BLOOMFIELD HILLS, Mich. -

As Penske Automotive Group posted a 20.4-percent jump in used retail sales, the company posted record third quarter adjusted income from continuing operations and related earnings per share.

The company reported last Friday that its adjusted income from continuing operations attributable to common shareholders increased 19.1 percent to $54.3 million and related earnings per share increased 20.0 percent to $0.60 per share. The performance compares to adjusted income from continuing operations attributable to common shareholders of $45.6 million, or $0.50 per share in the same period last year.

Penske retailed 39,844 used units during the third quarter, up from 33,084 vehicles in the year-ago period.  The total revenue of those used models climbed 8.4 percent as Penske noted it shot up to $924.8 million from $853.0 million.

However, the group’s gross profit per used vehicle retailed in the third quarter softened by 7.8 percent year-over-year, slipping from $1,978 to $1,824.

When asked about his used-car operation, chairman Roger Penske told Wall Street analysts during a conference call, “I think we’re seeing higher-mileage trades; there’s no question.

“We have the benefit today of retailing what we would have been wholesaling in the past,” Penske said. “Our cost of sale for used cars has gone down about $2,000 during the quarter. That’s demonstrating that we’re selling older cars in the marketplace. We’ll continue to do that because this is a profit opportunity and an internal reconditioning margin opportunity, plus a customer.”

Later during Friday’s call, Penske added, “I think used-car prices have gone much, much higher than any of us expected.” He went on to discuss the financing part of turning those used models.

“As (used-vehicle prices) have gone higher, you have somewhat of a cap on profitability because the advance rates on used cars,” Penske said. “When they get too high, the finance companies just won’t do it. By the time you put finance costs and whatever else you’re selling from an aftermarket standpoint and what the market is, the amount of financing they can offer is capped.”

However Penske is expecting some price moderation as 2012 finishes.

“I think you’ll start to see some deterioration. Obviously we see it normally in the fourth quarter because the year-end. A lot of the used-car guys need to get rid of their cars and pay their banks,” Penske said.

“To me, we’re still going to look at digging deeper and selling lower in the lower cost of sales areas, which will give us more volume,” he continued.

As further testament to the retailer’s commitment to the used industry, company executive Greg Penske will be on hand to accept Auto Remarketing’s 2012 CPO Dealer of the Year presented by NCM Associates. The honor is going to one of Penske's West Coast stores, Longo Toyota, a dealership in El Monte, Calif.

Auto Remarketing publisher Bill Zadeits and NCM president and chief executive officer Paul Faletti Jr. will present Greg Penske and Longo Toyota with the award on Nov. 12 at the CPO Forum in Scottsdale, Ariz.

Top certified pre-owned dealers will also participate in the “The Best of the Best: Top CPO Dealers Share Best Practices on What it Takes to be No. 1” panel discussion during the CPO Forum, which is being held next week as part of the Used Car Week series of conferences.

New-Vehicle Performance

On the new-model side, Penske enjoyed a 26.3-percent rise in retail sales year-over-year. The group turned 48,307 new units during the third quarter, up from 38,248 vehicles a year earlier.

But Penske’s gross profit per new vehicle sold dropped even more than it did in the used department. The figure slipped 12.4 percent to $2,821 from $3,221.

“The company’s third quarter results continue to demonstrate the strength of the auto retail sales environment in the U.S.,” Penske said. “We experienced strong new unit sales throughout the quarter, particularly through our volume foreign brands which increased 33.9 percent, including 30.7 percent on a same-store basis.

“While new and used unit sales were strong, we experienced pricing pressure in our markets, especially when compared to the third quarter last year when a lack of inventory at our Toyota, Honda and Nissan dealerships drove higher gross profits per unit,” he added.