Penske Automotive Group, Inc.: Form 10-Q for the period ended Jun 30, 2025

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Overview

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,400 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs nearly 44,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 414,000 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Business Overview

During the six months ended June 30, 2025, our business generated $15.3 billion in total revenue, which is comprised of approximately $13.1 billion from retail automotive dealerships, $1.8 billion from retail commercial truck dealerships, and $412.7 million from commercial vehicle distribution and other operations. We generated $2.6 billion in gross profit, which is comprised of $2.2 billion from retail automotive dealerships, $284.6 million from retail commercial truck dealerships, and $88.4 million from commercial vehicle distribution and other operations.

Retail Automotive. We are one of the largest global automotive retailers as measured by the $26.2 billion in total retail automotive dealership revenue we generated in 2024. We are diversified geographically with 57% of our total retail automotive dealership revenues in the six months ended June 30, 2025, generated in the U.S. and Puerto Rico and 43% generated outside of the U.S. We offer over 40 vehicle brands with 73% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche, and 21% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the six months ended June 30, 2025. As of June 30, 2025, we operated 353 retail automotive franchised dealerships, of which 148 are located in the U.S. and 205 are located outside of the U.S., principally in the U.K. As of June 30, 2025, we also operated 15 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, eight dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 280,000 vehicles in the six months ended June 30, 2025.

In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Some of our dealerships in the U.K. and Europe operate under an agency model where we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue with no corresponding cost of sale.

During the six months ended June 30, 2025, we sold one retail automotive franchise and opened one retail automotive franchise in the U.S., and we sold one used vehicle dealership in the U.K. In July 2025, we acquired one retail automotive franchise in Italy. Retail automotive dealerships represented 85.7% of our total revenues and 85.5% of our total gross profit in the six months ended June 30, 2025.

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of June 30, 2025, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 10,203 new and used trucks in the six months ended June 30, 2025. This business represented 11.6% of our total revenues and 11.1% of our total gross profit in the six months ended June 30, 2025.

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, energy solutions, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.7% of our total revenues and 3.4% of our total gross profit in the six months ended June 30, 2025.

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, freight management, and dry van truckload carrier services. We recorded $86.7 million and $85.4 million in equity earnings from this investment for the six months ended June 30, 2025 and 2024, respectively.

Outlook/Recent Developments

Tariffs. On March 26, 2025, U.S. President Trump announced the imposition of a 25% tariff on imports of automobiles and certain automobile parts (the "Automotive Tariffs"). These tariffs, which became effective on April 3, 2025, apply to imported fully-assembled passenger vehicles including sedans, SUVs, crossovers, minivans, and cargo vans as well as light trucks, and also apply to certain imported automotive parts. The situation regarding tariffs remains fluid.

In addition to the Automotive Tariffs, on April 2, 2025, U.S. President Trump announced a baseline tariff of 10% applied to imports from most countries, with limited country and product exceptions, and elevated tariff rates imposed on many specific countries (the "Reciprocal Tariffs"), although the implementation date of the Reciprocal Tariffs for countries not having reached new trade agreements with the U.S. has been extended until August 1, 2025. The vehicles and parts subject to the Automotive Tariffs are not subject to the Reciprocal Tariffs, although on April 29, 2025, U.S. President Trump announced further actions to reduce the compounding effects of other tariffs on vehicles and parts subject to the Automotive Tariffs and provide a partial reimbursement for tariffs imposed on foreign parts included in certain domestically assembled vehicles.

In response to these and other recently announced tariffs, certain key trading partners of the U.S. have negotiated new trade agreements with the United States to reduce the impact of tariffs, while trade discussions with other key partners remain ongoing. Despite new publicly announced trade agreements and ongoing bilateral discussions with key trading partners, the nature and scope of any new trade agreements remains uncertain.

It is difficult to assess the impact of tariffs and non-tariff trade barriers on our business and results of operations, particularly as the situation regarding tariffs and changes to trade policy remains fluid and our manufacturer partners have taken varying approaches in response. If sustained in their current or similar forms, tariffs are expected to broadly impact the automotive industry and supply chain and will affect a substantial portion of the retail automotive and commercial truck vehicles and parts we sell. The Automotive Tariffs and other tariffs have increased, or are likely to increase, the cost of acquiring vehicles and parts, as well as our inventory carrying costs going forward, which may alter the future mix and demand for certain vehicles produced by our manufacturer partners. Further, tariffs affecting new vehicles may potentially increase demand for used vehicles and our service and parts operations. While not subject to the Automotive Tariffs, the new trucks sold by Premier Truck Group ("PTG") are subject to the Reciprocal Tariffs and other tariffs which have been or may be announced and may have similar effects on the retail truck industry. We continue to monitor the impact of tariffs on our business and results of operations. For an additional discussion of certain risks associated Tariffs, see Part II, Item 1A. Risk Factors, "Tariffs and Trade Risk" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025.

Electric Vehicle Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles in an effort to combat perceived negative environmental effects, in many cases requiring vehicle manufacturers to achieve progressively lower emissions for new vehicles. For example, in 2023 and 2024, the Environmental Protection Agency ("EPA") allowed the State of California Air Resource Board (“CARB”) to adopt several environmental regulations exceeding various federal standards, including (i) the Advanced Clean Cars II (“ACCII”) program to rapidly accelerate the transition to Zero Emissions Vehicles (ZEVs) with 100% ZEV adoption required by model year 2035 (with certain allowances for hybrid gas/EVs), (ii) the Omnibus Low NOx program (the “Omnibus Rule”) to reduce nitrogen oxides (NOx) emissions from heavy-duty vehicles and (iii) the Advanced Clean Trucks rule (“ACT”) to phase out the sale of medium and heavy-duty gas-powered commercial vehicles over time by requiring a certain percentage of each manufacturer’s commercial vehicles sold within the state to be ZEVs. Certain states subsequently adopted California’s mandates, in whole or in part.

However, a renewed scrutiny by the U.S. executive branch, certain administrative agencies, and the U.S. Congress, as well as various international regulatory agencies, has cast uncertainty over the timelines and ultimate implementation of various environmental regulations and electrification mandates and in some cases, has resulted in their modification or repeal. In June 2025, three Congressional Review Act resolutions blocked the implementation of California’s vehicle emissions mandates including ACCII, the Omnibus Rule, and ACT, with the practical effect of repealing California’s electric vehicle mandates and those of other states adopting California’s rules. Although California and ten other states have filed litigation challenging the procedural process undertaken by the U.S. Congress to repeal these mandates, the timing and outcome of such litigation is uncertain.

Further, the EPA has recently stated it would reconsider the agency’s 2024 rules that would require a reduction in passenger vehicle fleetwide tailpipe emissions by nearly 50% by 2032 compared with 2027 projected levels, as well as the agency’s “Clean Trucks Plan” regulation adopted in 2022, which aims to significantly reduce certain smog- and soot-forming emissions from heavy-duty vehicles beginning in model year 2027. It is uncertain whether these rules will be further revoked or modified.

In addition, although representatives of the U.K. government have proposed a ban on the sale of internal combustion engines in new cars and new vans beginning in 2030, the phase out has been recently moderated to allow hybrid cars to be sold until 2035, with limited exceptions to the ZEV mandate for certain lower volume manufacturers. The status of, and any impact to our business from, these executive, legislative, and regulatory efforts remains uncertain.

On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was signed into law. The bill provides consumers with a tax deduction for the interest on loans for certain U.S.-assembled vehicles and eliminates federal Electric Vehicle ("EV") tax credits for vehicles purchased or leased after September 30, 2025. The OBBBA also reinstates 100% bonus depreciation for qualified property placed in service after January 19, 2025. This provision allows for immediate expensing for income tax purposes of the full cost of eligible tangible assets, including certain machinery, equipment and building improvements. Further, the OBBBA has effectively eliminated fines for automotive manufacturers who fail to meet federal fuel efficiency standards for vehicles dating back to model year 2022, which is expected to result in significant savings for vehicle manufacturers. We are currently evaluating the impact of the OBBBA on our consolidated financial statements and the cash flow implications. For an additional discussion of certain risks associated with our business related to the environmental regulations, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Retail Automotive. During the six months ended June 30, 2025, U.S. industry new light vehicle sales increased 3.2%, to 8.1 million units, including a 5.1% increase in retail sales, partially offset by a 2.1% decrease in fleet sales, as compared to the same period last year. New vehicle sales were positively impacted by continued strong consumer demand in the U.S., particularly in April and May 2025 in response to tariff announcements. Although U.K. new vehicle registrations increased 3.5% to 1.0 million registrations, including a 2.8% increase in fleet sales and a 5.0% increase in retail sales, as compared to the same period last year, the sale of new premium brand vehicles across the U.K., representing a significant portion of our U.K. portfolio, decreased 6.8% over such period. New vehicle sales were positively impacted by continued strong consumer demand in the U.S. Our new vehicle days' supply is 57 as of June 30, 2025, compared to 49 as of December 31, 2024. Our used vehicle days' supply is 44 as of June 30, 2025, compared to 47 as of December 31, 2024. We continue to expect strong demand for our service and parts operations driven by increased vehicle sales in recent years, increased average age of vehicles, recall campaigns, increased miles driven, and vehicle complexity.

