Penske reports record net income for Q4 and year

Penske Automotive Group Inc. today reported its highest fourth-quarter and full-year net income in company history, driven by higher retail sales and cost controls.

The company expects its revenue to grow at a “double digit" percentage clip this year. It said half of the growth will come from increased same-store sales and half from acquisitions.

Last year, Penske completed acquisitions or was awarded new stores that are expected to contribute $850 million in annual revenue.

For the fourth quarter, Penske’s net income rose 21 percent to $59.7 million, as revenue increased 15 percent to $3.86 billion.

The higher revenue came on an 11 percent increase in retail sales to 90,622 units, with sales of new units rising 7 percent and used units rising 18 percent. On a same-store basis, retail sales — new and used combined — rose 10 percent to 87,924.

'Get scale'

When shopping for dealerships, Penske said, “We look at a business based on profitability where we can get scale."

Penske said achieving economies of scale on new acquisitions takes time to show up in the bottom line.

“We can’t overnight consolidate offices," Penske said. “In the U.K., that is a priority for us. In the U.S., we have significant opportunities in the pipeline and overall. Only about 10 percent of the market is consolidated today — so it gives us an opportunity."

Penske said the company is looking to do a joint venture in Spain, but provided no further details.

Penske ranks No. 2 on the Automotive News list of the top 125 dealership groups in the United States, with retail sales of 180,764 new vehicles in 2012.