Item 1A. Risk Factors
Our business, financial condition, results of operations, cash flows, prospects, and the prevailing market price and performance of our common stock may be affected by a number of factors, including the matters discussed below. 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 Annual Report on Form 10-K 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.
Although we believe that the expectations, plans, intentions, and projections reflected in our forward-looking statements are reasonable, such statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The material risks, uncertainties, and other factors that our stockholders and prospective investors should consider include the following:
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Operational Risks
Macro-economic and geo-political conditions. Our performance is impacted by geo-political conditions and by general economic conditions overall and in particular by economic conditions in the markets in which we operate. These economic conditions include levels of new and used vehicle sales, 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, the rate of inflation, personal discretionary spending levels, interest rates, and unemployment rates. When the worldwide economy faltered early in 2020, we were adversely affected, and we expect a similar relationship between general economic and industry conditions and our performance in the future. PTG and PTS are currently experiencing weak market conditions in light of the continued recessionary freight environment, with PTG experiencing lower vehicle sales and PTS experiencing weak market conditions for used vehicle sales and commercial rental demand. While the diversification of our businesses have helped mitigate the impact of these conditions, a further prolonged freight market downturn will continue to impact our and PTS operating results.
Any geo-political developments that adversely affect the economies of our markets will also likely affect us. Moreover, geo-political conditions, including international conflict, can affect the vehicle supply chain as has happened with the war in Ukraine. Certain vehicle manufacturers and suppliers have experienced, and may continue to experience, difficulty sourcing certain parts which is further exacerbating the supply chain difficulties resulting from the demand for labor and the shortage of microchips and other components.
Many of our market countries have recently experienced a high rate of inflation. Inflation affects the price of vehicles, the price of parts, the rate of pay of our employees, the cost and availability of consumer credit, consumer demand, and our borrowing expenses. High rates of inflation may adversely affect consumer demand and increase our costs, which may materially and adversely affect us. Similarly, periods of rapid deflation in vehicle prices may materially and adversely affect our ability to profitably sell the affected vehicles.
Adverse conditions affecting one or more significant automotive manufacturers or suppliers will affect us. Our success depends on the overall success of the automotive and commercial vehicle industries generally and in particular, on the success of the brands of vehicles that each of our dealerships sell. In 2025, revenue generated at our BMW/MINI, Audi/Volkswagen/Porsche/Bentley, Toyota/Lexus, and Mercedes-Benz/Sprinter/smart dealerships represented 25%, 22%, 18%, and 8%, respectively, or 73% in aggregate, of our total automotive dealership revenues. In addition, our retail commercial truck operations rely principally on Freightliner and Western Star trucks (both Daimler brands). These manufacturers operate independently of us and we have no control over their operational decisions and future plans. We are subject to a concentration of risk in the event of adverse events or financial distress, including bankruptcy, impacting one or more of these manufacturers.
Significant adverse geo-political events, weather-related events, supply chain issues, or other events that interrupt vehicle or parts supply to our dealerships would likely have a significant and adverse impact on the automotive or commercial vehicle industries, including us, particularly if the events impact any of the manufacturers whose franchises generate a significant percentage of our revenue. In October 2025, the Dutch government invoked emergency powers to seize control of Nexperia, a subsidiary of a Chinese company and an important supplier of basic chips used in vehicles, prompting the Chinese government to ban exports of the company's finished products. This shortage impacted several manufacturers, most notably, Honda, who experienced reduced production in the fourth quarter of 2025. In September 2025, a fire at a major U.S. aluminum production facility caused significant damage which impacted supplies to various manufacturers. On September 2, 2025, Jaguar Land Rover (“JLR”) disclosed that it had experienced a significant cybersecurity incident that resulted in the temporary shutdown of certain production facilities and information technology systems. This disruption has led to continued delays in new vehicle deliveries, reduced availability of certain models, and interruptions in certain parts supply. These and other events affected, and could continue to affect, the timing of new vehicle deliveries to our dealerships, which may materially and adversely affect us.
Other national and international events, conditions, and conflicts may impact the supply of vehicles or parts to the markets in which we operate, and our business could be materially adversely affected. The supply chain required to manufacture and supply parts for the vehicles we sell is highly complex and integrated. Any failure of that supply chain could materially and adversely affect us. Production disruptions and supply shortages could result in suppressed new and used vehicle sales volumes which would impact the availability and affordability of new and used vehicles and may adversely affect us.
Increasing sales by underrepresented manufacturers may significantly and adversely affect us. Our success depends in part on the success of our automotive and commercial vehicle manufacturers for which we have franchised dealerships,
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as detailed in the prior risk factor. In recent years, Chinese manufacturers have increased market share in the U.K. and E.U., and for 2025, totaled 9.7% of U.K. new vehicle registrations as compared to 4.8% in 2024. While we have recently expanded our U.K. portfolio to include certain Chinese manufacturers, continued market share gains in any of our markets by manufacturers whom we do not fully represent may significantly and adversely affect us.
Vehicle manufacturers exercise significant control over us and our success is largely dependent on the success of our manufacturer partners. Each of our new vehicle dealerships and distributor operations operate under franchise and other agreements with automotive manufacturers, commercial vehicle manufacturers, or related distributors. These agreements, and in certain cases, related framework agreements, govern almost every aspect of the operation of our dealerships and give manufacturers the discretion to terminate or not renew our franchise agreements for a variety of reasons, including certain events outside our control such as accumulation of our stock by third parties. In certain cases, they also limit our ability to acquire dealerships on a national, regional, and local basis, and from time to time, we are precluded from acquiring additional franchises of certain manufacturers, or subject to other adverse actions, to the extent we are not meeting specified performance criteria at our existing stores (with respect to matters such as sales volume, sales effectiveness, and customer satisfaction or loyalty) until our performance improves in accordance with the agreements, subject to applicable state franchise laws.
Without franchise or distributor agreements, we would be unable to sell or distribute new vehicles or perform manufacturer authorized warranty service. If a significant number of our franchise agreements are terminated, not renewed, or, with respect to our distributor operations, a competing distributor were introduced, we would be materially affected. Manufacturers also have the right to establish new franchises or relocate existing franchises, subject, in the U.S., to applicable state franchise laws. While we expect that we will be able to renew our franchise agreements in the ordinary course, we cannot guarantee that all of our franchise agreements will be renewed, that the terms of the renewals will be favorable to us or that the manufacturers will not take other adverse actions under our arrangements with them. It is also possible that our stores will not be able to comply with manufacturers’ sales, customer satisfaction, loyalty, performance, facility, and other requirements in the future, which may affect our ability to acquire new stores or renew our franchise agreements, or subject us to other adverse actions, including the termination or compelled sale of a franchise, any of which could have a material adverse effect on our financial condition and results of operations.
