On the used-car side of its business, Penske Automotive Group has taken a “retail first” philosophy and that — along with support from PenskeCars.com as well as off-lease and loaner volumes — has helped generate some of the pre-owned success within the dealer group’s retail operations.

When asked last week by an analyst during the group’s quarterly earnings conference call to share why the used side of the group’s business has outperformed new on a percentage basis, chairman Roger Penske began by honing in on the dealer group’s philosophy on its used-car wholesale-to-retail sales ratio.

The group aims to keep this ratio under 20 percent, and this approach, Penske said, “drives at least some attention to the used cars.”

“I think the other area that has been positive for us is our Internet (presence); our PenskeCars.com website has been keen,” he said. “We had about 60 percent of the cars that came out of the rental car business that were sold this year went to our dealerships.

“But to me, the key point is that we’re retailing cars which have higher mileage. We put a warranty on those, maybe three to six months on the powertrain for the customer, in most cases. And with that, we’ve seen quite an increase,” Penske continued.

The company also has a large leasing portfolio, Penske said, which has helped on the used-car side, as well.

“That off-lease group of cars that comes to us has been very profitable for us, also, and gives us some more vehicles,” he said

And within the company’s loaner car program, Penske looks to move those vehicles in six to nine months, instead of waiting a year, which he said has been “key.”

Used Car Results

The dealership group retailed close to 15 percent more used vehicles last year, capping 2013 with a 17.8-percent increase in used sales for the fourth quarter.  

Penske sold a grand total of 166,419 retail used vehicles in 2013, up 14.7 percent from the 2012 total. Its Q4 used retail sales were up to 41,112, compared to 34,912 used retail sales in the prior-year period.

Penske generated $1,869 in gross profits per used car retailed in 2013, down 4.2 percent from the 2012 figure. In Q4, gross profit per used retail sale was at $1,742, down 6.3 percent year-over-year.