PAG - Earnings call transcript Q4 2024 | Penske Automotive Group, Inc.

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Operator

Good afternoon. Welcome to the Penske Automotive Group Fourth Quarter 2024 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately 1 hour after completion through February 20, 2025, on the company's website under the Investors tab at www.penskeautomotive.com.

I will now introduce Tony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. ahead. go please Sir,

Anthony Pordon

and Good in A and Automotive press financial designed this Quarter Julianne. along our joining a the with Group's you company's us XXXX presentation morning issued was today. release assist results posted afternoon, you, on thank website, you everyone, to for Fourth is understanding Thank detailing Penske results.

e-mail follow-up questions have. As any always, you for I'm or phone available by may

Officer; call today's Tony EVP are Roger Shearing, Chair; Randall our Operations; Hulgrave, Financial Vice Facione, President and for Penske, and and Shelley Seymore, Chief Corporate me Rich our Operations; American North Controller. Joining International who's

also Our discussion measures such certain earnings potential, plans, earnings events, our non-GAAP before today operations, as growth and depreciation ratio. interest, and may may include liquidity EBITDA and about business amortization, discuss our acquisitions, leverage of or future statements financial outlook, assessment taxes, forward-looking We conditions.

measures to measures reconciled morning's of presented are have investor presentation, website. available the comparable which GAAP comparable and directly both are measures GAAP on non-GAAP in release most and our We the press prominently this their

vary filings may XX-K previously results I'd differ press and discussion filed cause events direct from of XX-Qs could statements. future expected our under our outlined Form to in materially future Our today's risks and release to you additional for also including forward-looking because our SEC uncertainties from Form and factors that expectations.

over turn call to At like to Penske. this time, would I the Roger now

Roger Penske

exceeding efforts and hard strong work quarter to outstanding Thank members their our by commitment and of you profitability. a joining to thanking team of Tony. for us today. you, afternoon, begin delivered expectations I'd at like everyone, year Good fourth thank their and for another PAG through and each

We income earnings and XXXX, commercial billion. of We delivered per of X% net $XX.XX. earnings $XXX trucks. our used new and and XX,XXX and to new revenue $XX.X $X.XX before vehicles taxes, generated billion million by During increased used over in PAG XXX,XXX share

continue including location $X.X with completing business grow the strategic U.S. acquisitions Wisconsin. annualized expected and X revenue automotive in to Australia expanding in market entering dealerships our truck Porsche the of a We adding in automotive U.K. commercial by operations retail billion, the and

morning, and we press our share. leverage XXth dividend Increase have quarterly XX.X and the our this $X.XX We release to per the in debt we per consecutive ratios with increased announced end In maintained dividend. of capitalization increase share 'XX, of Since by balance X.Xx. was $X.XX sheet strong XX%. of our

financial ] pleased our results. to turn quarter quarter. record a very let's the with attention X% I'm the later Revenue billion. [ Now $X.X the performance increased to during

XX.X%, automotive per profit gross of used retail the gross Xth overall quarter remained representing and gross margin margin. strong New unit consistent was consecutive

point of administrative control to XX quarter the reduction basis third a the when a to as quarter points to profit percentage improvement efforts gross of XX expenses fourth selling, basis last sequentially and compared drove and XXXX. general costs a Our when when compared year,

share share before and X% income X% an compared X% basis, income last and earnings increased increased earnings income grew net PAG of taxes, XX%, in $X.XX. before increased quarter share Income generated XXXX, grew taxes income $XXX income in $XXX income and fourth before XX%. year. per increased taxes and adjusted the million by million when per On XX% to per In of by net

during delivered quarter, the at nearly Retail business, X%. Auto XXX,XXX Looking units up our we

as locations contributed higher of the Select decline fourth with retail quarter-over-quarter. units, vehicle remain XXXX. per used XXXX, to increased new which X%. U.K. were XX%. retail U.K.-based $XX,XXX, X,XXX sell in vehicle we the dealership units in gross shop transition and ] car The units disposal Sytner same-store the flat, Used third remained unit the decline new retail associated per X% is quarter. increased during transaction $X,XXX Average to Gross delivered Our from and increased of X% fewer $XXX [ increased Sytner the at by CarShop profit XXXX. location profit strong declined new sequentially price X vehicle Select vehicles $XX to in units quarter