In addition to the control afforded to manufacturers as a result of our franchise and other agreements, we also rely on our manufacturer partners for many aspects of our business and the success of our dealerships is dependent, in large part, on their success. For instance, we rely on our manufacturer partners exclusively for new vehicle inventory, and our ability to successfully sell new vehicles is dependent on the manufacturers' ability to design, manufacture and allocate to our dealerships a desirable mix of high-quality, competitively priced, technologically current and legally compliant vehicle inventories in quantities sufficient to meet our and our customers' demand. We also receive direct financial support and assistance from certain manufacturers and their affiliates, including captive finance companies, across various aspects of our business, including floorplan assistance and advertising assistance, and rely on manufacturers to pay us for warranty and service contract work for vehicles under manufacturer product warranties and service contracts where we directly bill the manufacturer instead of invoicing the customer directly. Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has an adverse effect on the vehicle manufacturers on which we rely for inventory, support and payment, or in the event such manufacturers fail to maintain the goodwill associated with their respective brands, which adverse consequences may be wholly outside of our control. See the risks captioned "Adverse conditions affecting one or more significant automotive manufacturers or suppliers will affect us" above and "Brand reputation" below.
The success of our commercial vehicle distribution and other business is directly impacted by availability and demand for the vehicles and other products we distribute. We are the exclusive distributor of Western Star commercial trucks, MAN commercial trucks and buses, and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. We are also the distributor of diesel and gas engines and power systems in these same markets. The profitability of these businesses depends upon the number of vehicles, engines, power systems, and parts we distribute, which in turn is impacted by demand for these products. We believe demand is subject to general economic conditions, exchange rate fluctuations, regulatory changes, competitiveness of the products, and other factors over which we have limited control. In the event sales of these products are fewer than we expect, our related results of operations and cash flows for this aspect of our business may be materially adversely affected. The products we distribute are principally manufactured at a limited number of locations. In the event of a supply disruption, sufficient quantities of vehicles, engines, power systems, and parts are not made available to us, or if we accept these products and are unable to economically distribute them, our cash flows or results of operations may be materially adversely affected.
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Australian and New Zealand economic conditions. Our commercial vehicle distribution and other operations in Australia and New Zealand may be impacted by local and regional economic conditions and in particular, the price of commodities such as copper and iron ore, which may impact the desire of our customers to operate their mining operations and replace their vehicle fleets. Adverse pricing concerns of those, and other commodities, may have a material adverse effect on our ability to distribute, and/or retail, commercial vehicles and other products profitably. These same conditions may also negatively impact the value of the Australian and New Zealand Dollar versus the U.S. Dollar, which negatively impacts our U.S. Dollar reported financial results and the pricing of products sold by Penske Australia, which are manufactured in the U.S., U.K., and Germany.
Additional risks relating to PTS. PTS' business has additional risks to those in the retail business, including:
Customers. PTS has a more concentrated customer base than we do and is subject to changes in the financial health of its customers, changes in their asset utilization rates, and increased competition for those customers. PTS is subject to credit risk associated with accounts receivable from its larger customers. If one or more of its larger customers were to become bankrupt, insolvent, or otherwise were unable to pay for the services PTS provides, PTS may incur significant write-offs of accounts receivable or incur lease or asset impairment charges that could adversely affect its operating results and financial condition.
Workforce. PTSrequires a significant number of qualified drivers and technicians, which may be difficult to hire, and is subject to increased compliance costs or work stoppages relating to those employees, particularly in regard to changes in labor laws and time of work rules regarding those employees. PTS contributes to several U.S. multi-employer pension plans that provide defined benefits to approximately 2,100 associates covered by collective bargaining agreements. If they withdraw or are deemed to withdraw from participation in any of these plans, then applicable law could require them to make withdrawal liability payments to the plan. If any of those plans were deemed to be underfunded, PTS could be subject to additional assessments, which could be substantial.
Fleet risk. As one of the largest purchasers of commercial trucks in North America, PTS requires continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, which may be uncertain, in particular if a significant recall were to occur. PTS is affected by the same supply issues noted above and any failure of the supply chain resulting in limited availability of new trucks or parts may have a material adverse impact on PTS. In addition, because PTS sells a large number of trucks each year and is subject to residual risk for the vehicles it leases to customers, changes in values of used trucks affect PTS' profitability.
PTS also bears the residual risk on the value of its vehicles when a customer's lease for those vehicles expires or when its holding period for rental vehicles ends. If demand for used vehicles declines, PTS may obtain lower sales proceeds upon their sale. A reduction in proceeds from sales of used vehicles in PTS’ fleet could cause PTS to sustain a substantial loss or require it to adjust the residual values, which could ultimately lead to depreciating those vehicles at a more accelerated rate. Any reduction in the resale values of the vehicles in its fleet could adversely affect its profitability.
Capital markets risk. PTS relies on banks and capital markets to fund its operations and capital commitments. PTS has a significant amount of total indebtedness, which it uses in part to purchase its vehicle fleet and therefore, is subject to changes in, and continued access to, capital markets.
Regulatory Requirements and Vehicle Mandates. Increasing efforts to control greenhouse gas emissions are likely to have an effect on PTS' (and PTG's) business and results of operations as further discussed below under "Vehicles Emissions and Other Regulation". Any of the factors noted could increase operating costs in the transportation industry, which would directly affect PTS' and PTG's customers and could reduce demand for vehicles. The new technology and legal requirements may also affect resale values of these vehicles when PTS or PTG attempts to sell them in the future.
Centralized Information Systems. PTS relies heavily on centralized information systems to process lease and rental transactions, manage its fleet of vehicles, account for its activities, and otherwise conduct its business. A failure of a major system, or a major disruption of communications between the system and the locations it serves, could cause a loss of reservations, interfere with PTS' ability to manage its fleet, impede real-time diagnostics of vehicles, slow leasing, rental, and sales processes, and otherwise adversely affect PTS' ability to manage its business.
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Strategic Risks
Brand reputation. Our businesses and our commercial vehicle operations, in particular, as those are more concentrated with a particular manufacturer, are impacted by consumer demand and brand preference, including consumers' perception of the quality of those brands. A decline in the quality and brand reputation of the vehicles or other products we sell or distribute, as a result of events such as manufacturer recalls or legal proceedings, may adversely affect our business. If such events were to occur, the profitability of our business related to those manufacturers could be adversely affected.
Our business is very competitive. We generally compete with other franchised dealerships in our markets, used vehicle dealerships, private market buyers and sellers of used vehicles, an increasing number of internet-based vehicle sellers, electric vehicle manufacturers that sell directly to consumers, national and local service and repair shops and parts retailers with respect to commercial vehicles, distributors of similar products, and manufacturers in certain markets. Purchase decisions by consumers when shopping for a vehicle are extremely price sensitive. The level of competition in the market can lead to lower selling prices and related profits. If there is a prolonged drop in retail prices or if new vehicle sales are allowed to be made over the internet or otherwise without the involvement of franchised dealers, our business could be materially adversely affected.
Changes to the retail delivery model, including increased digital retailer competition, efforts to sell vehicles directly outside the franchise system, and transition to an agency model of distribution could adversely affect our business, results of operations, financial condition, and cash flows.
