning in 2023, the company transitioned its Mercedes-Benz U.K. dealerships to an agency model. Under an agency model, its Mercedes-Benz U.K. dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. The company continues to provide new vehicle customer service at its Mercedes-Benz U.K. dealerships, and the Mercedes-Benz U.K. agency model is not expected to structurally change its used vehicle sales operations or service and parts operations, although the impact of the agency model at these dealerships, as well as other agency models proposed by its manufacturer partners is uncertain.
During 2022, the company acquired 19 retail automotive franchises, consisting of 15 franchises in the U.K. and four franchises in the U.S., and it opened two retail automotive franchises that it was awarded in the U.S.
New Vehicle Retail Sales: In 2022, the company retailed 185,831 new vehicles which generated 42.4% of its retail automotive dealership revenue and 30.2% of its retail automotive dealership gross profit.
Used Vehicle Retail Sales: In 2022, the company retailed 261,739 used vehicles, including 71,242 from its CarShop used vehicle dealerships, which generated 38.0% of its retail automotive dealership revenue and 13.2% of its retail automotive dealership gross profit. The company acquires used vehicles from various sources, including trade-ins from consumers in connection with their purchase of a new or used vehicle from it, purchases of used vehicles directly from consumers, lease expirations, public auctions, and auctions open only to authorized new vehicle dealers.
Vehicle Finance and Insurance Sales: The company typically receives a flat fee or a portion of the cost of the financing or leasing paid by the customer for each transaction.
The company also offers its customers various vehicle warranty and extended protection products, including extended service contracts, maintenance programs, voluntary vehicle protection products, and theft protection products. The extended service contracts and other products that its dealerships offer to customers are underwritten by independent third parties, including the vehicle manufacturers' captive finance companies. Similar to finance transactions, the company is subject to chargebacks relating to fees earned in connection with the sale of certain protection products. The company also offers for sale other aftermarket products, including security systems and protective coatings.
The company offers finance and insurance products using a menu process, which is designed to ensure that it offers its customers a complete range of finance, insurance, protection, and other aftermarket products in a transparent manner. The company utilizes docuPAD at it’s the U.S. dealerships, an interactive electronic interface designed to improve document processing and menu presentation of finance and insurance options during the purchase or lease transaction.
Service and Parts Sales: The company generates service and parts sales in connection with warranty work performed at each of its franchised dealerships and non-warranty work.
The company’s dealerships keep records of its customers' maintenance and service histories, and many dealerships send reminders to customers when vehicles are due for periodic maintenance or service. The company also offers rapid repair services, such as paintless dent repair, tire sales, and windshield replacement at most of its facilities in order to offer its customers the convenience of one-stop shopping for all of their automotive requirements. The company also operates 33 automotive collision repair centers, each of which is operated as an integral part of its dealership operations.
Fleet and Wholesale Sales: In the U.K., the company offers used vehicles to wholesalers and other dealers via a proprietary online auction.
Retail Commercial Truck Dealership
Retail Commercial Truck consists of the company’s retail commercial truck dealership operations in the U.S. and Canada.
The company operates Premier Truck Group (PTG), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across nine U.S. states and Ontario, Canada. During February 2022, the company acquired four full-service dealerships in Ontario, Canada. As of December 31, 2022, PTG operated 39 locations selling new and used trucks, parts and service, and offering collision repair services. The company retailed and wholesaled 21,002 new and used trucks in 2022. The company routinely acquires and disposes retail automotive franchises.
Premier Truck Group (PTG) is a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands) with 39 locations across nine U.S. states and in Ontario, Canada. PTG dealerships provide a similar suite of services as the company’s automotive dealerships, offering new trucks and a large selection of used trucks for sale, a full range of parts, maintenance and repair services, collision centers, and finance and insurance options by facilitating truck and trailer financing and leasing, extended maintenance plans, physical damage insurance, voluntary vehicle protection products, roadside relief, and other programs.
The maintenance and repair of commercial trucks is an essential service and a key area of differentiation for the company’s business. The company offers Elite Support certified locations to help maximize vehicle uptime. The company also offers roadside remote service for certain repairs and provide 24/7 technician support for breakdown/emergency service.