Excluding Sytner both would used periods vehicles X%. Select, retail dealerships have in increased

Variable a gross X/X per service increase and gross the is to $XX parts quarter $XX,XXX derived unit profit of unit XXX from profit sequential [ of increase 'XX when QX [ compared ] a 'XX. of Approximately per was our retail ] representing third business. our versus and

age count and increased our technician up [ customer U.S. years, already pay U.S. U.S., we and the in As of XXXX. basis, a XX.X%. In is business, effective service of absorption $XXX increased in by basis XX% and collision XXXX including look The has rate service on increased important part to increased repair during ]. service revenue labor X%. up Fixed [ XX,XXX. average our from X%, was to the average In on the this up X.X ] X% XX same-store vehicle the we've our up million, for to our points miles parts X.X with X% quarter, growing continue the XXX in vehicle

to now Shearing. me Let it turn over Rich

Richard Shearing

election. retail post we in Thank surge automotive Roger, and afternoon, traffic In you, experienced good operations, everyone. U.S. our a

used For units increased new increased while units X%. the quarter, XX%,

in new During strength the continued at the of units sold demonstrating quarter, sold were MSRP U.S. the demand. in XX%

nearly Although MSRP units working the more inventory, with In unit. be we've our demand, above QX, aligned to the $X,XXX done customer BEV require significant BEV discount to per with of closely job a discounting. average majority still great from manage was OEMs on

stand-alone Class to collision full XXXX. truck commercial business. XX our We for demand believe the commercial in of is diversified America the retailers We by operate and our Trucks of North We service primarily pillars and replacement XX purchases XX be and one commercial to retail our truck facilities truck one will sales remain facilities, parts business largest truck centers. service X Daimler and core of Turning continue model. retail driven

industry XXX,XXX X approximately which when flat North XX% from in to the Premier retail X,XXX sales industry is months last of sales Group timing deliveries months' first were represented units. down At half The in compared the the and X American pushed end was sales. half decline related or During XXXX. backlog Class December, QX and to units Truck the XX,XXX unit X worth sold deliveries in of new current year. of year-over-year second the at QX, used year QX, shortages out to of the supply was

return X.X% Revenue points. up absorption same $XX with X.X% was fixed and to Same-store and gross million XX sales gross that profit unit profit was period, million during on SG&A retail of XXX%. $XXX basis by the EBT quarter XX%. a increased However, per was was for

'XX sales. and demand anticipated change replacement while As for we we help expect emissions to drive 'XX and the higher look could the market 'XX continue, freight retail recovery towards and

Transportation Turning Penske Solutions. to

million PTS The fourth from million. revenue higher of of $XX revenue declined operating billion. profit $XX.X on interest and for freight million, $X Full as the of During recession PAG's to continued year, earnings PTS before operating to offset increased X%, the sale by decline in $XX.X earnings million, rental a in number [ cash $XX in QX million distributions. the QX, but with quarter PAG $X.XX year. our and a cost we up increased increased share of rental ] year. act and consistent increased million and utilization. was prior $X.X revenue contract revenue tax of $XXX of million X% the service X%, The rent was last and million logistics $XXX earnings PTS on the of $XX.X gain And PTS received share totaled units

turn call to over I Seymore. would now like to the Randall

Randall Seymore

everyone. Thanks, Good Rich. afternoon,

delivered QX favorably automotive increased with in by the new same-store market X.X% in the units QX. at U.K. Looking the X.X%, compares in our retail vehicle decline U.K. market, which