Retail Commercial Truck Dealership. During the six months ended June 30, 2025, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 6.9% from the same period last year to 208,600 units. The Class 6-7 medium-duty truck market increased 0.8% from the same period last year to 73,613 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 10.6% from the same period last year to 134,987 units. As discussed above, the new trucks sold by PTG, are subject to the Reciprocal Tariffs and other tariffs which have been or may be announced. We believe that, although PTG may experience increased demand for its service and parts operations and used trucks as a result of the tariffs, ongoing tariff volatility combined with general economic and freight market uncertainty may suppress new and used commercial vehicle demand. As of June 30, 2025, the Class 6-8 medium- and heavy-duty truck backlog is 140,938 units according to data published by ACT Research compared to 215,156 as of June 30, 2024, and a decrease of 27.4% since the prior quarter.

Commercial Vehicle Distribution and Other. During the six months ended June 30, 2025, the Australian heavy-duty truck market reported sales of 7,142 units, representing a decrease of 18.6% from the same period last year, while the New Zealand market reported sales of 1,140 units, representing a decrease of 40.7% from the same period last year. Our power system operations continue to grow through sales in the off-highway segments such as energy solutions, which provide power systems for large data centers, mining, and military applications.

Penske Transportation Solutions. A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. PTS also rents additional trucks to commercial customers in response to demand for freight as well as consumer customers. With a managed fleet of over 414,000 vehicles at June 30, 2025, PTS regularly sells trucks in order to maintain a low fleet age as well as in response to changes in demand for truck leasing and records a gain or loss on those sales. PTS has experienced an increase in revenue from its leasing and maintenance business, though it has experienced a decline in truck rental revenue and lower gain on sale of used trucks associated with continued weakness in the freight market. In response, PTS has decreased the size of its consumer and commercial rental fleets, aimed at improving the utilization rate of the fleet and has implemented certain operational improvements to mitigate the prolonged recessionary freight environment. PTS could also be negatively impacted by the tariffs discussed above, which could increase its costs of acquiring vehicles and parts as well as negatively impact the general freight environment.

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, and our other periodic reports filed with the Securities and Exchange Commission.

Operating Overview

Automotive and commercial truck dealerships represent 97.3% of our revenue and 85.1% of our earnings before taxes during the six months ended June 30, 2025. Income from our PTS investment represents 12.9% of our earnings before taxes during the six months ended June 30, 2025. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by vehicle manufacturers.

Our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles, used vehicles, finance and insurance products, and service and parts transactions. Our gross profit varies across product lines with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins. Factors such as inventory and vehicle availability, customer demand, consumer confidence, unemployment, general economic conditions, seasonality, weather, credit availability, the impact of tariffs and non-tariff trade barriers, fuel prices, and manufacturers' advertising and incentives also impact the mix of our revenues and therefore, influence our gross profit margin. The results of our commercial vehicle distribution and other business in Australia and New Zealand are principally driven by the number and types of products and vehicles ordered by our customers.

Across our consolidated business, total revenue decreased $34.4 million, or 0.4%, and gross profit increased $32.5 million, or 2.6%, during the three months ended June 30, 2025. For the six months ended June 30, 2025, total revenue increased $122.3 million, or 0.8%, and gross profit increased $56.3 million, or 2.2%, compared to the same periods in 2024.

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar, our U.K. results of operations would translate into less U.S. Dollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $136.6 million and $20.2 million, respectively, for the three months ended June 30, 2025, and increased revenue and gross profit by $96.2 million and $13.3 million, respectively, for the six months ended June 30, 2025, compared to the same periods in 2024. Foreign currency average rate fluctuations increased earnings per share by approximately $0.03 per share for the three months ended June 30, 2025, and increased earnings per share by approximately $0.02 per share for the six months ended June 30, 2025, compared to the same periods in 2024. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit decreased 2.2% and increased 1.0%, respectively, for the three months ended June 30, 2025, and increased 0.2% and increased 1.7%, respectively, for the six months ended June 30, 2025, compared to the same periods in 2024.

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, service vehicle loaner expenses, vehicle delivery and preparation expenses, utilities, and other expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

Equity in earnings of affiliates principally represents our share of the earnings from PTS, along with our investments in other joint ventures and other non-consolidated investments.

Floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that are secured by those vehicles. Other interest expense consists of interest charges on all of our interest-bearing debt, other than interest relating to floor plan financing. The cost of our variable rate indebtedness is based on the prevailing benchmark interest rates in our various markets.

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on sales of new and used vehicles, service and parts, and repair and maintenance services, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, tariffs and non-tariff trade barriers, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; changes in the retail model from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of EVs; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on our acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes, or work stoppages by its employees, a reduction in PTS' asset utilization rates, continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various government mandates concerning the electrification of its vehicle fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicles sales, including those related to the sales process, emissions standards or electrification, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, and our other periodic reports filed with the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the application of accounting policies that often involve making estimates and employing judgments. Such judgments influence the assets, liabilities, revenues, and expenses recognized in our financial statements. Management, on an ongoing basis, reviews these estimates and assumptions. Management may determine that modifications in assumptions and estimates are required, which may result in a material change in our results of operations or financial position.

The accounting policies and estimates that we believe to be most dependent upon the use of estimates and assumptions are revenue recognition, goodwill and other indefinite-lived intangible assets, investments, income taxes, and lease recognition. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K for additional detail and discussion of these critical accounting policies and estimates. There have been no material changes in critical accounting policies and estimates as described in our most recent Annual Report.

Refer to Part I, Item 1, Note 1 and Note 3 of the Notes to our Consolidated Condensed Financial Statements for disclosures regarding estimates and judgments related to lease recognition. Refer to Part I, Item 1, Note 2 of the Notes to our Consolidated Condensed Financial Statements for disclosures regarding estimates and judgments related to revenue recognition. Refer to "Income Taxes" within Part I, Item 1, Note 1 of the Notes to our Consolidated Condensed Financial Statements for disclosures regarding estimates and judgments related to income taxes.

Results of Operations

The following tables present comparative financial data relating to our operating performance in the aggregate and on a "same-store" basis. Dealership results are included in same-store comparisons when we have consolidated the acquired entity during the entirety of both periods being compared. As an example, if a dealership were acquired on January 15, 2023, the results of the acquired entity would be included in annual same-store comparisons beginning with the year ended December 31, 2025, and in quarterly same-store comparisons beginning with the quarter ended June 30, 2024.

Some of our dealerships in the U.K. and Europe operate under an agency model where we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue with no corresponding cost of sale. We have presented below units sold under this agency model as "Agency units". Moreover, our retail automotive revenue per unit retailed and related gross profit per unit retailed for new vehicles excludes agency unit sales and associated revenue.

Our results for the six months ended June 30, 2025, include a gain of $52.3 million from the sale of one retail automotive franchise in the U.S. in the first quarter of 2025, resulting in an after-tax gain of $38.9 million, or $0.58 per share. This gain was partially offset by impairments and other charges in the first quarter of 2025 of $25.2 million (none of which was individually material), resulting in an after-tax expense of $20.9 million, or $0.31 per share. This resulted in a net after-tax gain of $18.0 million, or $0.27 per share.

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Retail Automotive Dealership New Vehicle Data

(In millions, except unit and per unit amounts)

Units

Retail unit deliveries of new vehicles decreased from 2024 to 2025 due to a 2,963 unit, or 5.0%, decrease in same-store new retail unit deliveries, coupled with a 494 unit decrease from net dealership acquisitions/dispositions throughout the second half of 2024. Same-store retail units delivered decreased 0.2% in the U.S. and decreased 11.0% internationally. Overall, new retail unit deliveries increased 0.6% in the U.S. and decreased 13.3% internationally. We believe the decrease in same-store retail unit deliveries is primarily due to a comparative decrease in the sale of premium branded vehicles across the U.K. and decreased manufacturer incentives and other programs, partially offset by increased consumer demand in the U.S. in response to tariff announcements.

Revenues

New vehicle sales revenue decreased from 2024 to 2025 due to a $69.9 million, or 2.4%, decrease in same-store revenues, partially offset by a $15.9 million increase from net dealership acquisitions/dispositions. Excluding $52.8 million of favorable foreign currency fluctuations, same-store new revenue decreased 4.2%. Same-store revenue (excluding agency) decreased due to the decrease in same-store new retail unit sales, which decreased revenue by $202.1 million, partially offset by a $2,815 per unit increase in same-store comparative average retail selling price (including a $1,117 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $129.5 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to changes in the mix of higher priced units sold.

Retail gross profit from new vehicle sales decreased from 2024 to 2025 due to an $11.8 million, or 4.1%, decrease in same-store gross profit, partially offset by a $3.2 million increase from net dealership acquisitions/dispositions resulting in sales of more premium branded vehicles with comparatively higher gross margins. Excluding $5.8 million of favorable foreign currency fluctuations, same-store gross profit decreased 6.2%. Same-store gross profit (excluding agency) decreased due to the decrease in same-store new retail sales, which decreased retail gross profit by $18.4 million, partially offset by a $73 per unit increase in same-store comparative average gross profit (including a $98 per retail unit increase attributable to favorable foreign currency fluctuations), which increased gross profit by $3.4 million. Excluding favorable foreign currency, same-store comparative average retail gross profit per unit (excluding agency) decreased by $25 per unit.

Retail Automotive Dealership Used Vehicle Data

(In millions, except unit and per unit amounts)

Units

Retail unit sales of used vehicles decreased from 2024 to 2025 due to a 7,544 unit, or 12.3%, decrease in same-store used retail unit sales, coupled with a 3,028 unit decrease from net dealership dispositions. Our same-store units decreased 3.9% in the U.S. and decreased 19.8% internationally. Overall, our used units decreased 3.3% in the U.S. and decreased 26.6% internationally. Same-store unit sales were impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships which sell fewer units. Excluding the decrease of 5,153 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles decreased by 2,391 units. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed decreased 6.3% internationally and decreased 4.6% overall and same-store used units decreased 5.5% internationally and decreased 4.6% overall. In addition to the impact from net dealership dispositions, we believe the decrease in same-store retail sales of used units was driven largely by a change in inventory management strategy of our used vehicles internationally, coupled with challenges in sourcing lower mileage, higher quality used vehicles and comparatively fewer lease returns in the U.S.