Competition from online retailers. The automotive retail industry is experiencing competition in the used vehicle market from companies with a primarily online business model, including companies such as Carvana and others. We may face increased competition for market share with these non-traditional delivery models and digital retailers over time, which could materially and adversely affect our results of operations. We cannot be sure that our initiatives will be successful or that the amount we invest in these initiatives will result in our maintaining or enhancing our market share and continued or improved financial performance.
Sales outside the franchise system. In recent years, new electric vehicle manufacturers have been able to conduct new vehicle sales outside of the franchised automotive system as new entrants. While the sales levels of these new entrants were approximately 3.7% of new vehicles in the U.S. and approximately 2.3% of new vehicles in the U.K. for the year ended December 31, 2025, continued market share gains by manufacturers operating outside the franchise system may materially and adversely affect us. Moreover, while we expect continued good relations with our manufacturer partners, should U.S. franchise laws be repealed or amended to allow our existing manufacturer partners to effectively operate outside the franchised system, our results of operations may be materially and adversely impacted. Our franchised automotive dealers in the U.K., European Union, Australia, and Japan operate effectively without U.S. franchise law protections.
Agency. Some of our key automotive manufacturer partners have implemented or announced plans to implement an agency model of selling new vehicles in the U.K. and other countries. Under an agency model, 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. The long-term impact of the agency model at these dealerships as well as other agency models proposed by our manufacturer partners remains uncertain. We believe transition to an agency model in the U.S. would be difficult for the manufacturers in light of U.S. franchise laws. See Item 1. Business, "Regulations" and Item 1A. Risk Factors, "Sales outside the franchise system" and "Other Regulatory Issues."
New mobility models and vehicle electrification will continue to result in rapid changes to the automotive and trucking industries.Shared vehicle services such as Uber and Lyft provide consumers with increased choice in their personal mobility options. The effect of these and similar mobility options on the retail automotive industry is uncertain and may include lower levels of new vehicles sales but with increasing miles driven, which could require additional demand for vehicle maintenance. Most major vehicle manufacturers have announced plans to electrify some or all of their new vehicle fleets in response to concerns about the environment and due to regulatory requirements to limit vehicle emissions. We expect to continue to sell electric and hybrid gas/EVs through our franchised dealerships; however, our service revenues may decline over time as these vehicles may require less physical maintenance than gas and hybrid vehicles due to the absence of certain parts systems. Conversely, increasing consumer adoption of EVs may present new service opportunities, including with respect to range maintenance and optimization, cooling protection, torque protection, tire replacement, battery replacement, and warranty on newly released models.
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The effects of the eventual adoption of driverless vehicles are uncertain. Technological advances are facilitating the evolution of driverless vehicles. While many manufacturers offer varying degrees of driver assistance technology, the timing of adoption of true driverless vehicles remains uncertain due to regulatory requirements, additional technological requirements, and uncertain consumer acceptance of these vehicles. The effect of driverless vehicles on the automotive retail and trucking industries is uncertain and could include changes in the level of new and used vehicles sales, the price of new and used vehicles, the levels of service required by driverless vehicles and the role of franchised dealers, any of which could materially and adversely affect our business.
Key personnel. We believe that our success depends to a significant extent upon the efforts and abilities of our senior management and in particular, upon Roger Penske who is our Chair and Chief Executive Officer. To the extent Mr. Penske, or other key personnel, were to depart from our Company unexpectedly, our business could be significantly disrupted.
Financial Risks
Leverage. Our significant debt and other commitments expose us to a number of risks, including:
Cash requirements for debt and lease obligations.A significant portion of the cash flow we generate must be used to service the interest and principal payments relating to our various financial commitments, including $4.1 billion of floor plan notes payable, $2.2 billion of non-vehicle long-term debt, and $5.5 billion of future lease commitments(including extension periods that are reasonably assured of being exercised). A sustained or significant decrease in our operating cash flows could lead to an inability to meet our debt service or lease requirements or to a failure to meet specified financial and operating covenants included in certain of our agreements. If this were to occur, it may lead to a default under one or more of our commitments and potentially the acceleration of amounts due, which could have a significant and adverse effect on us.
Credit Availability. Because we finance the majority of our operating and strategic initiatives using a variety of commitments, including floor plan notes payable and revolving credit facilities, we are dependent on continued availability of these sources of funds. If these agreements are terminated or we are unable to access them because of a breach of financial or operating covenants or otherwise, we will likely be materially affected.
Interest rate variability. The interest rates we are charged on a substantial portion of our debt, including the floor plan notes payable we issue to purchase the majority of our inventory, are variable, increasing or decreasing based on changes in certain published interest rates. Increases to such interest rates have resulted in and may continue to result in higher interest expense for us, which negatively affects our operating results. Because many of our customers finance their vehicle purchases, increased interest rates may also decrease vehicle sales due to affordability, which would negatively affect our operating results.
Impairment of our goodwill or other indefinite-lived intangible assets has in the past had, and in the future could have, a material adverse impact on our earnings. We evaluate goodwill and other indefinite-lived intangible assets for impairment annually and upon the occurrence of an indicator of impairment. Our process and results for impairment testing of these assets is described further under “Impairment Testing” in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates. If we determine that the amount of our goodwill or other indefinite-lived intangible assets are impaired at any point in time, we would be required to reduce the value of these assets on our balance sheet, which could also result in a material non-cash impairment charge that could also have a material adverse effect on our results of operations for the period in which the impairment occurs.
Performance of sublessees. In connection with the sale, relocation, and closure of certain of our businesses, we have entered into a number of third-party sublease agreements. The rent paid by our sub-tenants on such properties in 2025 totaled approximately $15.6 million. In the aggregate, we remain ultimately liable for approximately $121.8 million of such lease payments including payments relating to all available renewal periods. We rely on our sub-tenants to pay the rent and maintain the properties covered by these leases. In the event a subtenant does not perform under the terms of their lease with us, we could be required to fulfill such obligations, which could have a significant and adverse effect on us.
International and foreign currency exchange risk. We have significant operations outside of the U.S. that expose us to changes in foreign currency exchange rates and to the impact of economic and political conditions in the markets where we operate. As exchange rates fluctuate, our results of operations as reported in U.S. Dollars fluctuate. For example, if the U.S. Dollar strengthens against the British Pound, our U.K. results of operations would translate into less U.S. Dollar reported results. Sustained levels or an increase in the value of the U.S. Dollar, particularly as compared to the British Pound, could result in a significant and adverse effect on our reported results.
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Joint ventures. We have significant investments in a variety of joint ventures, including retail automotive operations in the U.S. and Italy. We have a 28.9% interest in PTS. We expect to receive annual operating distributions from PTS and the other ventures and in the case of PTS, realize significant cash savings on taxes. These benefits may not be realized if the joint ventures do not perform as expected, or if changes in tax, financial, or regulatory requirements negatively impact the results of the joint venture operations. Our ability to dispose of these investments may be limited. In addition, the relevant joint venture agreement and other contractual restrictions may limit our access to the cash flows of these joint ventures. For example, certain of PTS' 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.