$XXX decreased when to to XXXX. the Select, and same-store U.K. Sytner same-store per remained New used But volume XX% profit $XXX the fourth U.K. on vehicles. would focuses when in Same-store units have as the revenue third the of gross vehicle of premium result quality lower dealerships, Service same-store Including unit per increased higher gross Parts locations unit the per pleasingly, sequential X.X%. a unit transition but those which units CarShop basis compared to resilient, on used quarter. increased a compared in quarter X%. used vehicle increasing

to Turning Australia.

acquired of used car Porsche Melbourne, As Xrd in you location X we December, operate in our Penske and locations second largest annualized X city in Australia. with an Porsche recall, Select $XXX million location. may the We now expected revenue

these revenue a with During to generated million dealerships X.X% sales. XXX retailed in $XX units used quarter, the and on new return fourth

The revenue we XX% Energy our to segment the of order XX% the [indiscernible] units gross over energy and the MAN sector, revenue record driver the strong on focus power beyond, gross provide in market business. business. our reduced over defense boosted support Service vehicles. related is XXXX a markets of profit in sale submarines, in data bank leadership and Australia. We and and Energy key our battery XXXX, reduction storage by off-highway market, we center very in of in a solution represent AUD million to In trucks the share. total in our number SG&A frigates and generation We has on- on-highway delivered growth of In infantry margin and Solutions, large to defense And in approximately fleet XXX largest off-highway basis to remain progress. XXX and high pleased in ever. market, In record increasing Solutions a parts delivery a by fighting mining operation the QX, predominantly for points. and horsepower for Turning were with business. driven and profit with remain

turn to Hulgrave. I would now to like call Shelley the

Michelle Hulgrave

Thank capital you, cash our balance Randall. and allocation. review everyone. I flow, sheet will Good afternoon,

capital sheet cash with and allocation. balance us provides to maximize Our strong opportunities flow

to business through and return we As repurchases. securities capital to and a continue result, dividends through shareholders grow opportunistic acquisitions our

billion cash $X.X During generated XXXX, we flow EBITDA and was from our billion. in $X.XX operations

flow were deducting flow, [ our increase million closing $XXX.XX announced the dividend our quarterly share increased at Dividends we price, XXth per from approximately of yield was The shareholders per which operations a returned was to for we million. $XXX X.X% the morning, and approximately ] approximately during capital we press in share. to million. in yesterday's current expenditures $XXX XXXX, XXXX In after consecutive $X.XX is have increase $XXX $X.XX of shares payout Our $XX XXX,XXX cash end ratio our dividend. to this million, shareholders free release XX%. share with Since per Combined, we the cash repurchased XXXX. paid Using XX%. is

in billion completed return these in in locations automotive $X.X to and truck to addition in annualized commercial commercial X revenues, and revenue. including XX acquisitions the $X.X billion retail XXXX. franchises truck shareholders, we represent automotive retail of In Together, retail acquisitions revenue million $XXX estimated

Additionally, strategic XXXX we as locations revenue. divested on or which retail estimated in approximately focus we million also represented in closed annualized capital $XXX automotive XX allocation,

cash flow allowed strong its to Our debt has low. and leverage PAG non-vehicle keep

we in expense ] $X.X point billion, end impact of the interest debt, the XX plan variable is U.S. interest debt million. rates. At December, $XXX December non-vehicle long-term fixed We XX.X% the XXXX. change end is of in debt leverage long-term floor rate XX% from including our approximately total When debt, would non-vehicle at was was estimate billion up of debt of [ capitalization X.Xx. Debt a our of $XX million to and the rates variable $X.XXX by have was XX% basis

we liquidity XX, us cash $XX $X.X December billion. was of million As to the had and available of

cash plan ahead expect was $X look currently from $XXX X.X% September of was we operations senior million the to billion. repay agreement. in from $XXX $X.X our or up of billion, Total we from million borrowings XXXX. to of Floor December flows notes maturity those this under of credit our As end notes the year, subordinated inventory debt