Revenues

Used vehicle retail sales revenue decreased from 2024 to 2025 due to a $47.4 million decrease from net dealership dispositions, coupled with a $27.9 million, or 1.3%, decrease in same-store revenues. Excluding $63.5 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 4.2%. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales discussed above, which decreased revenue by $267.6 million, partially offset by a $4,472 per unit increase in same-store comparative average selling price (including a $1,185 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $239.7 million. We believe the increase in same-store comparative average selling price is primarily due to the transition of our former U.K. CarShop locations to Sytner Select dealerships which focus on lower volume, higher priced and higher margin inventory, coupled with affordability and availability concerns with respect to new vehicles due to tariff implications.

Retail gross profit from used vehicle sales increased from 2024 to 2025 due to an $8.8 million, or 7.6%, increase in same-store gross profit, partially offset by a $0.4 million decrease from net dealership dispositions. Excluding $3.4 million of favorable foreign currency fluctuations, same-store gross profit increased 4.7%. The increase in same-store gross profit is due to a $431 per unit increase in same-store comparative average gross profit (including a $64 per unit increase attributable to favorable foreign currency fluctuations), which increased gross profit by $23.1 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $14.3 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to a change in inventory management strategy internationally and the transition of our U.K. CarShop locations to Sytner Select dealerships which focus on lower volume, higher priced and higher margin inventory, coupled with the increase in gross profit per unit as a result of a decreased supply of used vehicles in the U.S. from declining lease renewals as well as increased consumer demand for used vehicles in response to tariff announcements.

Retail Automotive Dealership Finance and Insurance Data

(In millions, except unit and per unit amounts)

Finance and insurance revenue decreased from 2024 to 2025 due to a $5.1 million decrease from net dealership dispositions, coupled with a $3.1 million, or 1.5%, decrease in same-store revenue. Excluding $3.6 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 3.3%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $19.8 million, partially offset by a $162 per unit increase in same-store comparative average finance and insurance retail revenue (including a $35 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $16.1 million. Same-store finance and insurance revenue per unit (excluding agency) increased 4.6% in the U.S. and increased 14.4% in the U.K. We believe the increase in same-store finance and insurance revenue per unit (excluding agency) is primarily due to the increase in average selling price of both new and used vehicles, coupled with enhanced product offerings internationally and our efforts to increase product penetration across the markets we serve.

Retail Automotive Dealership Service and Parts Data

(In millions)

Revenues

Service and parts revenue increased from 2024 to 2025, with an increase of 7.7% in the U.S. and an increase of 9.8% internationally. The increase in service and parts revenue is due to a $51.2 million, or 6.9%, increase in same-store revenues, coupled with a $12.6 million increase from net dealership acquisitions. Excluding $16.3 million of favorable foreign currency fluctuations, same-store revenue increased 4.7%. The increase in same-store revenue is due to a $28.4 million, or 5.3%, increase in customer pay revenue and a $23.4 million, or 15.0%, increase in warranty revenue, partially offset by a $0.6 million, or 1.2%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to additional warranty opportunities due to manufacturer recalls, vehicles remaining on the road longer due to affordability considerations, including in light of tariff announcements, and increasing vehicle complexity, as well as increases in labor rates, repair orders, and the price of parts.

Service and parts gross profit increased from 2024 to 2025 due to a $37.9 million, or 8.8%, increase in same-store gross profit, coupled with a $3.5 million increase from net dealership acquisitions. Excluding $8.8 million of favorable foreign currency fluctuations, same-store gross profit increased 6.7%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $30.3 million, coupled with a 1.1% increase in same-store gross margin from 58.1% to 59.2%, which increased gross profit by $7.6 million. The increase in same-store gross profit is due to an $18.0 million, or 7.1%, increase in customer pay gross profit, a $13.5 million, or 16.1%, increase in warranty gross profit, and a $6.4 million, or 6.9%, increase in vehicle preparation and body shop gross profit. We believe the increase in same-store gross margin is primarily due to a change in the mix of warranty and customer pay, particularly in the U.S.

Retail Commercial Truck Dealership Data

(In millions, except unit and per unit amounts)

Units

Retail unit sales of new trucks increased from 2024 to 2025 due to a 309 unit increase from net dealership acquisitions, partially offset by a 154 unit, or 3.4%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to replacement demand cycles, coupled with a prolonged recessionary freight rate environment.

Revenues

New commercial truck retail sales revenue increased from 2024 to 2025 due to a $47.1 million increase from net dealership acquisitions, partially offset by a $6.9 million, or 1.1%, decrease in same-store revenues. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $21.1 million, partially offset by a $3,299 per unit increase in same-store comparative average selling price, which increased revenue by $14.2 million. We believe the increase in same-store comparative average selling price is primarily due to manufacturer price increases.

New commercial truck retail gross profit decreased from 2024 to 2025 due to a $5.8 million, or 14.9%, decrease in same-store gross profit, partially offset by a $3.1 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to a $1,032 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $4.4 million, coupled with the decrease in same-store new retail unit sales, which decreased gross profit by $1.4 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shift in the sales mix, coupled with a prolonged recessionary freight rate environment.

Units

Retail unit sales of used trucks decreased from 2024 to 2025 due to an 80 unit, or 10.5%, decrease in same-store retail unit sales, partially offset by a 16 unit increase from net dealership acquisitions. We believe the decrease in same-store unit sales is primarily due to challenges in sourcing lower mileage, higher quality used trucks for sale.

Revenues

Used commercial truck retail sales revenue increased from 2024 to 2025 due to a $3.0 million, or 6.2%, increase in same-store revenues, coupled with a $1.0 million increase from net dealership acquisitions. The increase in same-store revenue is due to an $11,757 per unit increase in same-store comparative average selling price, which increased revenue by $8.0 million, partially offset by the decrease in same-store used retail unit sales, which decreased revenue by $5.0 million. We believe the increase in same-store comparative average selling price is primarily due to the limited availability of lower mileage, higher quality used trucks available for sale.

Gross Profit

Used commercial truck retail gross profit increased from 2024 to 2025 primarily due to a $1.4 million, or 41.2%, increase in same-store gross profit, coupled with a $0.1 million increase from net dealership acquisitions. The increase in same-store gross profit is due to a $2,529 per unit increase in same-store comparative average gross profit, which increased gross profit by $1.7 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $0.3 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to the limited availability of lower mileage, higher quality used trucks available for sale, increased consumer demand for used trucks due to tariff announcements, and affordability concerns regarding new trucks due to the prolonged recessionary freight environment, resulting in a sales mix of higher priced used units sold.

Revenues

Service and parts revenue increased from 2024 to 2025 due to a $5.9 million increase from net dealership acquisitions, coupled with a $1.6 million, or 0.7%, increase in same-store revenues. Customer pay work represented 79.1%, warranty represented 18.0%, and collision repair represented 2.9% of PTG's service and parts revenue. The increase in same-store revenue is due to a $2.2 million, or 1.3%, increase in customer pay revenue, partially offset by a $0.4 million, or 5.8%, decrease in body shop revenue and a $0.2 million, or 0.5%, decrease in warranty revenue. We believe the increase in same-store service and parts revenue is primarily due to the favorable comparison against June 2024, when revenue was negatively impacted by the CDK outage that disrupted our ability to sell retail parts and service vehicles.

Service and parts gross profit increased from 2024 to 2025 due to a $2.8 million increase from net dealership acquisitions, partially offset by a $2.0 million, or 2.1%, decrease in same-store gross profit. The decrease in same-store gross profit is due to a 1.2% decrease in same-store gross margin, which decreased gross profit by $2.7 million, partially offset by the increase in same-store revenues, which increased gross profit by $0.7 million. The decrease in same-store gross profit is primarily due to a $1.5 million, or 2.4%, decrease in customer pay gross profit and a $0.7 million, or 8.8%, decrease in body shop gross profit, partially offset by a $0.2 million, or 0.9%, increase in warranty gross profit.

Commercial Vehicle Distribution and Other Data

(In millions, except unit amounts)

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $201.2 million of revenue during the three months ended June 30, 2025, compared to $189.0 million of revenue in the prior year, an increase of 6.5%. This business also generated $44.2 million of gross profit during the three months ended June 30, 2025, compared to $44.6 million of gross profit in the prior year, a decrease of 0.9%.

Excluding $5.6 million of unfavorable foreign currency fluctuations, revenue increased 9.4% primarily due to an increase in higher value power generation units sold, partially offset by a decrease in commercial vehicle units sold. Excluding $1.2 million of unfavorable foreign currency fluctuations, gross profit increased 2.2% primarily due to an increase in higher value power generation units sold, partially offset by a decrease in commercial vehicle units sold related to the decline in the Australian heavy-duty truck market.

Selling, General, and Administrative Data

(In millions)

37

Selling, general, and administrative expenses ("SG&A") increased from 2024 to 2025 due to a $16.3 million, or 1.9%, increase in same-store SG&A, coupled with a $2.5 million increase from net acquisitions. Excluding $16.5 million of unfavorable foreign currency fluctuations, same-store SG&A decreased 0.1%. SG&A as a percentage of gross profit was 69.9%, a decrease of 30 basis points compared to 70.2% in the prior year. SG&A expenses as a percentage of total revenue were 11.8% and 11.5% in the three months ended June 30, 2025 and 2024, respectively. We believe the increase in SG&A expenses is primarily due to increases in personnel expenses related to an increase in overall gross profit, and rent and related expenses.

