BLOOMFIELD HILLS, Mich. -

In releasing its second-quarter results, Penske Automotive Group revealed record-breaking revenue growth, as well as double-digit rises in new and used retail sales. And some of these trends may be a direct result of improved inventory levels, which also spiked since the beginning of 2012.

For the second quarter of this year, revenue increased 19.2 percent to $3.4 billion; and for the first half of 2012, revenue increased 18.6 billion to $6.6 billion.

The company noted the revenue surge for Q2 was driven by an increase in total retail unit sales of 20.9 percent.

Breaking it down further, new unit sales increased by 24.8 percent (46,766 units sold), and used retail unit sales grew by 16.4 percent (37,580 units sold).

This represents a 0.8-to-1 used-to-new ratio for the dealer group.

Furthermore, total same-store used unit sales increased 8.5 percent, including a 9-percent increase in the U.S.

“I believe our results continue to demonstrate the strength and diversity of the Penske Automotive business model. In the past 12 months, we have added significant new topline growth to the business through acquisitions, and our business continues to generate substantial same store growth,” chairman Roger Penske noted in Tuesday’s company conference call to highlight its second-quarter results.

“We achieved significant expense leverage during the first half of this year through our focus on gross profit generation and expense management. I remain optimistic about our business. Pent-up demand, strong credit availability and many new product launches coming to the market should continue to keep demand strong in the U.S. and our international markets.

“Based on these factors, we expect the U.S. auto market to sell 14 to 14.5 million units this year, with a 10- to 15-percent increase at the retail level,”  he continued, stressing some of the reasons behind a strong quarter for the company, as well as the market as a whole.

During the company’s Q2 conference call, highlighting the quarter results, the company’s chairman also noted double-digit rises in retail revenue, breaking it down by region and brand.

First off, Penske explained same-store basis retail revenue grew 9.4 percent; and for the U.S., specifically, it grew 14 percent.

Breaking it down by segment, same-store retail revenue increased 6.1 percent for premium luxury brands, 16 percent in volume foreign and 19 percent for domestics, the executive explained during the call.

“Looking at our revenue mix, it pretty much consists of the U.S. at 63 percent and our international revenue was 37 percent,” Penske added.

As for brand mix, officials noted it remained consistent with last year’s results; premium luxury at 68 percent, foreign at 28 percent and the Big 3 at 4 percent.

“During the quarter, we outperformed new vehicle sales both in the U.S. and the U.K.,” Penske noted.

On the other hand, for individual vehicles, the average transaction price per unit fell for both new and used.

The average transaction price for a new unit was $36,959, down 1 percent; and for used, the number came in at $25,666, down 3.1 percent.

Q2 Sees Inventory Climb

And with the natural disasters in Japan just last year, along with an overall quality used-vehicle shortage, it seems inventory levels are looking up for 2012.

“Looking at the balance sheet at the end of June, vehicle inventory was at $1.7 billion, which was up $255 million when compared to December of last year,” Penske noted. 

Breaking it down further, new-vehicle inventory was up $183 million, and used was up $72 million.

Looking at it on a same-store basis, vehicle inventory increased $66 million from the end of March.

New-vehicle inventory was up $31 million, and used inventory was up $35 million.

“As of June 30th, our worldwide supply of inventory was at 56 days versus 53 last year; 43 on used versus 39 last year,” Penske continued.

Commenting on the quarter results as a whole, chairman Roger Penske said, "The company’s second-quarter results reflect strong performance across both the U.S. and International markets.

“We experienced strong unit sales throughout the quarter, particularly through our Toyota, Honda and Lexus dealerships, and we increased our service and parts gross margin by 130 basis points to 58.6 percent. Further, I was particularly pleased that we were able to drive a 230 basis point improvement in selling, general and administrative expenses as a percent of gross profit,” he continued.
 
In other news from the company, Penske  recently came in at No. 3 in  The Top 125 Used-Car Dealer Groups from Auto Remarketing, acheiving the third place spot with 188,245 used retail unit sales last year.

The order of dealer groups was based on 2011 retail used-vehicle sales, and the numbers and rankings were compiled from the Automotive News Data Center. The complete list of The Top 125 Used-Car Dealer Groups can be found in the June 15–30 print issue of Auto Remarketing or through this page.