CHICAGO – Penske Automotive Group has slowed its CarShop expansion, but that doesn’t mean its leaders are divesting its used-car arm or other parts of its portfolio, Rob Kurnick, president-Penske Automotive Group, tells attendees at the recent Automotive News Retail Forum.
The current shortage of affordable pre-owned vehicles led Penske executives to shelve plans to add 21 CarShop stores in the U.S. and U.K. by the end of 2023.
“As a result, we’ve pretty much paused our expansion plans,” Kurnick says, adding the group now is focusing on strategic sales and acquisitions to launch CarShop in Scottsdale, AZ, and other untapped markets. “I do think we’re absolutely on the right path. We’re in the business to own and operate dealerships, not to sell for-profit dealerships.”
Kurnick indicates Penske will reboot the expansion plans when there is “a bit more rationalization” in the used-car market. Lower acquisition prices and reconditioning costs are among the factors that may recharge plans, he says. In the meantime, the company has launched a cost improvement program focused on improving retail sales execution and overall cost structure.
During a recent earnings call, Penske reports third-quarter CarShop retail unit sales decreased 5% to 17,567. In comparison, total revenue fell 7% to $406.4 million, including a revenue drop of 12% on a same-store basis. For the nine months ending Sept. 30, retail unit sales climbed18% to 57,214 while total revenue jumped 28% to $1.4 billion, including an 18% increase of 18% on a same-store basis.
The CarShop decline is the only sour note in the recent Penske financials that includes automotive and commercial truck retailers. Earnings for Q3 2022 increased 7% to $6.9 billion.
“It really couldn’t get much better,” Kurnick says of demand and profits for new-car inventory. “So much of that is really driven by the chip shortage. It can be continued through discipline in inventory. I think the lesson learned here for us is that it’s a much better environment to work in when the inventory is pulled instead of pushed.”
