Penske Automotive’s growth trajectory remains on track, though the company has had to change how it finds new employees and used vehicles, said chief executive officer Roger Penske during the company’s Feb. 9 earnings conference call detailing the company’s financial results for the quarter and year ending Dec. 31.

“We had a terrific year,” Penske said. “I look forward to the future and I remain confident about the opportunities I see across our diversified enterprise.”

Penske Automotive is a diversified international transportation services company and operates automotive and commercial truck dealerships principally in the United States, the United Kingdom, Canada, Germany, Italy and Japan. It operated 304 franchise dealerships worldwide at the end of 2021.

Growth

Penske said he expects the company to make acquisitions totaling around 5% or about $1.3 billion of the company’s 2021 total revenues of $26 billion.

At the end of 2020, Penske Automotive had 18,000 new vehicles in inventory and at the end of 2021 it had only 2,000, Penske said.

Because the tight supply of new vehicles reduced the number of car purchases, trade-ins and availability at auctions, the company has shifted to buying used vehicles directly from consumers “on the curb,” Penske said. “It’s something we’re going to have to continue to do, but I’m not sure how deep that well is,” he added.

Penske predicted that the company’s parts and service business will continue to grow because vehicles are being driven more miles.

Enhancing digital footprint

Additionally, the company is continuing enhance its digital footprint.

As part of its omni-channel customer experience, the company is focused on engaging customers more with online appointments and payments and use of videos, Penske said.

“Online payments have increased 76% since the fourth quarter of 2019, our online (business development center) appointments increased 49% to 479,000 when compared  to the fourth quarter of 2019,” he said.

In 2021, the company retailed 10,500 units representing 4% of its U.S. unit sales, via its Preferred Purchase tool, and 14% of customers used the tool to initiate their buying journey, he said. Preferred Purchase enables customers to conduct all or some of the car-buying process online.

During the fourth quarter, the company sold 3,000 vehicles using its buy-online tool in the U.K.

He said the company is currently piloting online retail tools with Mini, BMW, Nissan, Lincoln and Porsche and expects to launch pilot programs with Toyota and Lexus this year.

Hiring is a big issue

A “bigger issue,” Penske said, is “we’re having a tough time at this particular time maintaining the number of key people we need to carry on the business in a professional way.”

He attributed the current dearth of employees to people working at home and having found other ways to earn income.

So, the company has made “significant” investments in recruiting and employee training, Penske said.

 “We’ve had to add recruiters across the whole country, whether it’s in truck leasing-rental or logistics or overall business,” he said. “It’s a big challenge for us. We’ve added significant investment not only in people, but in training in order to keep people loyal to the company and to attract them going forward.”

CarShop results

In March 2021, Penske Automotive renamed its U.S. based CarSense used-vehicle centers  CarShop, the name of its used-car centers in the U.K., to create a single global brand for its stand-alone, used-vehicle operation.

It added six CarShop locations in 2021, for a total of 23.

In the quarter, CarShop’s retail unit sales increased 24.3% to 14,815 its revenue grew 61.0%  to $393.9 million and its average per-vehicle transaction price was up 31% to $21,953.

In that same three-month period, CarShop’s same store revenue rose 38.4%  and its same-store average gross profit per unit retailed was up 18.2% to $2,750.

For the entire year, CarShop retail unit sales increased 19.2% to 63,403 and its revenue increased 43.2 % to $1.5 billion.

By the end of 2023, the company plans to sell 150,00 units annually at 40 CarShop stores, increase its revenues from $2.5 billion to $3 billion while generating earnings before taxes of $100 million, the company said.

Q4 and full-year results

In its fourth quarter that ended Dec. 31,  Penske Automotive’s net income from continuing operations increased 55.1% to $310.4 million on revenues that increased 8.3% to $6.3 billion.

Also in the quarter, the company’s new-unit retail sales dropped 17.7% to 42,813 and its used unit retail sales grew 3.3% to 58,919 . On a same store basis, new unit sales dropped 18.9% to 41,895 and used-unit sales dipped 0.8% to 55,921 in the quarter.

For the entire year, the company’s net income from continuing operations increased 118.4% to $1.2 billion on revenues that increased 25% to $25.6 billion.

Also for the entire year, the company increased its new unit retail sales 9.5% to 195,384 and its used unit retail sales grew 13.3% to 264,520.

For the entire year, on a same store basis, new unit retail sales rose 10.3% to 193,946 and used units were up 11.7% to 257,386.

Gross profit per new vehicle retailed grew 69.4% to $7,006 in the quarter and gross profit per used vehicle retailed grew 58.2% $2,884.

For the entire year, gross profit per new vehicle retailed rose 46.2% to $5,351 and gross profit per used vehicle retailed increased 51.3% to $2,520.