New inventory shape. good in remains used and

at at end down in in the vehicle vehicles volume days New vehicle of for end the supply, days U.S. XX June. supply, and XX XX-day days ] at XX of at XX. U.S. and vehicles includes is inventory days in XX is of in U.S. premium which U.K. XX which the days and supply the was days days [indiscernible] of in electric supply is [ inventory XX the battery was new a a new from Used XX The the the includes days Day XX U.K. XXXX

I'll At to the this time, remarks. for back call Roger turn final some

Roger Penske

controls. cost new a in vehicle was and gross PAG continued XXXX Randall. on and with Rich very model I'm and one the revenue focus the Shelley, business. you, the you Thank performance the for profit us retail Appreciate today. Yes. and record I year per of and the joining the years history. confident remain of strongest of resilience remarkable company's our pleased particularly our in reflected of profitability

over it you. the operator turn Thank Let's for questions. to

Operator

[Operator Instructions].

Capital. Michael question from first Our comes Ward from Freedom

Michael Ward

same, little a continue And shifting there? Or trucks, whether we the your confidence at that Hello, assuming will your seems continue in allocation that environment. it we're maybe look bit X 'XX, a Page there like your everybody. greater. -- a I When there that look whether you with Is similar can wave it's when it's since at in U.S. anything look -- is on been are of XXXX 'XX, where anything changed? in it's expect -- will anything chart overseas, in I type at mean, consistent. of whether core acquisition pretty slide strategy, we're it's more to I deck, opportunities you mean has

Michelle Hulgrave

Shelley. strategy X% to really revenue. of Hi to X% capital of and Mike, annualized this internally. our billion year, a advantage that us $X.X about grow it's taking allocation of acquiring opportunities before acquisition some We good in did job We've came of available wanting the through talked

We course along stay stock, that in look We're we target with multiples of to the of good X% think revenue, right. in you're I We going for we expanded a us. that did we year year, And U.K. you if solely Australian -- our on acquisition which looked opportunity the took strategy, business. of terms the line, to into this our of retail is acquisition a corner that's balance that our look to So right? going at every at the with market, but same a international significant start we're --

and We also [indiscernible] trucks. we domestically, expanded

So opportunity, the We right secure, for right and the we'll continue price take do definitely to that. like will advantage and that. for but being we safe of

and shareholders our that, Board repurchases. going got of to we're to prioritize. our is side continue $XXX to other return of we've something $XXX which from the million important this On us look return to million authorization over share to year got at I that

And go line. on just so the we'll down

Operator

from Murphy comes of question Bank John from America. Next

John Murphy

inflection team. is auto this like basis. the a afternoon, -- while a hitting time fear going It sure. gross, the happened of of are as what new business of well we've period back front years? question. This business few the Roger, on Good first just point. mentioned, and up the in seems I falling, is but a and was to GPUs think the in think total us in keep not particularly seen as an front-end specifically Roger that's hitting auto you side for this year-over-year Do actually this here first And next the and in quarter to an we're new in sort for constant on inflection the the business, you sequentially we're gross point maybe sequentially

Roger Penske

X,XXX very got when to the new, high XX%. in at we think as We know, overall, at at helps think, X,XXX I where U.K. PAG, those we're which we're maintaining BMW, you premium, numbers. to brands are And you've on concentration. you Mercedes, number at back us. -- year look about look growth, the look overall, last like the brand that and go mix. the as when And we Land July January I have brands XX% you Porsche, at we're Rover at I see of look you one, And were at look certainly when Well, our

couldn't the there to from I that continue standpoint, piece and But That flexing look, that think communicate coming thing to not an of deterioration. strong F&I, overall, to gross would leasing overall really of we're opportunity we loaner terrific past I'm will So right lot the in we used cars. or Obviously, a get these doing back those vehicles new because saying go today. as lease had be cars. that And think won't of can those we'll out will the the that now. that have less the cars financed some a not because to a have used and service. make more profit. are product side the we we cars and back have help also that probably of F&I mix be us cars They'll come coming I And the use out. in premium X-year use on good on We're

at over over the I down in taken X.X So or on day used X.X the growth to think U.K., the just as we U.K. strong. look supply X%. to used on Obviously, continue XX the we've will be from

which is a So because single-digit could dealing higher ability be Toyota downward very used of with some now. now, to And -- we're pressure that's single again, with cars strong driving a right -- margin. Toyota supply some new determinate day

good it. So about I feel

more. coming Hopefully, rates interest think we'll I down. see

So I active finance be now right captive again, also. companies and affordability will key see the being very

that the So maintain helps us growth.