Commercial Vehicle Distribution and Other Operations
Penske Australia: Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, the company is also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region.
Penske Australia distributes commercial vehicles and parts for Western Star, MAN, and Dennis Eagle to a network which comprises on average of more than 70 dealership locations across Australia, New Zealand, and portions of the Pacific. Of these dealership locations, ten are company-owned retail commercial vehicle and/or service and parts dealerships in Australia and three are company-owned retail commercial vehicle dealerships in New Zealand. The company’s dealership in Brisbane, Australia is the largest retailer of Western Star Trucks in Australia by volume, and its dealership in Perth, Australia is the largest retailer of MAN Trucks in Australia by volume. The company finances its purchases of these vehicles under floor plan agreements with a local Daimler affiliate and a local Volkswagen affiliate with terms similar to its other floor plan agreements.
Western Star trucks are manufactured by Daimler Trucks North America in Portland, Oregon. The company is also the exclusive importer of MAN trucks and buses. MAN Truck and Bus, a VW Group company, is a leading producer of medium- and heavy-duty trucks, as well as city and coach buses.
The company also distributes diesel gas engines and power systems to over 100 dealer locations that are strategically located throughout Australia, New Zealand, and portions of the Pacific. The company utilizes mobile remote field service units to travel directly to customer premises.
Penske Transportation Solutions: The company holds a 28.9% ownership interest in Penske Truck Leasing Co., L.P. (PTL). PTL is owned 41.1% by Penske Corporation, 28.9% by the company, and 30.0% by Mitsui & Co., Ltd. (Mitsui). The company accounts for its investment in PTL under the equity method. Penske Transportation Solutions (PTS) is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistic services, such as dedicated contract carriage, distribution center management, transportation management, lead logistics provider services, and dry van truckload carrier services.
PTS operates two principal businesses: one of the leading full-service truck leasing, truck rental, and contract maintenance businesses in North America; and an international logistics business in North America, South America, and Europe. PTS also operates a truck leasing and truck rental business in Australia through a joint venture with the company.
Full-service truck leasing, truck rental, and contract maintenance of commercial trucks, tractors, and trailers constitutes PTS' largest business. PTS manages a fleet of over 414,500 trucks, tractors, and trailers, consisting of over 271,300 vehicles owned by PTS and leased to customers under full-service lease or rental agreements and over 143,200 customer-owned and -operated vehicles for which they provided contract maintenance services. Lease terms under its full-service leases generally range from four to seven years for tractors and trucks and six to ten years for trailers. Its commercial and consumer rental fleet as of December 31, 2022, consisted of approximately 109,000 vehicles for use by its full-service truck leasing, small business, and consumer customers for periods generally ranging from less than a day to 12 months. Most of its leased vehicles are configured according to customer specifications, including custom painting and lettering, while its rental trucks bear Penske branding.
The services provided under full-service lease and contract maintenance agreements generally include preventive and regular maintenance, advanced diagnostics, emergency road service, fleet services, safety programs, and fuel services through PTS' network of company-operated facilities and a nationwide network of independent truck stops. In addition, PTS makes available to its full-service leasing and contract maintenance customers additional vehicles on a rental basis. PTS' commercial rental operations offer short-term availability of tractors, trucks, and trailers typically to accommodate seasonal, emergency, and other temporary needs. A significant portion of these rentals are to existing full-service leasing and contract maintenance customers who are seeking flexibility in their fleet management. PTS has established a network of approximately 850 locations to provide full-service truck leasing, truck rental, and contract maintenance services to customers. This network enables PTS to meet multi-location customer requirements.
For consumer customers, PTS provides short-term rental of light- and medium-duty vehicles on a one-way and local basis, typically to transport household goods. Customers typically include local small businesses and individuals seeking a do-it-yourself solution to their moving needs. PTS' consumer fleet generally consists of late model vehicles ranging in size from small vans to 26-foot trucks, and its consumer rentals are conducted through approximately 1,930 independent rental agents and approximately 410 of its company-operated leasing and rental facilities. PTS' consumer business generated 5% of its revenue for 2022.
