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Houston, Texas, August 2007 Penske Automotive GroupPenske Automotive Group Incorporated, with corporation headquarters in the Detroit suburb of Bloomfield Hills, Michigan, is chaired by former race driver Roger S. Penske. Yeah, that Roger Penske, whose net worth (around $2 Billion) makes him #133 on the Forbes 400 Richest, and whose racing team has won 14 Indianapolis 500's. Self made billionaire Penske bought a controlling stake in the publicly-traded United Auto Group Incorporated auto retail chain in 1999, eventually turning it into the nation's second-largest automotive dealership group. In 2007 the name change to Penske Automotive Group took effect. Dealerships have retained their existing names. The group is NYSE listed (symbol: PAG), a member of the Fortune 500 and Russell 1000, and employs 15,800 persons. The turnaround of the former United Auto Group as Mr. Penske gradually assumed more management responsibility has been impressive. This reflects Penske's team-building management style. Of the publicly traded dealer groups, PAG is considered the best at integrating personnel and processes. PAG's strategy of buying dealerships and retaining existing management resulted in annualized sales growth of 10.3% in the most recent quarter. The auto group has 164 franchises in 19 states and Puerto Rico and 147 franchises located outside the US. PAG'S UK subsidiary, Sytner Group, operates about 130 dealerships. Brand MixBrand mix is a key element in an auto retailer group's success. PAG car dealerships offer 41 vehicle brands; Acura, Aston Martin, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ferrari, Ford, GMC, Honda, HUMMER, Hyundai, Infiniti, Jaguar, Jeep, Lamborghini, Land Rover, Lexus, Lincoln-Mercury, Lotus, Maybach, Mazda, Maserati, Mercedes Benz, MINI, Nissan, Pontiac, Porsche, Rolls Royce, Bentley, SAAB, Scion, Smart, Subaru, Suzuki, Toyota, Volvo, and Volkswagen. Penskes premium-luxury brand mix and international operations, (34% of the company’s operations are outside the US), help insulate it from US retail market downturns. Sateside, Detroit big 2.7 (domestic car) sales account for less than 10% of revenue. Around 94% of first quarter 2007 revenues came from sales of foreign/luxury brands; BMW, Honda, Lexus, Mercedes, and Toyota. Smart, Very SmartPAG is as financially sound and better managed than most other dealer groups. Roger's US new car inventory is 49 days compared to 64 days average supply at American dealers. Second quarter 2007 revenues increased 19.2% to $3.4 billion, with an 8.5% increase in same-store sales.
During the world stock market meltdown underway in Aug 2007, NYSE traded PAG shares, 40% institutionally owned, have held up well. Mr. Penske has taken a big risk, becoming the exclusive US distributor for the tiny Mercedes-built Smart Car. Hoping to fill a space below the pricey BMW Mini, the Smart is marketed almost exclusively on the internet. What I see coming with these "$15K" low-powered mini-cars is a $24K actual out-the-door cost that will limit widespread acceptance. About 70 dealers have been lined up to carry the Smart autos, most are outside the Penske group. The fact that Roger is devoting so much energy to the dealerships and Smart Fortwo small car launch that his racing efforts are slipping hardly qualifies as criticism. Googling "penske automotive" +complaint produced no actual complaints.
Penske Locations in TexasIn 2007 to date, PAG has dropped ten underperforming franchises, adding six. These six included the classic group in Austin, Texas, which runs Honda, Toyota, Scion, and Hyundai stores. The new acquisitions are located along the I-35 corridor, on the north end near Dell Computer's Round Rock campus. When I returned to Texas in 1982, this area was nothing but cow pasture. Today, it's wall-to-wall modern suburbia, and the four new franchises are expected to add $300 million in annual revenue to Penske's operations. Together with the company's existing BMW dealership in Austin, the new lots are a beachhead for a wider role in the Lone Star state. In the first quarter conference call, Roger lamented the short supply of BMW sedans (he could sell lots more), and the pressure to move the lame duck '07 Honda Accord (the '08 redesign is real slick and will sell). Plenty of car dealers wish they had his problems. Smart ForTwo might be ahead of its time, as Honda's Insight Hybrid proved to be, but I'd never bet against Roger S. Penske. Penske Auto Group Texas locations include; BMW of Austin Classic Honda of Round Rock Classic Hyundai of Round Rock Classic Scion of Round Rock Classic Toyota of Round Rock Goodson Collision Goodson Honda North Houston Goodson Honda West Longo Toyota/Scion/Lexus: Dealership of the Future is in El Monte California. News-Blog Updates: Penske Auto10/26/07 Penske Automotive Group Profits up 29% End Penske Automotive Group, goto Sitemap Synter PenskeAutomotiveGroup Acura, Aston Martin, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ferrari, Ford, GMC, Honda, HUMMER, Hyundai, Infiniti, Jaguar, Jeep, Lamborghini, Land Rover, Lexus, Lincoln-Mercury, Lotus, Maybach, Mazda, Maserati, Mercedes Benz, MINI, Nissan, Pontiac, Porsche, Rolls Royce, Bentley, SAAB, Scion, Smart, Subaru, Suzuki, Toyota, Volvo, Volkswagen, Chevy.
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