Legal and Compliance Risks
Vehicle Emissions and Other Environmental Regulations. Federal and state governments and regulators in our markets have increasingly placed restrictions and limitations on new vehicles in an effort to combat perceived negative environmental effects. In response to concerns that emissions of nitrogen oxides (NOx), and carbon dioxide and certain other gases, referred to as "greenhouse gases" or "GHGs," may be contributing to warming of the Earth's atmosphere, climate change-related legislation and policy changes to restrict NOx and GHGs have been implemented, at state and federal levels in a manner that impacts our business.
Significant increases in fuel economy requirements, new battery warranty standards, and new restrictions on emissions on vehicles and fuels could adversely affect prices, availability, and demand for the vehicles that we sell, which could materially adversely affect us. Such vehicles may also not be able to be produced in the quantities required, or, if produced, may not be able to be sold to consumers in light of customer reluctance to transition to EVs. Adoption of EVs will increasingly require the generation of additional electricity and nationwide electric charging infrastructures which may be unavailable in our markets. While increasing consumer adoption of EVs may present new service opportunities, including with respect to range maintenance and optimization, cooling protection, torque protection, tire replacement, battery replacement, and warranty on newly released models, our service revenue per vehicle may decline over time as these EVs may require less physical maintenance than gas and hybrid vehicles due to the absence of certain parts systems.
PTG sells new and used heavy- and medium-duty commercial trucks, parts and service, and offers collision repair services. PTS, with its broad product offering including full-service truck leasing, contract maintenance, and truck rental, along with logistics services, is one of the largest purchasers of commercial trucks in North America. The EPA and the National Highway Traffic Safety Administration ("NHTSA") have been building on federally mandated corporate average fuel economy standards, which are scheduled to increase substantially for certain vehicles through at least 2032 pursuant to existing regulations, and legislative and regulatory efforts in California are seeking higher fuel standards, stringent emissions reductions and a move toward zero emissions fleets while also requiring public disclosures on emissions and other climate-related matters. However, under the current U.S. administration, the EPA and NHTSA have taken steps to revise or scale back their regulations, and Congress has passed resolutions signed by President Trump purporting to revoke a number of waivers necessary for California and other states to engage in their own rulemaking. Moreover, in February 2026, the EPA rescinded its 2009 final rule under the Clean Air Act which found that GHGs endanger the public health and welfare of current and future generations, which forms the basis of the EPA regulatory authority to regulate GHG emissions. These regulatory efforts are expected to face legal challenges and their outcome is uncertain.
Should future regulations or consumer sentiment hinder our or PTS' ability to maintain, acquire, lease, sell, service, or operate trucks, we may be adversely affected. Should additional states adopt California Air Resources Board regulations, PTG and PTS could experience increased compliance costs, additional operating restrictions, or changes in demand for their products and services, which could have a material adverse effect on our business, financial condition and results of operations. New regulations could be adopted that require moving to zero emission formats and/or the implementation of more stringent emissions controls. For example, original equipment manufacturers may be required to install additional engine components, additional aerodynamic features or low-rolling resistance tires to comply with fuel economy regulations, which may result in higher costs associated with more complex components and a shorter useful tread life for tires, increasing operating costs for customers, suppliers, and our businesses. Foreign, federal, state, provincial and local lawmakers also are considering a variety of other climate change proposals, including prohibiting the use of certain substances with high "global warming potential."
Other Regulatory Issues. We are subject to a wide variety of regulatory activities and oversight, including:
Governmental regulations, claims, and legal proceedings. Governmental regulations affect almost every aspect of our business, including the fair treatment of our employees, wage and hour issues, and our financing activities with
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customers. We could be susceptible to claims or related actions if we fail to operate our business in accordance with applicable laws or it is determined that our long-standing compensation methods or other practices did not comply with local laws. Many laws and regulations applicable to our business were adopted prior to the introduction of online vehicle sales, the Internet and certain digital technology, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. Claims arising out of actual or alleged violations of law which may be asserted against us or any of our dealers by individuals, through class actions, or by governmental entities in civil or criminal investigations and proceedings, may expose us to substantial monetary damages which may adversely affect us.
Our financing activities with customers are subject to truth-in-lending, consumer leasing, equal credit opportunity, and similar regulations as well as motor vehicle finance laws, installment finance laws, insurance laws, usury laws, and other installment sales laws. In the U.K., the Financial Conduct Authority (the "FCA") regulates financial services firms and financial markets, including our activities in acting as broker of vehicle financing. The FCA has reviewed the vehicle finance industry concerning certain practices which, in the FCA’s determination, may have been unfair to customers, including with respect to vehicle financing commission disclosures. In October 2025, the FCA proposed a redress scheme requiring lenders to compensate customers whose financing arrangements are deemed unfair because they involved an undisclosed discretionary commission arrangement, or undisclosed high levels of commission paid to dealers, or there was an undisclosed exclusivity or similar arrangement between the lender and broker. Under the FCA’s proposed redress scheme, lenders would bear primary responsibility for delivering the proposed scheme including identifying affected customers, assessing potential liability and administering and paying redress. The FCA has indicated that dealers will be required to support lenders by providing relevant documentation and information necessary for lenders to implement the scheme. This new proposed redress scheme invited comment by industry participants with that consultation closing in December 2025. The final detail of the redress scheme is expected to be announced in the first quarter of 2026 and implemented later in the same year. The scheme may be subject to industry legal challenges. However, we will be subject to significant administrative obligations in connection with the redress scheme, if implemented, and it is possible that lenders could seek to directly or indirectly offset their redress obligations under the scheme from dealers. While the terms of the final redress scheme and its repercussions are presently unknown, it could materially and adversely affect our business and results of operations.
Privacy Regulation. We are subject to numerous laws and regulations in the U.S. and internationally designed to protect the information of clients, customers, employees, and other third parties that we collect and maintain, including the European Union General Data Protection Regulation (the "EUGDPR") and the United Kingdom General Data Protection Regulation (the "UKGDPR"). Both the EUGDPR and UKGDPR, among other things, mandate requirements regarding the handling of personal data of employees and customers, including its use, protection, and the ability of persons whose data is stored to correct or delete such data about themselves. The state of California has similar laws which includes a private right of action for certain violations of law. Multiple other U.S. states have also enacted comprehensive consumer privacy laws, and additional states may follow. Many privacy laws and regulations applicable to our business were adopted prior to the introduction of the Internet, artificial intelligence, certain digital technologies, and e-commerce, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. These laws pose increasingly complex and rigorous compliance challenges, which may increase our compliance costs and related risk. If we fail to comply with these laws or other similar regulations applicable to our business, we could be subject to reputational harm and significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. For example, a failure to comply with the UKGDPR could result in fines up to the greater of £17.5 million or 4% of annual global revenues.
Recalls. Legislative and regulatory bodies from time to time have considered laws or regulations that would prohibit companies from renting or selling any vehicle that is subject to a recall until the recall service is performed. Whether any such prohibition may be enacted, and its ultimate scope, cannot be determined at this time. If a law or regulation is enacted that prevents the sale of vehicles until recall service has been performed, we could be required to reserve a significant portion of our vehicles from being available for sale for even a minor recall unrelated to vehicle safety. In addition, various manufacturers have issued stop sale notices in relation to certain recalls that require that we retain vehicles until the recall can be performed, whether or not parts are then available. While servicing recall vehicles yields parts and service revenue to us, the inability to sell a significant portion of our vehicles could increase our costs and have an adverse effect on our results of operations if a large number of our vehicles are the subject of simultaneous recalls or if needed replacement parts are not in adequate supply.
