Penske Automotive Group (PAG 46.66, +0.69) is set to open higher by 1.5% after reporting better than expected results.
The company, which operates more than 350 auto & truck dealerships and service locations, reported above-consensus third quarter earnings of $1.10 per share on a 7.2% year-over-year increase in revenue to $5.52 billion, which also exceeded expectations.
Penske Automotive beat estimates even though its bottom line was reduced by $0.04 due to storm-related losses.
The increase in revenue was driven by 9.9% growth in retail unit sales, which increased to 130,257. Used retail sales jumped 25.4% to 65,892, offsetting a 2.5% decline in new retail sales (64,365). In terms of revenue, new vehicle sales rose 1.3% to $2.48 billion while used vehicle sales grew 15.9% to $1.67 billion.
Same store retail unit sales declined 2.9% to 114,941 as a 6.2% decline in new unit retail sales offset a 1.2% increase in used unit sales. Same store retail revenue declined 1.0% as a 3.5% decline in new retail revenue outweighed a 1.7% increase in used revenue, a 5.0% increase in Finance & Insurance revenue, and a 1.5% increase in Service and Parts revenue.
The average sales price of new vehicles sold increased 3.8% to $38,542 while the average price of used vehicles sold declined 7.6% to $25,337. Finance and Insurance revenue grew 17.8% to $152.00 million while Service and Parts revenue increased 5.8% to $520.90 million. Fleet and Wholesale revenue ticked up 0.3% to $262.20 million.
Automotive gross margin on new vehicles increased to 7.5% from 7.3% one year ago while gross margin on used vehicles dipped to 5.7% from 5.8% one year ago. Service and Parts gross margin increased to 59.1% from 57.1% while Fleet and Wholesale gross margin improved to 1.7% from 1.3%.
Retail commercial truck unit sales increased 10.7% to 2,096. New retail sales declined 2.2% to 1,632 while used retail sales jumped 105.3% to 464. New truck revenue grew 9.2% to $184.30 million while used truck revenue spiked 127.4% to $25.70 million. Commercial truck Finance and Insurance revenue rose 16.7% to $2.10 million while Service and Parts revenue increased 2.2% to $83.30 million. Lease, Rental & Wholesale revenue grew 55.6% to $4.20 million.
The average sales price of new commercial trucks sold increased 11.6% to $112,907 while the average sales price of used commercial trucks sold grew 10.8% to $55,387.
Commercial truck gross margin on new vehicles increased to 4.3% from 3.7% while gross margin on used vehicles improved to 10.1% from -2.7%. Gross margin on Service and Parts increased to 38.1% from 36.8%.