Penske Automotive Group Inc. announced on Monday the highest income in company history, increasing 13.9% to $56.9 million in the first quarter of 2013.
First quarter 2013 revenue was $3.4 billion, compared to $3.2 billion in the same period last year, an increase of 7.7%, or 7.4% on a same-store basis. The revenue growth was driven by a 9.9% increase in total retail unit sales and 6.8% on a same-store basis, the company reported. Gross profit improved 7.9% to $533 million.
Roger Penske, chairman, said in a statement, “Penske Automotive Group delivered strong operating results and record profitability in the first quarter, including double-digit growth in operating income, income from continuing operations and earnings per share. I was pleased to see our gross margin improve to 15.7% on the strength of a 3.1% increase in same-store service and parts revenue and a 60 basis-point increase in service and parts gross margin to 58.4%.”
During the conference call to discuss first quarter results, Penske was asked for an update on the Hertz franchise acquisition and how it will impact profit and loss. Penske responded that the company incurred a loss of $600,000 on the acquisition, mostly due to startup costs, with annualized revenue for the car rental division expected to be about $50 million.
Penske pointed to the rental car fleet, which numbers between 5,000 and 6,500 units, saying that those vehicles will provide Penske dealerships with used cars in six to 15 months. “So as we try to grow this used-to-new ratio, we think is a great strategy,” Penske said, adding that this allows for more warranty service and bodywork at Penske dealerships. “We can vertically integrate and this gives us a chance to touch more customers not only on the service and rental side, but also potentially conquesting some of those on the retail auto side,” he said.
Click here for an Auto Focus blog on what Penske brings to the car rental market.
The project will create 3,000 new jobs and more than $75 million in capital investment.