Tariff and trade risk. During 2025, the U.S. enacted various tariffs on automobiles, automobile parts, medium- and heavy-duty trucks and truck parts which impacted each of our automotive and commercial vehicle suppliers, as well as our and PTS' operations. These tariffs have impacted the retail price of vehicles sold by us and used in the
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operations of PTS. The policies and announcements regarding tariffs remain fluid. It remains difficult to assess how these tariffs will affect our business and results of operations as each manufacturer has responded differently to the impact of tariffs with some increasing retail prices and some absorbing more of the tariff cost. Moreover, many manufacturers have announced plans to shift production to the U.S. to mitigate the impact of the tariffs. Existing or subsequently announced tariffs affecting the automotive or transportation industry may increase our cost of acquiring vehicles, trucks and parts, as well as our inventory carrying costs. This may lead to increased prices for consumers, which may decrease consumer demand and negatively impact revenue and gross profit with respect to the sale of new vehicles and parts, particularly in light of the prolonged recessionary freight rate environment.
In October 2025, the Dutch government invoked emergency powers to seize control of Nexperia, a subsidiary of a Chinese company and an important supplier of basic chips used in vehicles, prompting the Chinese government to ban exports of the company's finished products. This shortage impacted several manufacturers, most notably, Honda, who experienced reduced production in the fourth quarter of 2025. In September 2025, a fire at a major U.S. aluminum production facility caused significant damage which impacted supplies to various manufacturers. Rare earth minerals are broadly used within the vehicle supply chain. Trade tensions has resulted in China threatening to withhold some of those minerals. These and other events affected, and could continue to affect, the timing of new vehicle deliveries to our dealerships, which may materially and adversely affect us.
Changes or increases in tariffs, trade restrictions, the negotiation of new trade agreements, non-tariff trade barriers (such as those imposed on Nexperia noted above), local content requirements, uncertainty surrounding global trade policies, and the imposition of retaliatory tariffs or trade barriers against certain countries or covering certain products, including vehicles and parts, may affect our competitive position and negatively impact our gross profit with respect to affected vehicles and parts. The ultimate impact of any tariffs is uncertain and will depend on various factors, including whether such tariffs are maintained and/or implemented, the scope and nature of applicable exemptions, the duration of the tariffs and the timing of their implementation, the amount, scope, and nature of the tariffs, and the related responses from impacted countries, manufacturers, and/or consumers.
Franchise laws in the U.S. In the U.S., state law generally provides protections to franchised vehicle dealers from discriminatory practices by manufacturers and from unreasonable termination or non-renewal of their franchise agreements. In many states, the laws require that new vehicle sales be conducted exclusively by automotive retailers (not manufacturers). Should U.S. franchise laws be repealed or amended to allow our existing manufacturer partners to effectively operate outside the franchised system, our results of operations may be materially and adversely impacted. See the risk factor captioned “Sales outside the franchise system” above.
Changes in law. New laws and regulations at the state and federal level may be enacted which could materially adversely impact our business. For example, in October 2025, California adopted the "California Combating Auto Retail Scams Act", which will change the way vehicles are advertised and sold in California. The rule, which takes effect in October 2026, mandates a new three-day right to return for certain used vehicles, requires that ads and first customer written communications about a specific vehicle include a "total vehicle price", and expands record retention and customer disclosure requirements. This new law or similar state laws will likely complicate the transaction process and increase our compliance costs and risk, among other effects, which could increase our customers costs and have a significant and adverse effect on us.
Climate change and environmental regulations. Scientific evidence suggests that the globe is warming potentially resulting in an environment more prone to natural disasters, such as flooding or wild fires. To date, we have seen increases in our cost to insure against such risks, which costs could continue to increase should this trend continue.We are subject to a wide range of environmental laws and regulations, including those governing discharges into the air and water; the operation and removal of storage tanks; and the use, storage, and disposal of hazardous substances. In the normal course of our operations we use, generate, and dispose of materials covered by these laws and regulations. In the face of climate change, these laws could become more stringent. 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. Furthermore, should climate change continue, we expect further regulation of internal combustion engines and vehicle emissions which may affect the types of vehicles we sell and service. We cannot predict the future costs to our businesses for these developments.
Accounting and disclosure rules and regulations. Significant changes to generally accepted accounting principles in the U.S. ("GAAP") could significantly affect our reported financial position, earnings, and cash flows upon adoption and effectiveness. For example, a change to lease accounting could affect PTS customers' decisions to purchase or lease trucks, which could adversely affect their business if leasing becomes a less favorable option. See the disclosure
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provided under "Recent Accounting Pronouncements" in Part II, Item 8, Note 1 of the Notes to our Consolidated Financial Statements for additional detail on accounting standard updates that could have an impact on us.
In addition, we are subject to various reporting regimes in the U.S. and internationally. In the U.K. and Australia, we are subject to certain regulations which require disclosure of climate risks and opportunities, among other matters. We are also subject to California's Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act which require disclosure of emissions and other matters, although legal challenges may thwart these acts. Further, we are subject to the European Sustainability Reporting Standards which also require emissions and other disclosures, as well as any regulations regarding climate and sustainability disclosures eventually adopted by the U.S. Securities and Exchange Commission. We are also subject to regulations and corporate financial reporting and auditing obligations in other jurisdictions that we operate in. These multiple sets of disclosures standards are not yet clearly defined and require duplicative and sometimes conflicting disclosures across our individual and consolidated business units, and the failure to comply with these standards may result in fines, penalties and reputational harm. Compliance with these standards will subject us to additional expenses and compliance risk which may adversely affect our business.
Related parties. Our two largest stockholders, Penske Corporation and its affiliates (“Penske Corporation”) and Mitsui & Co., Ltd. and its affiliates (“Mitsui”), together beneficially own approximately 73% of our outstanding common stock. The presence of such significant stockholders results in several risks, including:
Our principal stockholders have substantial influence. Penske Corporation and Mitsui have entered into a stockholders agreement pursuant to which they have agreed to vote together as to the election of our directors. As a result, Penske Corporation has the ability to control the composition of our Board of Directors, which may allow it to control our affairs and business. This concentration of ownership coupled with certain provisions contained in our agreements with manufacturers, our certificate of incorporation, and our bylaws could discourage, delay, or prevent a change in control of us.
Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests. Roger Penske, our Chair and Chief Executive Officer and a director, holds the same offices at Penske Corporation. 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. Each of these officers is paid much of their compensation by Penske Corporation. The compensation they receive from us is based on their efforts on our behalf; however, they are not required to spend any specific amount of time on our matters. The Vice Chair of our Board of Directors, Greg Penske, is the son of our Chair and also serves as a director of Penske Corporation. Michael Eisenson, one of our directors, is also a director of Penske Corporation and an Advisory Board member of PTS. Lisa Davis, one of our directors, is also an Advisory Board member of PTS. Yosuke Kawakami, one of our directors, is also an employee of Mitsui. Roger Penske also serves as Chairman of Penske Transportation Solutions, for which he is compensated by PTS.