John Murphy

Roger, just forward? be you time those? for BEVs follow going And from that. to see going DPU and about quite that going becoming wait to I delivering to up on realistic Do you're to BEVs with what overburdened is more you they're automaker been relief not a have now. some with the on maybe, know be that

Roger Penske

premium if BEV's were inventories brands. X answer X XX% ago, XX% that months would say in that Well, premium to our you I the to question, high

just so that the And Now we're the was look we from we is at what sell. the that fully Porsche, they've $X,XXX dealers nice which X% is XX%, to a MSRP out, in have the key. nice is pivot. brand. each electric about to discount down a they're made new a than now at notified It's of is already going vehicle were We all that that year about had now, less right across who When really which standpoint take to the BEV's seeing. big active came which really Macan more last version,

John Murphy

technician for do tech these finding What That's scarce are and coming how helpful. on more And hit you plus the growth XXXX as you're in think XXXX. able just are more to you're as lastly, far X% folks hiring to be people in? going and

Roger Penske

would and more Well, network, taking say have across applicants the in we're we from that I than past. the this seeing

organization, this them they're many business when meet move really probably filling of helps we and get ], and really is -- they [ people see per it's at where now ATEC $XX,XXX a using we them. great that with which this in team us. because and off this look is But do probably can our Now we're profit an And the we answer the paid criteria, driving of efficiency gross and funnel the up with per technology, profit. gross to text, generating tech month, obviously, we're up

I us. this again, key is to And think

shops, the and both that of shops. is in not lot truck, investing One of the we're divesting the it, And always we see and secret auto on areas we're shop. sauce in our commercial staying body we're about as this where concerned body body a side also a

as many not I text, grow our negotiating better premium insurance the somewhere it think would people on BMW the or turnover rate companies. a about XX%. turnover. last the own we company when worldwide for in certainly side, a on probably basis. XX% to I XX% was And can I so a fix And think have a And the was So say we we year get because less of in the get properly, we benefit Porsche with our

Operator

Our Wendler Inc. next from Thomas question comes Stephen from

Unknown Analyst

of the How start in be do prebuying in think the to you XXXX. the changes could some prior off truck impactful wanted emission just to commercial demand I with XXXX?

Richard Shearing

Shearing Tom, Rich here. Yes, it's

that's administration that the ability a a clean standard there's at at new regulations. of out seen are also California's truck, at have of or true regulation, you've because, head the waivers bit rescinding look the a the national think away wait Trump and to and then advanced and there the a and little transportation, independent truck the obviously, today, whether taking taking moment EPA, refrigeration of some I looking see

I But of things of those none so quite initiatives. there's And easily. around some turned around a of or think lot those are support

And have investment But I already the made so tell. think is think will OEMs around I now, time book. standards XXXX most a significant the probably in right meeting

into that's play so going the as And to well. results

it we'll as effect there. think I I relates prebuy think see XXXX, don't a much to So of

clarity little As like 'XX. on look than we'll going answer go bit question. to be what are we into regulations a the It 'XX, have may in your easier better to

a I have of recession, recession, marketplace amount think capacity it's than prebuy the a Typically, of capacity comes that's rate longer at a cycles any out there's the been the other temper thing of because in this lasted the -- you quickly. previous the freight lot would that the moment. when is fairly

get not the case truck are to state You used big have loads available the at there, and new then capacity where a a the reduction in meet and And pricing. of trucks the you that's that equilibrium moment. the

With the were fast the 'XX, that very prices come we're the the carriers out not as sold of market frame, past. in time as high 'XX in did seeing used trucks they those at

that's length so freight the recession. of the to And adding

So freight the an amount the in capacity for there's the at excess still market moment. of