Depreciation

(In millions)

Depreciation increased from 2024 to 2025 due to a $3.1 million, or 8.3%, increase in same-store depreciation due to capital expenditures, coupled with a $0.4 million increase from net dealership acquisitions.

Floor Plan Interest Expense

(In millions)

Floor plan interest expense decreased from 2024 to 2025 due to a $5.3 million, or 11.5%, decrease in same-store floor plan interest expense, partially offset by a $2.0 million increase from net acquisitions. The overall decrease is due to decreases in applicable rates, partially offset by increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory.

Other Interest Expense

(In millions)

Other interest expense increased from 2024 to 2025 due to increases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by decreases in applicable rates.

Equity in Earnings of Affiliates

(In millions)

Equity in earnings of affiliates decreased from 2024 to 2025 due to the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in certain German dealerships in the fourth quarter of 2024, partially offset by a $0.6 million, or 1.1%, increase in earnings from our investment in PTS. We believe the increase in our PTS equity earnings is primarily due to an increase in revenue from PTS' leasing and maintenance business, partially offset by the continued decline in truck rental revenue and lower gain on sale of used trucks associated with weakness in the freight market.

Income Taxes

(In millions)

Income taxes increased from 2024 to 2025 primarily due to an $11.4 million increase in our pre-tax income compared to the prior year. Our effective tax rate was 25.5% during the three months ended June 30, 2025, compared to 25.4% during the three months ended June 30, 2024, primarily due to fluctuations in our geographic pre-tax income mix.

Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

Retail Automotive Dealership New Vehicle Data

(In millions, except unit and per unit amounts)

Units

Retail unit deliveries of new vehicles increased from 2024 to 2025 due to a 1,398 unit, or 1.2%, increase in same-store new retail unit deliveries, partially offset by a 1,166 unit decrease from net dealership acquisitions/dispositions throughout the second half of 2024. Same-store retail units delivered increased 3.4% in the U.S. and decreased 1.4% internationally. Overall, new retail unit deliveries increased 4.1% in the U.S. and decreased 4.4% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to increased inventory availability and continued strong consumer demand, coupled with increased consumer demand in the U.S. in response to the tariff announcements. We believe the decrease in same-store retail unit deliveries internationally is primarily due to a comparative decrease in the sale of premium branded vehicles across the U.K., coupled with decreased manufacturer incentives and other programs and other economic impacts.

Revenues

New vehicle sales revenue increased from 2024 to 2025 due to a $123.5 million, or 2.2%, increase in same-store revenues, coupled with a $42.0 million increase from net dealership acquisitions/dispositions. Excluding $47.1 million of favorable foreign currency fluctuations, same-store new revenue increased 1.4%. Same-store revenue (excluding agency) increased due to a $2,235 per unit increase in same-store comparative average retail selling price (including a $485 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $212.0 million, partially offset by the decrease in same-store new retail unit sales, which decreased revenue by $98.8 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to changes in the mix of higher priced units sold.

Retail gross profit from new vehicle sales decreased from 2024 to 2025 due to a $7.9 million, or 1.4%, decrease in same-store gross profit, partially offset by a $6.9 million increase from net dealership acquisitions/dispositions resulting in sales of more premium branded vehicles with comparatively higher gross margins. Excluding $5.2 million of favorable foreign currency fluctuations, same-store gross profit decreased 2.4%. Same-store gross profit (excluding agency) decreased due to a $100 per unit decrease in same-store comparative average gross profit (despite a $42 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $9.5 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $9.0 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to an increasing supply of new vehicles leading to a more competitive selling environment, coupled with vehicle affordability considerations.

Retail Automotive Dealership Used Vehicle Data

(In millions, except unit and per unit amounts)

Units

Retail unit sales of used vehicles decreased from 2024 to 2025 due to a 14,749 unit, or 11.8%, decrease in same-store used retail unit sales, coupled with a 6,602 unit decrease from net dealership dispositions. Our same-store units decreased 1.0% in the U.S. and decreased 20.6% internationally. Overall, our used units decreased 0.8% in the U.S. and decreased 27.1% internationally. Same-store unit sales were impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships which sell fewer units. Excluding the decrease of 12,340 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles decreased by 2,409 units. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed decreased 5.0% internationally and decreased 2.7% overall and same-store used units decreased 3.9% internationally and decreased 2.3% overall. In addition to the impact from net dealership dispositions, we believe the decrease in same-store retail sales of used units was driven largely by a change in inventory management strategy of our used vehicles internationally, coupled with challenges in sourcing lower mileage, higher quality used vehicles and comparatively fewer lease returns in the U.S.

Revenues

Used vehicle retail sales revenue decreased from 2024 to 2025 due to a $108.5 million, or 2.5%, decrease in same-store revenues, coupled with a $102.5 million decrease from net dealership dispositions. Excluding $53.4 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 3.7%. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales discussed above, which decreased revenue by $514.5 million, partially offset by a $3,685 per unit increase in same-store comparative average selling price (including a $485 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $406.0 million. We believe the increase in same-store comparative average selling price is primarily due to the transition of our former U.K. CarShop locations to Sytner Select dealerships which focus on lower volume, higher priced and higher margin inventory, coupled with affordability and availability concerns with respect to new vehicles due to tariff implications.

Retail gross profit from used vehicle sales increased from 2024 to 2025 due to a $5.9 million, or 2.5%, increase in same-store gross profit, partially offset by a $1.7 million decrease from net dealership dispositions. Excluding $3.0 million of favorable foreign currency fluctuations, same-store gross profit increased 1.2%. The increase in same-store gross profit is due to a $310 per unit increase in same-store comparative average gross profit (including a $27 per unit increase attributable to favorable foreign currency fluctuations), which increased gross profit by $34.2 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $28.3 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to a change in inventory management strategy internationally and the transition of our U.K. CarShop locations to Sytner Select dealerships which focus on lower volume, higher priced and higher margin inventory, coupled with the increase in gross profit per unit as a result of a decreased supply of used vehicles in the U.S. from declining lease renewals as well as increased consumer demand for used vehicles in response to tariff announcements.

Retail Automotive Dealership Finance and Insurance Data

(In millions, except unit and per unit amounts)

Finance and insurance revenue decreased from 2024 to 2025 due to a $10.4 million decrease from net dealership dispositions, coupled with a $5.6 million, or 1.4%, decrease in same-store revenue. Excluding $3.1 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 2.2%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $29.3 million, partially offset by a $110 per unit increase in same-store comparative average finance and insurance retail revenue (including a $15 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $22.6 million. Same-store finance and insurance revenue per unit (excluding agency) increased 2.7% in the U.S. and increased 8.1% in the U.K. We believe the increase in same-store finance and insurance revenue per unit (excluding agency) is primarily due to the increase in average selling price of both new and used vehicles, as well as changes in the availability of certain products in the U.K. during the first quarter compared to the prior year, coupled with enhanced product offerings internationally and our efforts to increase product penetration across the markets we serve.

Retail Automotive Dealership Service and Parts Data

(In millions)

41

Revenues

Service and parts revenue increased from 2024 to 2025, with an increase of 7.1% in the U.S. and an increase of 7.2% internationally. The increase in service and parts revenue is due to an $80.7 million, or 5.5%, increase in same-store revenues, coupled with a $26.4 million increase from net dealership acquisitions. Excluding $12.9 million of favorable foreign currency fluctuations, same-store revenue increased 4.6%. The increase in same-store revenue is due to a $49.7 million, or 16.0%, increase in warranty revenue and a $32.5 million, or 3.0%, increase in customer pay revenue, partially offset by a $1.5 million, or 1.6%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to additional warranty opportunities due to manufacturer recalls, vehicles remaining on the road longer due to affordability considerations, including in light of tariff announcements, and increasing vehicle complexity, as well as increases in labor rates, repair orders, and the price of parts.

Service and parts gross profit increased from 2024 to 2025 due to a $63.7 million, or 7.5%, increase in same-store gross profit, coupled with an $8.0 million increase from net dealership acquisitions. Excluding $7.3 million of favorable foreign currency fluctuations, same-store gross profit increased 6.6%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $47.6 million, coupled with a 1.1% increase in same-store gross margin from 57.9% to 59.0%, which increased gross profit by $16.1 million. The increase in same-store gross profit is due to a $29.2 million, or 17.6%, increase in warranty gross profit, a $23.7 million, or 4.7%, increase in customer pay gross profit, and a $10.8 million, or 6.0%, increase in vehicle preparation and body shop gross profit. We believe the increase in same-store gross margin is primarily due to a change in the mix of warranty and customer pay, particularly in the U.S.

Retail Commercial Truck Dealership Data

(In millions, except unit and per unit amounts)

Units

Retail unit sales of new trucks increased from 2024 to 2025 due to a 629 unit increase from net dealership acquisitions, partially offset by a 226 unit, or 2.8%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to replacement demand cycles, coupled with a prolonged recessionary freight rate environment.

Revenues

New commercial truck retail sales revenue increased from 2024 to 2025 due to a $96.1 million increase from net dealership acquisitions, partially offset by a $22.9 million, or 2.1%, decrease in same-store revenues. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $31.4 million, partially offset by a $1,105 per unit increase in same-store comparative average selling price, which increased revenue by $8.5 million. We believe the increase in same-store comparative average selling price is primarily due to manufacturer price increases.