Penske Corporation ownership levels. Certain of our agreements have clauses that are triggered in the event of a material change in the level of ownership of our common stock by Penske Corporation, such as our trademark agreement between us and Penske Corporation that governs our use of the “Penske” name which can be terminated 24 months after the date that Penske Corporation no longer owns at least 20% of our voting stock. We may not be able to renegotiate such agreements on terms that are acceptable to us, if at all, in the event of a significant change in Penske Corporation's ownership.
We have a significant number of shares of common stock eligible for future sale.Penske Corporation and Mitsui own approximately 73% of our common stock, and each has two demand registration rights that could result in a substantial number of shares being introduced for sale in the market. We also have a significant amount of authorized but unissued shares. Penske Corporation does not currently pledge any of its shares of our common stock, however it has agreed to pledge a substantial portion of its shares as collateral to secure a loan facility in the future if specified events occur under such agreement. If it were to pledge its shares, a default by Penske Corporation could result in the foreclosure on those shares by the lenders, after which the lenders could attempt to sell those shares on the open market or to a third party. The introduction of any of these shares into the market could have a material adverse effect on our stock price.
General Risks
We rely on third parties for the majority of our information systems and the availability and efficient operation of such systems is critical to the operation of our business.
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Our information systems are fully integrated into our operations, and we rely on them to operate effectively, including with respect to electronic interfaces with manufacturers and other vendors, customer relationship management, sales and service efforts, data storage, and financial and operational reporting. The majority of our systems are provided by or licensed from third-party vendors and suppliers; the most significant of which are the dealer management systems ("DMS") and customer relationship management ("CRM") systems used across our retail operations, which are provided by a limited number of suppliers. We also rely on third-party vendors to supply other key products and services to us and our customers. One or more of these third-party vendors or suppliers may experience financial distress, technology challenges, cybersecurity incidents, ransomware demands, programming errors, staffing shortages or liquidity challenges, file for bankruptcy protection, go out of business, or suffer other disruptions in their business, each of which could affect the vendors’ ability to provide services to us and our customers. If any of our vendors or suppliers fail to deliver their products or services for any reason, our business and results of operations and financial condition could be adversely impacted, and such failures may lead to broader disruptions or failures across our information systems which may expose us to customer, employee, manufacturing partner, governmental, or third-party claims or other legal liabilities.
In June 2024, CDK Global, LLC ("CDK"), a third-party provider of information systems, including DMS software to support retail automotive and commercial truck dealership operations, experienced a cybersecurity incident and its systems were rendered inoperable (the "CDK Cybersecurity Incident"). Although we do not utilize CDK's DMS in our U.S. or international automotive dealership operations, our Premier Truck Group business does utilize CDK’s DMS and was impacted by the CDK Cybersecurity Incident. Events such as the CDK Cybersecurity Incident and the failure of our information systems, the failure to protect the integrity of these systems, or the interruption of these systems as discussed herein or otherwise due to natural disasters, power loss, unexpected termination of our agreements, cyber-attacks or ransomware encryptions, could significantly and adversely disrupt our business operations, impact our sales, service, inventory, customer relationship management, and accounting functions and otherwise adversely affect our results of operations. Even where business continuity responses and contingency plans are implemented to minimize disruptions caused by information systems failures, such mitigation efforts may result in decreased operational efficiencies and limit dealership productivity. Further, despite our efforts to assess, identify, and manage material risks from cybersecurity threats to our business and operations, including through evaluating key partners and third parties with whom we share our information as well as certain customer and employee information, we may not be able to protect our various systems from disruptions.
Cybersecurity. In the ordinary course of our business, we receive confidential information about our customers, employees, associates, and vendors. We collect, process, retain, and in some cases share this information in the normal course of our business, and such information is collected and stored primarily in our core information systems, including our DMS and CRM platforms. Our internal and third-party systems, including our DMS and CRM systems, are under a heightened level of risk from state actors, cyber criminals or other individuals with malicious intent to gain unauthorized access to our systems and exploit the information, including the confidential information of our customers and employees, that we gather. Moreover, increasingly powerful artificial intelligence technologies may increase our cybersecurity risks as we and other industry participants need to respond to these novel technologies which will likely be used to thwart our defenses or to obtain personal information. Cyber-attacks, such as the CDK Cybersecurity Incident described above, and threats to information systems and network and data security are becoming increasingly diverse and sophisticated, with attacks increasing in frequency, scope, and potential harm. In addition, some of our software applications are utilized by third parties who, in turn, subcontract or otherwise outsource various processes and administrative functions to additional third parties. Such third parties may have access to confidential information that is critical to our business operations and services. While our information security program includes enhanced controls to monitor third party providers' security programs, these third parties are subject to their own risks of data breaches, cyber-attacks, and other events or actions that could damage, disrupt, or close down their networks or systems, which in turn may adversely impact our business operations. For an overview of certain of our efforts related to cybersecurity risk management, strategy, and governance and our written Information Security Program, see Item 1C. Cybersecurity.
Despite the security measures we have in place or may implement in the future, we may be unable to fully detect, mitigate, or protect against cyber-attacks, ransomware attacks, computer viruses, security breaches, social engineering, malicious software, lost or misplaced data, programming errors, human errors, burglary, acts of vandalism, misdirected wire transfers or other events impacting us or our third-party service providers. Any security breach or event, whether by us directly or our third-party service providers, may result in an authorized party obtaining trade secrets, personally identifiable information or confidential information and may result in loss of revenue, increase the costs of doing business, harm our competitiveness, reputation or customer, vendor or manufacturer relationships, and have other negative operational impacts. In addition, such security breaches or events resulting in the loss or exposure of this information could result in liabilities and other significant financial exposures, including those derived from investigations, regulatory fines, penalties for violations of applicable laws and regulations, costs related to the remediation of ransomware events, litigation
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including consumer class actions, the imposition of penalties, or other means, any of which could have a material adverse effect on our business, results of operations or financial condition. In addition, our failure to respond quickly and appropriately to such a security breach, or our failure to adequately test and verify the remediation of security incidents involving third parties prior to reintegration into our information systems, could exacerbate the consequences of the breach.
