Penske Automotive Group Inc., a diversified international transportation services company based in Bloomfield Township, today provided an operational update on its business, noting improvements in automotive retail business conditions when compared to March and April.
“I am encouraged by the significant improvement we continue to see in our operations,” says Roger Penske, CEO of Penske Automotive Group. “Since the COVID-19 pandemic began impacting operations in the second half of March, we took actions to reduce costs and preserve our liquidity position. Based on these actions, I expect further improvements to our operating results in June and into the second half of the year as the economy continues to recover.”
The company provided the following regional market updates:
United States – All automotive retail dealership sales and service operations are open. As shelter-in-place orders impacted operations in April, new and used unit sales declined approximately 50 percent and service and parts gross profit declined by 52 percent when compared to April last year.
In May 2020, business conditions began improving. New and used unit sales declined approximately 25 percent when compared to May last year and increased 60 percent sequentially from April to May 2020. Service and parts gross profit declined 39 percent in May when compared to the same-period last year but increased 28 percent sequentially from April to May 2020.
The company’s North American commercial truck dealership sales and service operations have remained open. In April 2020, new and used unit sales were essentially flat with April last year. In May 2020, new and used unit sales declined 20 percent when compared to May last year, as the Class 8 heavy-duty truck market adjusted from its record level last year.
On a same-store basis, new and used units declined 39 percent as compared to April last year and declined 19 percent sequentially from April to May 2020. Service and parts gross profit remains strong with May fixed absorption remaining above 120 percent and repair orders per day increased 7 percent sequentially from April to May 2020.
United Kingdom – All dealerships had closed on March 24 in accordance with a government order. Service and parts operations resumed during the middle of May, while dealership showrooms re-opened on June 1 for most of the U.K. Despite the dealerships being closed, the company remotely delivered approximately 2,500 vehicles in May.
Further, through e-commerce efforts, U.K. dealership operations had more than 4,000 vehicles sold and awaiting delivery at the beginning of June. Since re-opening June 1, sales have been strong and increased approximately 50 percent during the first week of June 2020 when compared to the same period last year.
Europe – All dealerships and service operations in Germany, Italy, and Spain are now open. As restrictions are lifted in each country, operations are improving from week to week.
Australia – All operations are open and restrictions in the market are being gradually lifted. The mining, transportation, defense and power generation sectors remain resilient and service revenue increased 8 percent sequentially from April to May 2020.
Penske Transportation Solutions – The company has a 28.9 percent ownership interest in Penske Transportation Solutions (PTS). As an integral part of the supply chain and transportation infrastructure, PTS benefits from a strong recurring revenue base that is derived from 17,000 contract customers across a wide range of industries.
Seventy percent of its business is generated from multi-year contracts from these customers through full-service leasing, contract maintenance and logistics services. Each part of the business experienced positive results in May.
New contracts for full-service leases were on par with the same-period last year, commercial rental utilization improved sequentially from April 2020 to May, and Penske Logistics experienced continued strong activity in the grocery and home improvement sectors as well as increased revenues in the automotive sector as OEMs began to restart production. PTS earnings more than tripled sequentially from April to May 2020 and were down only 17 percent from May last year.
Penske Automotive Group operates automotive and commercial truck dealerships principally in the U.S., U.K., Canada, and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services principally in Australia and New Zealand.