New commercial truck retail gross profit decreased from 2024 to 2025 due to a $10.2 million, or 13.9%, decrease in same-store gross profit, partially offset by a $6.4 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to a $1,052 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $8.1 million, coupled with the decrease in same-store new retail unit sales, which decreased gross profit by $2.1 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shift in the sales mix, coupled with a prolonged recessionary freight rate environment.

Units

Retail unit sales of used trucks decreased from 2024 to 2025 due to a 175 unit, or 9.7%, decrease in same-store retail unit sales, partially offset by a 37 unit increase from net dealership acquisitions. We believe the decrease in same-store unit sales is primarily due to challenges in sourcing lower mileage, higher quality used trucks for sale.

Revenues

Used commercial truck retail sales revenue increased from 2024 to 2025 due to a $3.1 million, or 2.8%, increase in same-store revenues, coupled with a $2.3 million increase from net dealership acquisitions. The increase in same-store revenue is due to an $8,407 per unit increase in same-store comparative average selling price, which increased revenue by $13.8 million, partially offset by the decrease in same-store used retail unit sales, which decreased revenue by $10.7 million. We believe the increase in same-store comparative average selling price is primarily due to the limited availability of lower mileage, higher quality used trucks available for sale.

Used commercial truck retail gross profit increased from 2024 to 2025 primarily due to a $5.2 million, or 76.5%, increase in same-store gross profit, coupled with a $0.3 million increase from net dealership acquisitions. The increase in same-store gross profit is due to a $3,587 per unit increase in same-store comparative average gross profit, which increased gross profit by $5.9 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $0.7 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to the limited availability of lower mileage, higher quality used trucks available for sale, increased consumer demand for used trucks due to tariff announcements, and affordability concerns regarding new trucks due to the prolonged recessionary freight environment, resulting in a sales mix of higher priced used units sold.

Revenues

Service and parts revenue increased from 2024 to 2025 due to a $12.8 million increase from net dealership acquisitions, partially offset by a $6.9 million, or 1.6%, decrease in same-store revenues. Customer pay work represented 78.6%, warranty represented 18.4%, and collision repair represented 3.0% of PTG's service and parts revenue. The decrease in same-store revenue is due to a $3.7 million, or 1.1%, decrease in customer pay revenue, a $2.7 million, or 3.3%, decrease in warranty revenue, and a $0.5 million, or 3.7%, decrease in body shop revenue. We believe the decrease in same-store service and parts revenue is due to customers delaying maintenance costs due to the continued weak freight market, coupled with lower freight spot rates.

Service and parts gross profit decreased from 2024 to 2025 due to a $10.7 million, or 5.6%, decrease in same-store gross profit, partially offset by a $6.0 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to a 1.8% decrease in same-store gross margin, which decreased gross profit by $7.8 million, coupled with the decrease in same-store revenues, which decreased gross profit by $2.9 million. The decrease in same-store gross profit is due to an $8.8 million, or 6.7%, decrease in customer pay gross profit, a $1.1 million, or 7.2%, decrease in body shop gross profit, and a $0.8 million, or 1.8%, decrease in warranty gross profit.

Commercial Vehicle Distribution and Other Data

(In millions, except unit amounts)

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $412.7 million of revenue during the six months ended June 30, 2025, compared to $367.0 million of revenue in the prior year, an increase of 12.5%. This business also generated $88.4 million of gross profit during the six months ended June 30, 2025, compared to $87.8 million of gross profit in the prior year, an increase of 0.7%.

Excluding $15.1 million of unfavorable foreign currency fluctuations, revenue increased 16.5% primarily due to an increase in higher value power generation units sold, partially offset by a decrease in commercial vehicle units sold. Excluding $3.3 million of unfavorable foreign currency fluctuations, gross profit increased 4.4%, primarily due to an increase in higher value power generation units sold, partially offset by a decrease in commercial vehicle units sold related to the decline in the Australian heavy-duty truck market.

Selling, General, and Administrative Data

(In millions)

Selling, general, and administrative expenses ("SG&A") increased from 2024 to 2025 due to a $44.5 million, or 2.6%, increase in same-store SG&A, coupled with an $8.1 million increase from net acquisitions. Excluding $11.4 million of unfavorable foreign currency fluctuations, same-store SG&A increased 1.9%. SG&A as a percentage of gross profit was 70.9%, an increase of 50 basis points compared to 70.4% in the prior year. SG&A expenses as a percentage of total revenue were 11.9% and 11.7% in the six months ended June 30, 2025 and 2024, respectively. We believe the increase in SG&A expenses is primarily due to increases in personnel expenses related to an increase in overall gross profit, and impairments and other charges (none of which was individually material).

Depreciation

(In millions)

Depreciation increased from 2024 to 2025 due to a $4.7 million, or 6.3%, increase in same-store depreciation due to capital expenditures, coupled with a $0.9 million increase from net dealership acquisitions.

Floor Plan Interest Expense

(In millions)

Floor plan interest expense decreased from 2024 to 2025 due to a $10.4 million, or 11.6%, decrease in same-store floor plan interest expense, partially offset by a $3.8 million increase from net acquisitions. The overall decrease is due to decreases in applicable rates, partially offset by increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory.

Other Interest Expense

(In millions)

Other interest expense increased from 2024 to 2025 due to increases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by decreases in applicable rates.

Equity in Earnings of Affiliates

(In millions)

Equity in earnings of affiliates decreased from 2024 to 2025 due to the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in certain German dealerships in the fourth quarter of 2024, partially offset by a $1.3 million, or 1.5%, increase in earnings from our investment in PTS. We believe the increase in our PTS equity earnings is primarily due to an increase in revenue from PTS' leasing and maintenance business, partially offset by the continued decline in truck rental revenue and lower gain on sale of used trucks associated with weakness in the freight market.

Income Taxes

(In millions)

Income taxes increased from 2024 to 2025 primarily due to a $53.7 million increase in our pre-tax income compared to the prior year. Our effective tax rate was 26.4% during the six months ended June 30, 2025, compared to 26.0% during the six months ended June 30, 2024, primarily due to fluctuations in our geographic pre-tax income mix.

Liquidity and Capital Resources

Our cash requirements are primarily for working capital, inventory financing, the acquisition of new businesses, the improvement and expansion of existing facilities, the purchase or construction of new facilities, debt service and repayments, dividends, and potential repurchases of our outstanding securities under the program discussed below. Historically, these cash requirements have been met through cash flow from operations, borrowings under our credit agreements and floor plan arrangements, the issuance of debt securities, sale-leaseback transactions, real estate financings, and dividends and distributions from joint venture investments.

We have historically expanded our operations through organic growth and the acquisition of dealerships and other businesses. We believe that cash flow from operations, dividends and distributions from PTS and our joint venture investments, and our existing capital resources, including the liquidity provided by our credit agreements and floor plan financing arrangements, will be sufficient to fund our existing operations and current commitments for at least the next twelve months. In the event that economic conditions are more severely impacted than we expect due to proposed tariffs, geo-political conditions, the impact of tariffs and non-tariff trade barriers, any pandemic or vehicle shortages resulting from supply chain difficulties, we pursue significant acquisitions or other expansion opportunities, pursue significant repurchases of our outstanding securities, or refinance or repay existing debt, we may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings, which sources of funds may not necessarily be available on terms acceptable to us, if at all. In addition, our liquidity could be negatively impacted in the event we fail to comply with the covenants under our various financing and operating agreements or in the event our floor plan financing is withdrawn. Future events, including acquisitions, divestitures, new or revised operating lease agreements, borrowings or repayments under our credit agreements and our floor plan arrangements, raising capital, and purchases or refinancing of our securities, may also impact our liquidity.

We expect that scheduled payments of our debt instruments will be funded through cash flows from operations or borrowings under our credit agreements. Upon the maturity of our $550 million of 3.50% senior subordinated notes due September 1, 2025, we currently expect to repay those notes from cash flows from operations or borrowings under our U.S. credit agreement. In the case of payments upon the maturity or termination dates of our other debt instruments, we currently expect to be able to repay or refinance such instruments from cash flows from operations or borrowings under our credit agreements. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Financial Statements set forth below for a detailed description of our long-term debt obligations and scheduled interest payments.

Floor plan notes payable are revolving inventory-secured financing arrangements. Refer to the disclosures provided in Part I, Item 1, Note 7 of the Notes to our Consolidated Financial Statements for a detailed description of financing for the vehicles we purchase, including discussion of our floor plan and other revolving arrangements.

Refer to the disclosures provided in Part I, Item 1, Note 10 of the Notes to our Consolidated Financial Statements for a description of our off-balance sheet arrangements which includes a repurchase commitment related to our floor plan credit agreement with Daimler Truck Financial Services Australia and Mercedes-Benz Financial Services New Zealand.

As of June 30, 2025, we had $155.3 million of cash available to fund our operations and capital commitments. In addition, we had an aggregate of approximately $2.2 billion available for borrowing under our U.S. credit agreement, U.K. credit agreement, the revolving mortgage facility through Toyota Motor Credit Corporation in the U.S., and other various credit facilities.