Property loss, business interruption, or other liabilities. Our business is subject to substantial risk of loss due to the significant concentration of property values, including vehicle and parts inventories at our operating locations; claims by employees, customers, and third parties for personal injury or property damage; and fines and penalties in connection with alleged violations of regulatory requirements. While we have insurance for many of these risks, we retain risk relating to certain of these perils, including through self-insurance, and certain perils are not covered by our insurance. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. If we experience significant losses that are not covered by our insurance, whether due to adverse weather conditions or otherwise, or we are required to retain a significant portion of a loss, it could have a significant and adverse effect on us.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Risk Management Processes. We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats to our business and operations and developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems. As a result, we have integrated the management of cybersecurity threats into our broader risk management efforts, implementing policies and procedures to promote cybersecurity risk management and enhance mitigation efforts against cyber-attacks and similar threats. To help secure our systems that store or transmit electronic information, we have implemented multi-layered preventive controls which use aggregated intelligence to proactively detect, block and evaluate attacks. We also maintain a Chief Information Officer who is charged with implementing and overseeing our comprehensive written Information Security Program. In connection with our Information Security Program, we perform cybersecurity risk assessments at least annually to analyze the materiality of identified risks, the likelihood of such risks materializing, and the scope and intensity of adverse impacts if such risks result in the compromise of our information systems or sensitive information stored by us or on our behalf.
Our Information Security Program includes proactive measures to manage cybersecurity risks and threats, including mandatory annual security awareness training for all personnel with enhanced training for designated information security personnel; enterprise-wide phishing simulations and security assessments; a business continuity and recovery plan in the event of a cybersecurity incident; and the implementation of targeted access controls and various other measures, including multi-factor authentication, with respect to certain systems containing sensitive information. We have also implemented an incident response plan to guide our response to cybersecurity incidents, with a dedicated, cross-functional response team, including senior management from our information technology, information security, operations, finance, risk management, investor relations and legal teams, responsible for overseeing efforts related to detection, containment, threat mitigation and notification, as appropriate. We identify vulnerabilities in our information systems through proactive scanning of system assets for known vulnerabilities. Our outsourced managed security source operates 24/7, identifying threats and vulnerabilities, and our information security team regularly monitors alerts and meets to discuss trends in cybersecurity threats. We proactively manage vulnerabilities from major software publishers through a global patching program. To prevent unauthorized access to our information systems, we have a system of controls in place to manage user access to our information systems. Our employees acknowledge an acceptable use policy and are trained in how to identify information security risks in the workplace.
Third Party Engagement and Oversight. We engage third-party service providers, including consultants and auditors, to monitor and protect critical assets from cyber-attacks and to enhance certain components of our Information Security Program, including to assist us with annual security assessments, penetration and vulnerability testing, email and web filtering, endpoint protection, and consultation on certain cybersecurity enhancements.These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain current. To oversee and identify cybersecurity threats associated with our use of third-party service providers, we periodically audit and review certain information security practices of critical vendors in possession of sensitive information, including through seeking responses to cybersecurity questionnaires. In the ordinary course of business, we also rely on contractual obligations from certain third-party service providers to meet certain information security standards and to notify and cooperate with us in the event of qualifying cybersecurity incidents.
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Board of Directors Oversight. Our business is managed under the direction of our Board of Directors ("the Board"), which guides our long-term strategy and represents the highest level of oversight at the Company. Our Board views the identification and effective management of cybersecurity threats as a critical component of overall risk management and oversight responsibilities. To that end, the Board assures that we maintain robust corporate governance policies designed to promote our culture of uncompromised integrity that have been implemented in a manner that facilitates active oversight and engagement regarding various cybersecurity matters. Consistent with these policies, the Board receives updates regarding cybersecurity threats and events in connection with its regularly scheduled meetings, as appropriate, and as part of its ongoing strategy and risk management sessions, engages in discussions regarding cybersecurity threats to our operations. In addition to this direct oversight, the Board has delegated oversight responsibilities with respect to cybersecurity risks to the Audit Committee of the Board. In addition to its oversight of the quality and integrity of the Company’s financial statements and internal audit functions, the Audit Committee is also responsible for reviewing the Company’s key risk areas, including cybersecurity risks, and regularly receives updates regarding cybersecurity threats and incidents involving the Company or our vendors and suppliers.
Management's Role in Managing Risk. As noted above, we have a designated Chief Information Officer who is charged with implementing and overseeing our comprehensive written Information Security Program.With over 25 years of experience in the field of information technology and cybersecurity, our Chief Information Officer brings a wealth of expertise to his role and maintains both Certified Information Systems Security Professional (CISSP) and Certified Information Systems Auditor (CISA) certifications and additional personnel on our information security team have cybersecurity experience and certifications. Our Chief Information Officer’s background includes extensive experience as an enterprise chief information officer and is well-recognized within our industry.Our Chief Information Officer reviews with senior management, at least quarterly, the status of our Information Security Program, identified threats to our data security, and cyber incidents relevant to our operations and reviews these matters with our Board and/or Audit Committee at least annually, or more frequently when appropriate. Further, at least quarterly, our senior leadership team, including our Chief Financial Officer, General Counsel, Chief Information Officer, and Executive Vice President of Financial Services and Global Risk Management, prepares a comprehensive summary of certain key risks facing the Company (the “Risk Report”). The Risk Report includes feedback from multiple constituencies within the Company, incorporating and evaluating heightened risk areas identified by senior management, functional area teams within the organization, and management at the regional and local dealership levels. In addition to various enterprise-wide risks identified throughout this management-led process, the Risk Report highlights cybersecurity risks, tasking the Chief Information Officer or his designees with the responsibility to monitor such risks and, as appropriate, implement risk mitigation strategies. The Risk Report also clarifies that both the Board and the Audit Committee retain oversight of such risks. The Risk Report is shared and discussed at least quarterly with the Audit Committee and periodically with the full Board, with certain specified risks and mitigation efforts reported to the Board or designated standing committees on a more frequent basis, as appropriate.
We and others across our industry face a number of cybersecurity risks in connection with our business and operations. Although such risks have not materially affected our business strategy, results of operations, or financial condition to date, we have, from time to time, experienced threats to, and incidents in connection with, our information systems. Any security breach or event resulting in the unauthorized disclosure of our information or the information of our customers or the degradation of services provided by our critical business systems, whether by us directly or our third-party service providers, could adversely affect our business operations, sales, reputation with current and potential customers, associates, or vendors as well as other operational and financial impacts derived from investigations, litigation, the imposition of penalties, or other means. For more information about the information technology and cybersecurity risks we face, see the risk factors entitled "We rely on third parties for the majority of our information systems and the availability and efficient operation of such systems is critical to the operation of our business," "Cybersecurity," and "Regulatory Issues – Privacy Regulation" in Item 1A. Risk Factors.
Item 2. Properties
We own our headquarters building in Bloomfield Hills, Michigan and many of our operating or management facilities. We also lease or sublease many of our other properties and other facilities. These leases are generally for an initial period of between 5 and 20 years and are typically structured to include renewal options at our election. We believe that our facilities are sufficient for our needs and are in good repair.
Item 3. Legal Proceedings
From time to time, we are a party to litigation and other legal proceedings, including class action claims and purported class action claims, in the ordinary course of business. Such claims may be brought by governmental authorities, customers, vendors, stockholders, or employees. We are not a party to any legal proceedings, including class action
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lawsuits, that individually or in the aggregate are reasonably expected to have a material effect on us. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Our common stock is traded on the New York Stock Exchange under the symbol “PAG.” As of February 20, 2026, there were 228 holders of record of our common stock.