Unknown Analyst

major perfect. How thinking kind takes gears here the Maybe be was year-over-year to of improvement about XX to this SG&A, bps and XXXX? should SG&A quarter. puts over little bit we That of a shifting in

Michelle Hulgrave

question. thanks your Tom, for it's Shelley,

daily our the Our SG&A of lowering they're equation, of for team, service into there. streamline vehicle we continuing this should against that and we that some quarter efforts their the an watching our in for inflation of off, in go saw improvement advertising maintenance commended all as terms fight by in loaners. first approach numerator success saw to be We our costs

keep daily just So great low. those our [indiscernible] job of by costs really team

line. look the growing of at profitable more we're side other margin equation, the When looking though, the you at business and

vehicles, there. growth we're of to on we reducing So margin so a that's levers inventory those used XX% X%, up costs, all got gross with kind fixed and get pulling more it, of out

comfortable for still maintained I that XXs X we're We've In last guidance. quarters. think with the it terms of XXXX, low

just trend. the quarter-over-quarter it basis really more XX normalized to as seems again, should feels our to improvements continue to It down see certainly efforts. So we quarter. our And be opposed about be some third being And good a points team commended. from

Roger Penske

comp we're somewhere watching we're really location. of me, XX% metric But also the number at to And gross. side also a fixed. employees much. looking balance This and And compensation to this XX% the our your between talk have people per you that on how don't is variable is you the and about on

controls, doing. low technology, us comp inventory this. So in to at that below when obviously, all. driving at all to say is going XX%. if growth, look want XX we're think and you that we I the this And to don't we're talked going about you think be probably, I we're And at we XXXX look

you're that, to I'd support be say realistic, XX% as So some guidance somewhere on around looking it's maybe to probably on to XX%.

Operator

comes question next from JPMorgan. Our Rajat from Gupta

Rajat Gupta

price is had you [indiscernible] one like business. the quick just utilizing. [indiscernible] I Looks on one

outlook on to for the strong. is us despite quick that line. the you You mean keeping a give parts we I the there [indiscernible] rate follow-up so [indiscernible] in your even on expect And [indiscernible]. I have [indiscernible]. sense mentioned interest grow demand again and XXXX, Could a of could moving

Roger Penske

certainly, that one, our interest about headwind year, look would it to costs million, you $XXX year what I and sale. $XXX. have this was up on were at number When on is, down gain last from the we Well, say you previous from a

replacing still bonds see costs here term who with we're to X%. I We because a $XXX a And million going on higher across X% just higher the them. in have XXXX interest are [indiscernible] in we're those X-year think last days. XX did XX to

standpoint hit bottom. used maybe market, we the the standpoint we from the From of thinking think truck we're

we [indiscernible] hope think look last XX,XXX And doesn't at year, was big help key. time, and out February is present rental and favor. was a Remember, take obviously, taken our on expect in for first going fleet January strong that us the utilization, quarter. have me, that's forward, will difference sold a at make and to to to we we close [indiscernible] to fleet, that's XX,XXX turn a we've that going units It much. our which even in So to which I XX% rental balance and probably going us we

It's don't this have fleet. We to and at utilization also. all point about focusing the balancing profit. because we get or move trucks rental balance Remember, Obviously, to that's got just more around we're once where gross we buy today. utilization, to we're our revenue business the personnel our

So from side, look, still sales little in contract on of on also the our you be from lease perspective, maintenance standpoint, bit a logistics. I'd we're from a a when headwind gain, up but interest certainly and in

around posted be So that it. area, get better, and million same were would a I we pretax is I the hopefully, was $XXX. around bit think say -- shape. a that XXXX. we'll little we're number I in And about see somewhere think through good overall, And available, you We $XXX of we pretax net income