Securities Repurchases

From time to time, our Board of Directors has authorized securities repurchase programs pursuant to which we may, as market conditions warrant, purchase our outstanding common stock or debt on the open market, in privately negotiated transactions, via a tender offer, through a pre-arranged trading plan, pursuant to the terms of an accelerated share repurchase program, or by other means. We have historically implemented pre-arranged trading plans as part of our securities repurchase programs. These plans authorize share repurchases based on parameters outlined in the specific plan during periods when we otherwise would not trade in our securities, such as the period approaching the end of a quarter through our public announcement of earnings. We have historically funded any such repurchases using cash flow from operations, borrowings under our U.S. credit agreement, and borrowings under our U.S. floor plan arrangements. The decision to make repurchases will be based on factors such as general economic and industry conditions, the market price of the relevant security versus our view of its intrinsic value, the potential impact of such repurchases on our capital structure, and our consideration of any alternative uses of our capital, such as for acquisitions, dividends, the repayment of our existing indebtedness, and strategic investments in our current businesses, in addition to any then-existing limits imposed by our finance agreements and securities trading policy. On May 14, 2025, our Board of Directors delegated to management an additional $250 million in securities repurchase authority. As of June 30, 2025, $295.7 million remained outstanding and available for repurchases under our securities repurchase program. This authority has no expiration. Refer to the disclosures provided in Part I, Item 1, Note 11 of the Notes to our Consolidated Condensed Financial Statements for a summary of shares repurchased during the six months ended June 30, 2025.

Dividends

We paid the following cash dividends on our common stock in 2024 and 2025:

Per Share Dividends

We also announced a cash dividend of $1.32 per share, payable on September 3, 2025, to stockholders of record on August 15, 2025. While future quarterly or other cash dividends will depend upon a variety of factors considered relevant by our Board of Directors, which may include our expectations regarding vehicle availability, the impact of recently announced tariffs discussed above under "Outlook/Recent Developments — Tariffs" and in Part II, Item 1A. Risk Factors, "Tariffs and Trade Risk" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, the rate of inflation, earnings, cash flow, capital requirements, restrictions relating to any then-existing indebtedness, financial condition, alternative uses of capital, and other factors, we currently expect to continue to pay comparable dividends in the future.

Vehicle Financing

Refer to the disclosures provided in Part I, Item I, Note 7 of the Notes to our Consolidated Condensed Financial Statements for a detailed description of financing for the vehicles we purchase, including discussion of our floor plan and other revolving arrangements.

Long-Term Debt Obligations

As of June 30, 2025, we had the following long-term debt obligations outstanding:

(In millions)

As of June 30, 2025, we were in compliance with all financial covenants under our credit agreements, and we believe we will remain in compliance with such covenants for the next twelve months. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Condensed Financial Statements for a detailed description of our long-term debt obligations.

Short-Term Borrowings

As of June 30, 2025, we had five principal sources of short-term borrowings: our U.S. credit agreement, U.K. credit agreement, other local country credit agreements, the revolving mortgage facility through Toyota Motor Credit Corporation, and the floor plan agreements that we utilize to finance our vehicle inventories. We are also able to access availability under the floor plan agreements to fund our cash needs. Our borrowings vary over time based on our cash flows, capital requirements and investment activities. The amounts outstanding under our floor plan agreements varied based on the timing of the receipt and expenditure of cash in our operations, driven principally by the levels of our vehicle inventories. Of our approximately $2.2 billion available for borrowing under our various credit facilities, our U.S. credit facility provides for up to $1.5 billion in borrowing capacity. During the six months ended June 30, 2025, our outstanding revolving commitments under the U.S. credit agreement varied between $0.0 million and $184.0 million.

PTS Dividends

We hold a 28.9% ownership interest in PTS as noted above. Their partnership agreement requires PTS, subject to applicable law and the terms of its credit agreements, to make quarterly distributions to the partners with respect to each fiscal year by no later than 45 days after the end of each of the first three quarters of the year and by April 15 of the following year. PTS' partnership agreement and certain of its debt agreements allow partner distributions only as long as it is not in default under those agreements and the amount it pays does not exceed 50% of its consolidated net income, unless its debt-to-equity ratio is less than 3.0 to 1.0, in which case its distributions may not exceed 80% of its consolidated net income. We receive pro rata cash distributions relating to this investment, typically in April, May, August, and November of each year. During the six months ended June 30, 2025, and 2024, we received $42.8 million and $41.8 million, respectively, of pro rata cash distributions relating to this investment. We currently expect to continue to receive future distributions from PTS quarterly, subject to its financial performance.

Operating Leases

We estimate the total rent obligations under our operating leases, including any extension periods that we are reasonably certain to exercise at our discretion and assuming constant consumer price indices, to be $5.3 billion. As of June 30, 2025, we were in compliance with all financial covenants under these leases consisting principally of leases for dealerships and other properties, and we believe we will remain in compliance with such covenants for the next twelve months. Refer to the disclosures provided in Part I, Item 1, Note 3 and Note 10 of the Notes to our Consolidated Condensed Financial Statements for a description of our operating leases.

Supplemental Guarantor Financial Information

The following is a description of the terms and conditions of the guarantees with respect to senior subordinated notes of Penske Automotive Group, Inc. ("PAG") as the issuer of the 3.50% Notes and the 3.75% Notes (collectively the "Senior Subordinated Notes").

Each of the Senior Subordinated Notes are unsecured, senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries ("Guarantor subsidiaries"). Each of the Senior Subordinated Notes also contains customary negative covenants and events of default. If we experience certain "change of control" events specified in their respective indentures, holders of these Senior Subordinated Notes will have the option to require us to purchase for cash all or a portion of their Senior Subordinated Notes at a price equal to 101% of the principal amount of the Senior Subordinated Notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the Senior Subordinated Notes at a price equal to 100% of the principal amount of the Senior Subordinated Notes, plus accrued and unpaid interest.

Guarantor subsidiaries are directly or indirectly 100% owned by PAG, and the guarantees are full and unconditional and joint and several. The guarantees may be released under certain circumstances upon resale or transfer by us of the stock of the related guarantor or all or substantially all of the assets of the guarantor to a non-affiliate. Non-wholly owned and foreign subsidiaries of PAG do not guarantee the Senior Subordinated Notes ("Non-Guarantor subsidiaries"). The following tables present summarized financial information for PAG and the Guarantor subsidiaries on a combined basis. The financial information of PAG and Guarantor subsidiaries is presented on a combined basis; intercompany balances and transactions between PAG and Guarantor subsidiaries have been eliminated; PAG's or Guarantor subsidiaries' amounts due from, amounts due to, and transactions with non-issuer and Non-Guarantor subsidiaries and related parties are disclosed separately.

Condensed income statement information:

Condensed balance sheet information:

(1) Includes $537.0 million and $535.4 million as of June 30, 2025, and December 31, 2024, respectively, due from Non-Guarantor subsidiaries.

During the six months ended June 30, 2025, PAG received $95.1 million from Non-Guarantor subsidiaries. During the twelve months ended December 31, 2024, PAG received $110.3 million from Non-Guarantor subsidiaries.

Cash Flows

The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities. The major components of these changes are discussed below.

(In millions)

Cash Flows from Operating Activities

Cash flows from operating activities include net income, as adjusted for non-cash items and the effects of changes in working capital.

We finance substantially all of the commercial vehicles we purchase for distribution, new vehicles for retail sale (however, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, "Overview" for a discussion of the agency model of distribution), and a portion of our used vehicle inventories for retail sale under floor plan and other revolving arrangements with various lenders, including the captive finance companies associated with automotive manufacturers. We retain the right to select which, if any, financing source to utilize in connection with the procurement of vehicle inventories. Many vehicle manufacturers provide vehicle financing for the dealers representing their brands; however, it is not a requirement that we utilize this financing. Historically, our floor plan finance source has been based on aggregate pricing considerations.

In accordance with generally accepted accounting principles relating to the statement of cash flows, we report all cash flows arising in connection with floor plan notes payable with the manufacturer of a particular new vehicle as an operating activity in our statement of cash flows, and we report all cash flows arising in connection with floor plan notes payable to a party other than the manufacturer of a particular new vehicle and all floor plan notes payable relating to pre-owned vehicles as a financing activity in our statement of cash flows. Currently, the majority of our non-trade vehicle financing is with other manufacturer captive lenders. To date, we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us with vehicle financing.

We believe that changes in aggregate floor plan liabilities are typically linked to changes in vehicle inventory and therefore, are an integral part of understanding changes in our working capital and operating cash flow. As a result, we have prepared the following reconciliation to highlight our operating cash flows with all changes in vehicle floor plan being classified as an operating activity for informational purposes:

(In millions)

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily of cash used for capital expenditures, proceeds from the sale of dealerships, proceeds from the sale of property and equipment, and proceeds from the sale of an equity method investment. Capital expenditures were $147.4 million and $201.7 million during the six months ended June 30, 2025 and 2024, respectively. Capital expenditures relate primarily to improvements to our existing dealership facilities, the construction of new facilities, the acquisition of the property or buildings associated with existing leased facilities, and the acquisition of land for future development. We currently expect to finance our capital expenditures with operating cash flows or borrowings under our credit agreements. Proceeds from the sale of dealerships were $79.2 million during the six months ended June 30, 2025, compared to no proceeds during the six months ended June 30, 2024. Proceeds from the sale of property and equipment were $20.5 million during the six months ended June 30, 2025, compared to no proceeds during the six months ended June 30, 2024. Proceeds from the sale of an equity method investment were $16.0 million during the six months ended June 30, 2025, compared to no proceeds during the six months ended 2024. We had no cash used in acquisitions and other investments, net of cash acquired, during the six months ended June 30, 2025, compared to $440.8 million during the six months ended June 30, 2024, and included cash used to repay sellers' floor plan liabilities in such business acquisitions of $101.9 million.

