Penske Automotive Group reported a 14% drop in net income in Q3 due to the BMW recall and rising interest costs. Penske, a diverse automotive giant, offers a portfolio of over 30 brands of cars, trucks, SUVs, and more. The company’s revenue is down approximately $23.8 million compared to a year ago.
The 2024 BMW stop-sale, in which over 278,000 vehicles were affected by faulty brake modules, significantly impacted the company’s declining revenue results. This recall was a major event in the automotive industry, and BMW and Mini account for 26% of Penske’s dealership revenue, and the significant loss greatly contributed to the company’s overall declining revenue results. In addition, with heightened inventory levels across dealerships, floorplan interest expenses are up a staggering 43%.
Despite the challenges caused by the stop-sale and CDK Global outage, Penske’s CEO, Roger Penske, is confident that things will turn around. The company is steadily boosting its revenue streams by acquiring high-profile dealerships worldwide.
In July, the automotive giant acquired Bill Brown Ford in Livonia, Michigan, the world’s largest sales volume of Ford dealers. This significant acquisition is estimated to add $550 million in annual revenue.
Penske is also working on a deal to acquire Porsche Centre Melbourne in Australia from Porsche Retail Group. This deal is expected to close at the end of the fiscal year and is estimated to add a whopping $130 million in additional annual revenue. This store will mark the third Porsche store added to Penske’s expansive portfolio.
Despite the significant challenges this year, Penske Automotive Group Inc. is making notable acquisitions and effective moves to diversify and strengthen its revenue streams further solidifying its position as one of the most resilient and solid automotive groups in the marketplace.