Rajat Gupta

Got of the when could the you have us growth business sense context you perspective, decent I unit of grow used it. on then Can across mean your car to a side. U.K. business if supply you're you Maybe the very Got on the [indiscernible] of through you again? to and U.K. apart start the growing it. -- to stores. in expect And you used give U.S. been auto obviously, high. [indiscernible]. a just again challenges the expect When that start helpful. business That's going do on still reset that

Randall Seymore

in to would U.K. start is next it's with estimate Rajat, say the Randall. car be new U.K. I'll about the challenged. going it's flat. Hi continue The for to I the year for market

similar So conditions. a be we're I think market going in to

really organically going on. to make to strategy the the and cars are taken that we've growth very why that's get So inventory of on we difficult to instead auction buying focus how

the So inventory. it's gross more available given of strategy a

how we're our maximize really new vehicle. Look, are you used [indiscernible] focused our when trades is people retention a of a with or buying vehicle

conditions. So of the to the given get market pulling levers we're inventory some more those are

Roger Penske

vehicle used out was Randall, actually, And a business when comment... on strip you got out, worldwide you [indiscernible] the basis strip our CarShop closures, to up

Richard Shearing

Rajat, U.S. the you look then. market in Yes,

were market comparison, activity Just used [ our new look quarter a the used the up for car retail and SAAR at up X% when the used as quarter near that new car XX, full in and whereas we was full certainly saw there is was the fourth a generates if you that up compare when And that sales $XX level the X%. cars. year, quarter, fourth had the you you to the fourth ] our year, million, retail compared

we the being [ I think a if forecasted from car think per for retail well. see XX used range, I this year up XX.X see we'll that SAAR So correspondingly million standpoint to cars in that's ] as

Rajat Gupta

We that right, months, end last next the the the the of of is this right? XX would difficult be cycle probably have the lease months returns, XX --

Richard Shearing

So go then least into when kicking return should you back beyond up. 'XX start at 'XX,

Roger Penske

the went one the the That's probably from leasing from of XXs. say, in premium is down we because today lease XX%, returns issues have in side

side. we makes can business a And get to years takes a good starts really it because premium critical are these to young vehicle, the difference, vehicles but us us. lease and big we XX, on X from especially this Our on XX those gone plus they're certify before them has margin impact for

Operator

[Operator Instructions].

Our next Whiston question comes from David from Morningstar.

David Whiston

Good afternoon, everyone.

me. questions X for Just

First on affordability is that negative and equity. somewhat related to

for right clientele, your guys is you a not that now? really problem Given

Roger Penske

of is XX, what people this sold when car Obviously, used negative XX. were I XX standpoint cars, the issue XX equity, selling for from months think ago, Well, an trade-ins. we for saw buying we

the lot we of Now obviously, the a side the see taking had premium because a risk on that and of we're we those. residual in don't manufacturers, leasing lot

coming vehicles more want of back. So those we

So that. But I have because you look mix we with customer. subprime across premium that that not our our primarily I business, with X% the don't think and don't of company. about [indiscernible] quite customer. we're only dealing at it's When

David Whiston

side? that your is it is too? exposure the more Or on luxury subprime Where actually? the space Is in premium import

Roger Penske

car, it's be primarily on volume used it new. than is would probably used car the It -- forward and more

David Whiston

you that envision vehicles? come you that Coupa with mean working I brand's been If Okay. buy those were being do to demographic reported it's to that are together. ]. deal who And [

Roger Penske

to be discussions with of here, Well, [indiscernible] have are, but XX- comment would to can't on having lot we we let tangibly is in We we know And but were -- really the with market you've we that we the discussion we don't report items really where read it journey. really point. a a felt this there's so XX-month this open about talking them. we're that at are to proper anything

Operator

the Penske have questions. closing like to for call over Mr. any further I'd back turn remarks. to no We

Roger Penske

a Thanks, everybody. great Thank forward everybody. 'XX. you, continue to had progress. and we're quarter, a Thanks, year, our to great looking Hopefully, operator. We

Operator

This your call. concludes today's conference Thank you participation. for

You may now disconnect.

Penske Automotive (PAG) 13 Feb 252024 Q4 Earnings call transcript