Cash Flows from Financing Activities

Cash flows from financing activities include net repayments and borrowings of debt, net borrowings of floor plan notes payable non-trade, repurchases of common stock, dividends, and payments for debt issuance costs.

We had net repayments of debt of $110.6 million and net borrowings of $136.6 million during the six months ended June 30, 2025 and 2024, respectively. We had net repayments of floor plan notes payable non-trade of $48.7 million and $51.6 million during the six months ended June 30, 2025 and 2024, respectively. We repurchased 0.8 million and 0.4 million shares of common stock under our securities repurchase program for $111.2 million and $58.1 million during the six months ended June 30, 2025 and 2024, respectively. We acquired 0.13 million and 0.12 million shares from employees in connection with a net share settlement feature of employee equity awards for $22.1 million and $18.3 million during the six months ended June 30, 2025 and 2024, respectively. We also paid cash dividends to our stockholders of $165.4 million and $123.0 million during the six months ended June 30, 2025 and 2024, respectively. We made payments for debt issuance costs of $0.6 million and $0.7 million during the six months ended June 30, 2025, and 2024, respectively.

Tax Developments

Global Minimum Tax

The Organization for Economic Co-operation and Development (“OECD”), an international association of thirty-eight countries including the United States, has proposed reform of international taxation known as Pillar Two, which imposes a global minimum corporate income tax rate of 15% on multinational companies. In December 2022, the European Union

(“EU”) Member States formally adopted a directive that implements the OECD Pillar Two framework, which is expected to be enacted into the national laws of the EU member states. Certain countries in which we operate have enacted legislation to adopt the Pillar Two framework effective for the Company for the calendar year 2024. Several other countries are also considering changes to their local tax laws to implement this framework in the future. We expect the enacted Pillar Two legislation to increase tax compliance obligations; however, we do not anticipate any monetary impact from any Pillar Two legislation as all of the jurisdictions in which we operate are expected to have an effective tax rate greater than the minimum threshold of 15%. We will continue to monitor new guidance in this area including proposed and enacted legislative changes as further information becomes available.

Related Party Transactions

Stockholders Agreement

Several of our directors and officers are affiliated with Penske Corporation or related entities. Roger Penske, our Chair of the Board and Chief Executive Officer, is also Chair of the Board and Chief Executive Officer of Penske Corporation and through entities affiliated with Penske Corporation is our largest stockholder owning approximately 52.0% of our outstanding common stock. Mitsui & Co., Ltd. and Mitsui & Co. (USA), Inc. (collectively, "Mitsui") own approximately 20.2% of our outstanding common stock. Mitsui, Penske Corporation and Penske Automotive Holdings Corp. (together with Penske Corporation, the "Penske companies") are parties to a stockholders agreement which expires March 26, 2030 (the "Stockholders Agreement"). Pursuant to the Stockholders Agreement, in connection with any shareholder election of directors, the Penske companies agreed to vote their shares for two directors who are representatives of Mitsui as long as Mitsui owns in excess of 20% of our outstanding common stock, and for one director as long as Mitsui owns in excess of 10% of our outstanding common stock. Mitsui agreed to vote its shares for up to fourteen directors voted for by the Penske companies.

Voting Agreement

Penske Corporation (“PC”) and the Company entered into a voting agreement (the “Voting Agreement”) pursuant to which PC agreed, on each matter brought to a vote at any annual or special meeting of our stockholders and in connection with any action proposed to be taken by consent of our stockholders in lieu of a meeting, to vote all shares of Voting Common Stock, or other voting or equity securities of ours which could be issued (together with the Voting Common Stock, the “Voting Securities”) beneficially owned by PC, that, together with the Voting Securities held by Roger S. Penske, our Chair and Chief Executive Officer, and any entity that Roger S. Penske controls, exceed 43.57% of the outstanding Voting Securities (the “Excess Voting Securities”), in the same proportion as all votes cast by stockholders other than PC, Roger S. Penske or any entity that Roger S. Penske controls (except as otherwise required by the existing Stockholders Agreement). Any Voting Securities that are not Excess Voting Securities may be voted at the discretion of PC. The Voting Agreement will terminate per its terms at the time that PC ceases to beneficially own 30% or more of the Voting Securities then outstanding. Notwithstanding the foregoing, the Voting Agreement does not impact the provisions of the Stockholders Agreement noted above as currently in effect.

Other Related Party Interests and Transactions

Robert Kurnick, Jr., our President and a director, is also the Vice Chair and a director of Penske Corporation and an Advisory Board member of PTS. Bud Denker, our Executive Vice President, Human Resources, is also the President of Penske Corporation. Greg Penske, the Vice Chair of our Board of Directors, is the son of our Chair and is also a director of Penske Corporation. Michael Eisenson, one of our directors, is also a director of Penske Corporation. Yosuke Kawakami, one of our directors, is also an employee of Mitsui & Co.

We sometimes pay to and/or receive fees from Penske Corporation, its subsidiaries, and its affiliates for services rendered in the ordinary course of business or to reimburse payments made to third parties on each other's behalf. These transactions are reviewed periodically by our Audit Committee and reflect the provider's cost or an amount mutually agreed upon by both parties.

We own a 28.9% interest in PTS. PTS, discussed previously, is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui. The PTS partnership agreement, among other things, provides us with specified partner distribution and governance rights and restricts our ability to transfer our interest. The partnership has an eleven-member Advisory Board. We have the right to appoint one Advisory Board member and appointed Robert H. Kurnick, Jr., our President. Lisa Davis and Michael Eisenson, our directors, are also members of the Advisory Board. We have the right to pro rata quarterly distributions equal to at least 50% of PTS' consolidated net income, as well as specified minority rights which require our and/or Mitsui's consent for certain actions taken by PTS as specified in the PTS partnership agreement.

Joint Venture Relationships

From time to time, we enter into joint venture relationships in the ordinary course of business, pursuant to which we own and operate automotive dealerships together with other investors. We may also provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of June 30, 2025, our automotive joint venture relationships were as follows:

Additionally, we are party to non-automotive joint ventures representing our investments in PTS (28.9%) and Penske Commercial Leasing Australia (28%) that are accounted for under the equity method. In June 2025, we sold the remaining 50% interest in our joint venture in Barcelona, Spain.

Cyclicality

Unit sales of motor vehicles, particularly new vehicles, have been cyclical historically, fluctuating with general economic cycles. During economic downturns, the automotive and truck retailing industries tend to experience periods of decline and recession similar to those experienced by the general economy. We believe that these industries are influenced by general economic conditions and particularly, by consumer confidence, the level of personal discretionary spending, the rate of inflation, including its impact on vehicle affordability, fuel prices, utility prices, interest rates, and credit availability.

U.S. light vehicle sales have ranged from a low of 10.4 million units in 2009 to a high of 17.5 million units in 2016. Unit sales of new commercial vehicles have historically been subject to substantial cyclical variation based on these general economic conditions. According to data published by ACT Research, in recent years, total U.S. retail sales of new Class 8 commercial vehicles have ranged from a low of approximately 97,000 in 2009 to a high of approximately 334,000 in 2019. Through geographic diversification, concentration on higher margin regular service and parts revenues, and diversification of our customer base, we have attempted to reduce the negative impact of adverse general economic conditions or cyclical trends affecting any one industry or geographic area on our earnings.

Seasonality

Retail Automotive Dealership. Our business is modestly seasonal overall. Our U.S. operations generally experience higher volumes of vehicle sales in the second and third quarters of each year due in part to consumer buying trends and the introduction of new vehicle models. Also, vehicle demand, and to a lesser extent demand for service and parts, is generally lower during the winter months than in other seasons, particularly in regions of the U.S. where dealerships may be subject to severe winters. Our U.K. operations generally experience higher volumes of new vehicle sales in the first and third quarters of each year, due primarily to new vehicle registration practices in the U.K.

Inflation

Many of the markets in which we operate have recently experienced higher rates of inflation when compared to historical norms. Inflation, which may include inflationary effects caused by tariffs and non-tariff trade barriers, affects the price of vehicles, the price of parts, the rate of pay of our employees, consumer credit availability, and consumer demand. Higher rates of inflation may adversely affect consumer demand and increase our costs, which may materially and adversely affect us.

Forward-Looking Statements

Certain statements and information set forth herein, as well as other written or oral statements made from time to time by us or by our authorized officers on our behalf, constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "goal," "plan," "seek," "project," "continue," "will," "would," and variations of such words and similar expressions are intended to identify such forward-looking statements. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we set forth this statement in order to comply with such safe harbor provisions. You should note that our forward-looking statements speak only as of the date of this report or when made, and we undertake no duty or obligation to update or revise our forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements include, without limitation, statements with respect to:

• the impact of macro-economic and geo-political conditions and events, including their impact on new and used vehicle sales, availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, the rate of inflation, personal discretionary spending levels, consumer credit availability, interest rates, and unemployment rates;
• the impact of recently announced tariffs, as well as trade restrictions, trade disputes, non-tariff trade barriers and other foreign trade risks, on our acquisition costs, consumer demand, vehicle affordability, the supply of vehicles and parts, and our gross profit with respect to affected vehicles and parts;
• our future financial and operating performance;
• future dealership openings, acquisitions, and dispositions;
• future potential capital expenditures and securities repurchases;
• our ability to realize cost savings and synergies;
• our ability to respond to economic cycles;
• our expectations regarding new vehicle availability and the renewal of our existing franchise agreements and arrangements;
• trends and sales levels in the automotive retail industry, commercial vehicles industries, and in the general economy in the various countries in which we operate;
• the rate of adoption of EVs and their effect on our business;
• our liquidity and ability to access the remaining availability under our credit agreements;
• the performance of our joint ventures, including PTS;
• future foreign currency exchange rates;
• the outcome of various regulatory matters and legal proceedings;
• results of self-insurance plans or other insured matters;
• trends affecting the automotive or trucking industries generally, such as changes to an agency model of distribution, and our future financial condition or results of operations; and
• our business strategy.