Logistics: PTS' logistics business offers an extensive variety of services, including dedicated contract carriage, distribution center management, freight management, lead logistics provider, and dry van truckload carrier services. PTS coordinates services for its customers across the supply chain, including inbound material flow, handling and packaging, inventory management, distribution and technologies, and sourcing of third-party carriers. These services are available individually or on a combined basis and often involve its associates performing services at the customer's location. By offering a scalable series of services to its customers, PTS can manage the customer's entire supply chain or any stand-alone service. PTS also utilizes specialized software that enables real-time fleet visibility and provides reporting metrics. PTS' international logistics business has approximately 525 locations in North America, South America, and Europe.
Other
Other consists of the company’s commercial vehicle and power systems distribution operations.
Non-Automotive Investments
Non-Automotive Investments consists of the company’s equity method investments in non-automotive operations, which includes its investment in PTS and other various investments.
Outlook
Commercial Vehicle Distribution and Other
Penske Transportation Solutions: A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. During 2022, PTS continued to expand its managed fleet with over 414,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts.
Business Strategy
The key elements of the company’s strategy are to provide a superior customer experience that exceeds expectations, and establishes trust and loyalty through honesty, transparency, and accountability; deliver long-term value for its stakeholders through continuous improvement, organic growth, and strategic acquisitions; and provide opportunities for team members to succeed in its organization by cultivating talent, rewarding achievement, and maintaining the highest standards of respect for each other. The company’s strategy is to grow its business, both organically and by acquisition.
Agreements with Vehicle and Equipment Manufacturers
The company operates its franchised new vehicle dealerships under separate franchise agreements with the manufacturers or distributors of each brand of vehicle sold at that dealership. These franchise agreements are typical throughout the industry and may contain provisions and standards governing almost every aspect of the dealership, including ownership, management, personnel, training, maintenance of a minimum of working capital, net worth requirements, maintenance of minimum lines of credit, advertising and marketing activities, facilities, signs, products and services, maintenance of minimum amounts of insurance, achievement of minimum customer service standards, and monthly financial reporting. The agreements also grant the company a non-exclusive license to use each manufacturer's trademarks, service marks, and designs in connection with its sales and service of its brand at its dealership.
Many of these franchise agreements also grant the manufacturer or distributor a security interest in the vehicles and/or parts sold by them to the dealership, as well as other dealership assets and permit them to terminate or not renew the agreement for a variety of causes, including failure to adequately operate the dealership, insolvency or bankruptcy, impairment of the dealer's reputation or financial standing, changes in the dealership's management, owners, or location without consent, sales of the dealership's assets without consent, failure to maintain adequate working capital or floor plan financing, changes in the dealership's financial or other condition, failure to submit required information to them on a timely basis, failure to have any permit or license necessary to operate the dealership, and material breaches of other provisions of the agreement. In the U.S., these termination rights are subject to state franchise laws that limit a manufacturer's right to terminate a franchise. In the U.K., the company operates without such local franchise law protection.
In the U.S., some of the company’s franchise agreements, including those with BMW, Honda, and Toyota, expire after a specified period of time ranging from one to six years. The company expects the manufacturers to renew all of its the U.S. franchise agreements as they expire. In the U.K., many of its agreements have two-year rolling terms. The company’s franchise agreement with BMW, its largest U.K. manufacturer, contains a five-year fixed term through October 2023.
With respect to its commercial vehicle distribution and other operations in Australia and New Zealand, the company is party to distributor agreements with each manufacturer of products it distributes pursuant to which it is the distributor of these products in those countries and nearby markets. The agreements govern all aspects of the company’s distribution rights, including sales and service activities, service and warranty terms, use of intellectual property, promotion and advertising provisions, pricing and payment terms, and indemnification requirements. The agreement with Western Star expires in 2031, the agreement with MTU expires in 2029, and the agreement with Detroit Diesel expires in 2031. The company is party to shipping agreements with respect to importing those products.
Competition
In its retail commercial truck dealership operations, the company competes with other manufacturers and retailers of medium- and heavy-duty trucks, such as Ford, International Kenworth, Mack, Peterbilt, and Volvo.
History
Penske Automotive Group, Inc. was incorporated in the state of Delaware in 1990.