Forward-looking statements involve known and unknown risks and uncertainties and are not assurances of future performance. Actual results may differ materially from anticipated results due to a variety of factors, including the factors identified in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, and our other periodic reports filed with the Securities and Exchange Commission. Important factors that could also cause actual results to differ materially from our expectations include the following:

• our business and the automotive retail and commercial vehicles industries in general are susceptible to adverse macro-economic and geo-political conditions, including their impact on new and used vehicle sales, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG, personal discretionary spending levels, interest rates, foreign

currency exchange rates, customer confidence, the rate of inflation, including its impact on vehicle affordability, fuel and utility prices and unemployment rates;

• many of the vehicles and parts we sell are subject to recently announced tariffs, which tariffs and related trade restrictions, trade disputes, non-tariff trade barriers and other foreign trade risks may increase the cost of vehicles and parts to us and consumers, limit the supply of certain vehicles and parts we sell, reduce consumer demand due to affordability challenges, and negatively impact our gross profit with respect to affected vehicles and parts;
• we depend on the success, popularity and availability of the brands we sell, and adverse conditions affecting one or more of these vehicle manufacturers, including the adverse impact on the vehicle and parts supply chain due to natural disasters, the shortage of vehicle components, international conflicts, challenges in sourcing labor, labor strikes, or work stoppages, or other disruptions that interrupt the supply of vehicles and parts to us may negatively impact our revenues and profitability;
• the number of new and used vehicles sold in our markets, which impacts our ability to generate new and used vehicle gross profit and future service and parts operations;
• the effect on our businesses of the changing retail environment due to certain manufacturers selling direct to consumers outside the franchise system, changes to an agency model of distribution, and the growing number of EVs, whose service history is unproven;
• the effect on our businesses of mobility technologies, such as Uber and Lyft, and the eventual availability of driverless vehicles;
• vehicle manufacturers exercise significant control over our operations, and we depend on them and the continuation of our franchise and distribution agreements in order to operate our business;
• we are subject to the risk that a substantial number of our new or used inventory may be unavailable due to inventory shortages, recalls, or other reasons;
• the success of our commercial vehicle distribution operations and engine and power systems distribution operations depends upon continued availability of the vehicles, engines, power systems, and other parts we distribute, demand for those vehicles, engines, power systems, and parts and general economic conditions in those markets;
• a restructuring of any significant vehicle manufacturer or supplier;
• our operations may be affected by severe weather or other periodic business interruptions;
• with respect to PTS, changes in the financial health of its customers, compliance costs, labor strikes or work stoppages with respect to its employees, a reduction in PTS' asset utilization rates, continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various government mandates concerning the electrification of its vehicle fleet, potential decreases in the resale value of used vehicles which may affect PTS' ability to sell its used vehicles after the expiration of its customers' leases or at the end of its holding period for rental vehicles, which may affect PTS' profitability, compliance costs in regard to its trucking fleet and truck drivers, its ability to retain qualified drivers and technicians, risks associated with its participation in multi-employer pension plans, conditions in the capital markets to assure PTS' continued availability of capital to purchase trucks, the effect of changes in lease accounting rules on PTS customers' purchase/lease decisions, industry competition, new or enhanced regulatory requirements, emissions standards, vehicle mandates, changes in consumer sentiment regarding the transportation industry, and vulnerabilities with respect to its centralized information systems, each of which could impact equity earnings and distributions to us;
• we have substantial risk of loss not covered by insurance;
• we may not be able to satisfy our capital requirements for acquisitions, facility renovation projects, financing the purchase of our inventory, or refinancing of our debt when it becomes due;
• our level of indebtedness and cash required for lease obligations may limit our ability to obtain financing generally and may require that a significant portion of our cash flow be used for debt service;
• non-compliance with the financial ratios and other covenants under our credit agreements and operating leases;
• higher interest rates may significantly increase our variable rate interest costs and because many customers finance their vehicle purchases, adversely impact vehicle affordability, and decrease vehicle sales;
• our operations outside of the U.S. subject our profitability to fluctuations relating to changes in foreign currency values;
• we are dependent on the continued security and availability of our information technology systems and those of certain third-party providers to avoid significant business interruptions, which systems are increasingly threatened by ransomware and other cyber-attacks;
• we may be subject to significant litigation, fines, penalties, and other costs under applicable privacy laws and regulations if we do not maintain our confidential customer and employee information properly;
• if we lose key personnel, especially our Chief Executive Officer, or are unable to attract additional qualified personnel;
• new or enhanced regulations in both our domestic and international markets relating to automobile dealerships and vehicle sales, including those enacted in certain European countries and various U.S. states banning or taking actions to ban the sale of new vehicles with gasoline engines;
• new or enhanced regulations, including those related to emissions standards, or changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks;
• changes in tax, financial or regulatory rules, or requirements, including new regulations proposed by the governments and agencies that regulate retail automotive transactions may lead to additional transaction times for the sale of vehicles, complicate the transaction process, decrease customer satisfaction, and increase compliance costs and risk, among other effects;
• we could be subject to legal and administrative proceedings which, if the outcomes are adverse to us, could have a material adverse effect on our business, including the result of the U.K. Financial Conduct Authority’s investigation of discretionary commission arrangements and potential remediation measures amid concerns these arrangements were unfair to customers as well as the resulting impact of a recent U.K. court judgment requiring the lenders in that case to repay the customers in that case the commissions paid to the dealers for their vehicle finance agreements;
• if state dealer laws in the U.S. are repealed or weakened or new manufacturers such as those selling EVs are able to conduct significant vehicle sales outside of the franchised automotive system, our automotive dealerships may be subject to increased competition and may be more susceptible to termination, non-renewal, or renegotiation of their franchise agreements;
• we are subject to a wide range of environmental laws and regulations governing the use, generation, and disposal of materials used in our ordinary course of operations, and we face potentially significant costs relating to claims, penalties, and remediation efforts in the event of non-compliance with existing and future laws and regulations which may become more stringent in the face of climate change;
• some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests; and
• shares of our common stock eligible for future sale may cause the market price of our common stock to drop significantly, even if our business is doing well.

We urge you to carefully consider these risk factors and further information identified in our Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, and our other periodic reports filed with the Securities and Exchange Commission in evaluating all forward-looking statements regarding our business. Readers of this report are cautioned not to place undue reliance on the forward-looking statements contained in this report. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Except to the extent required by the federal securities laws and the Securities and Exchange Commission's rules and regulations, we have no intention or obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise.

Interest Rates. We are exposed to market risk from changes in the interest rates on a significant portion of our outstanding debt. Outstanding revolving balances under our credit agreements bear interest at the prevailing benchmark interest rates in our various markets. Based on an average of the aggregate amounts outstanding under these facilities during the six months ended June 30, 2025, a 100-basis-point change in interest rates would result in an approximate $4.6 million change to our annual other interest expense.

Similarly, amounts outstanding under floor plan financing arrangements also bear interest at the prevailing benchmark interest rates in our various markets. Based on an average of the aggregate amounts outstanding under our floor plan financing arrangements subject to variable interest payments during the six months ended June 30, 2025, a 100-basis-point change in interest rates would result in an approximate $38.6 million change to our annual floor plan interest expense.

We evaluate our exposure to interest rate fluctuations and follow established policies and procedures to implement strategies designed to manage the amount of variable rate indebtedness outstanding at any point in time in an effort to mitigate the effect of interest rate fluctuations on our earnings and cash flows. These policies include:

• the maintenance of our overall debt portfolio with fixed and variable rate components;
• the use of authorized derivative instruments;
• the prohibition of using derivatives for trading or other speculative purposes; and
• the prohibition of highly leveraged derivatives, derivatives which we are unable to reliably value, or derivatives which we are unable to obtain a market quotation.

Interest rate fluctuations affect the fair market value of our fixed rate debt, including our mortgages and certain seller financed promissory notes, but with respect to such fixed rate debt instruments, do not impact our earnings or cash flows.

Foreign Currency Exchange Rates. As of June 30, 2025, we had consolidated operations in the U.K., Germany, Italy, Japan, Canada, Australia, and New Zealand. In each of these markets, the local currency is the functional currency. In the event we change our intent with respect to the investment in any of our international operations, we would expect to implement strategies designed to manage those risks in an effort to mitigate the effect of foreign currency fluctuations on our earnings and cash flows. A ten percent change in average exchange rates versus the U.S. Dollar would have resulted in an approximate $627.5 million change to our revenues for the six months ended June 30, 2025.

We purchase certain of our new vehicles, parts, and other products from non-U.S. manufacturers. Although we purchase the majority of our inventories in the local functional currency, our business is subject to certain risks, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, changes in tax and tariff rates, other regulations and restrictions, and foreign currency exchange rate volatility, which may influence such manufacturers' ability to provide their products at competitive prices in the local jurisdictions. Our future results could be materially and adversely impacted by changes in these or other factors.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely discussions regarding required disclosure.

Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, we maintain internal controls designed to provide us with the information required for accounting and financial reporting purposes. There were no changes in our internal control over financial reporting that occurred during the most recent quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.