Dividends
We have announced a cash dividend of $1.40 per share payable on March 5, 2026, to stockholders of record as of February 25, 2026. 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, 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.
Securities Repurchases
The table below sets forth information with respect to shares of common stock repurchased by the Company during the three months ended December 31, 2025.
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SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on our common stock based on an investment of $100 on December 31, 2020, and the close of the market on December 31 of each year thereafter against (i) the Standard & Poor's 500 Index and (ii) an industry/peer group consisting of Asbury Automotive Group, Inc., AutoNation, Inc., Group 1 Automotive, Inc., Lithia Motors, Inc., and Sonic Automotive, Inc (the "Peer Group"). The graph assumes the reinvestment of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Penske Automotive Group, Inc., the S&P 500 Index, and a Peer Group
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* $100 invested on 12/31/20 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Cumulative Total Return
Item 6. Reserved
Reserved.
Item 7. Management's Discussion and Analysis of Financial Condition andResults of Operations
This Management's Discussion and Analysis of Financial Condition and Results ofOperations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-lookingstatements as a result of various factors, including those discussed in "Item 1A.Risk Factors" and "Forward-Looking Statements." We have acquired, disposed, 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. Ourfinancial statements include the results of operations of those businesses fromthe date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.
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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 27,700 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs over 42,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 396,600 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
In 2025, our business generated $31.8 billion in total revenue, which is comprised of approximately $27.5 billion from retail automotive dealerships, $3.4 billion from retail commercial truck dealerships, and $922.6 million from commercial vehicle distribution and other operations. We generated $5.2 billion in gross profit, which is comprised of $4.5 billion from retail automotive dealerships, $542.3 million from retail commercial truck dealerships, and $192.3 million from commercial vehicle distribution and other operations.
Retail Automotive. We are one of the largest global automotive retailers as measured by the $27.5 billion in total retail automotive dealership revenue we generated in 2025. We are diversified geographically with 61% of our total retail automotive dealership revenues in 2025 generated in the U.S. and Puerto Rico and 39% generated outside of the U.S. We offer over 40 vehicle brands with 71% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Lexus, Mercedes-Benz, and Porsche, and 23% of revenue generated from volume non-U.S. brands such as Toyota and Honda in 2025. As of December 31, 2025, we operated 365 retail automotive franchised dealerships, of which 148 are located in the U.S. and 217 are located outside of the U.S., principally in the U.K. As of December 31, 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 583,000 vehicles in 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 2025, in the U.S. we sold four retail automotive franchises, closed one retail automotive franchise, and opened one retail automotive franchise. In addition, on November 19, 2025, we acquired all of the membership interests of Penske Motor Group, LLC ("PMG"), representing two Lexus brand locations and one Toyota brand location in California and one Toyota brand location in Texas, including Longo Toyota, the largest Toyota brand dealership in the U.S. This acquisition was accounted for as a transaction between entities under common control. Please refer to Part II, Item 8, Note 1 and Note 12 for further details. In the U.K., we sold one used vehicle dealership and opened eight retail automotive franchises at existing Sytner Select locations, representing the Geely and Chery brands, and opened two Skoda points at existing VW brand dealerships. We also acquired a Ferrari brand dealership in Modena, Italy, and opened a BYD franchise in Germany. During 2025, in aggregate we acquired or opened dealerships representing approximately $1.6 billion in expected annualized revenue, of which $1.5 billion is related to our acquisition of PMG, and disposed of dealerships representing approximately $408.5 million of expected annualized revenue. In February 2026, we acquired Lexus of Orlando and Lexus of Winter Park, both located in the Orlando metropolitan area of Central Florida.
Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail 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 December 31, 2025, PTG operated 45 locations
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selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 19,239 new and used trucks in 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. We also own and operate three Porsche dealerships in Melbourne, Australia which results are included within our retail automotive segment described above.
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 businesses, which articulates the breadth of their services. PTS 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, supply chain management, and dry van truckload carrier services. We recorded $192.8 million and $198.0 million in equity earnings from this investment in 2025 and 2024, respectively.
Outlook/Recent Developments
Please see “Outlook” in Part I, Item 1 for a discussion of our outlook in our markets.
Operating Overview
Automotive and commercial truck dealerships represent 97.1% of our revenue and 80.9% of our earnings before taxes during 2025. Income from our PTS investment represents 15.3% of our earnings before taxes during 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.
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 $302.3 million and $43.1 million, respectively, in 2025. Foreign currency average rate fluctuations increased earnings per share by approximately $0.04 per share in 2025. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit decreased 1.1% and 0.8%, respectively, in 2025.
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
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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, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning 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; 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 above and "Forward-Looking Statements" below.
Critical Accounting 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 following discussion addresses the accounting policy applied in the preparation of our financial statements that management believes is the most dependent upon the use of estimates and assumptions. Refer to Part II, Item 8, Note 1 of our Consolidated Financial Statements for a description of our significant accounting policies.
Impairment Testing
Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its fair value to its carrying value. These indefinite-lived intangible assets relate to franchise agreements with manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations; trade names, which represents the estimated value of trade names acquired in business combinations; and distribution agreements with commercial vehicle manufacturers and other manufacturers, which
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represent the estimated value for distribution rights acquired in business combinations. An indicator of impairment exists if the carrying value exceeds its estimated fair value, and an impairment loss may be recognized up to that excess. The fair value is determined using an income approach, which includes assumptions about revenue growth, terminal growth rates, and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, and the selection of the weighted average cost of capital. Changes in these assumptions could have a significant effect on the fair value of these intangible assets and the amount of any impairment charge. Each of the significant assumptions to the fair value model are considered level 3 inputs within the fair value hierarchy. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life.
Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations which includes our investment in PTS and other investments. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that were aggregated into two reporting units for the purpose of goodwill impairment testing as of October 1, 2025, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts, and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The reporting units are United States Retail Automotive and International Retail Automotive. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment.
For reporting units within our Retail Automotive, Retail Commercial Truck, and Other reportable segments, we prepared a quantitative assessment of the carrying value of goodwill. We estimated the fair value of our reporting units using an income approach. The income approach measures fair value by discounting expected future cash flows at a weighted average cost of capital. We also validate the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed by the Company or in the industry. As part of that assessment, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization as of the assessment date. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest and other significant assumptions, including revenue growth, terminal growth rates, EBITDA margin, and the weighted average cost of capital.
Based on our assessment as of October 1, 2025, and in conjunction with our fourth quarter annual forecasting process for 2026 which impacts key assumptions used in our goodwill impairment assessment, we concluded that for each of our reporting units that the fair values were more likely than not greater than their carrying values. As a result, we had no goodwill impairment charges in 2025. We also had no goodwill impairment charges in 2024.
For our other indefinite-lived intangible assets, we prepared a quantitative assessment as of October 1, 2025, by comparing the fair value to its carrying value. We estimated the fair value using an income approach, applying similar methodology as discussed above. In conjunction with the sale of a franchised dealership in the U.S. during 2025, we had $3.4 million of impairment charges relating to our other indefinite-lived intangible assets. We also had $1.8 million of impairment charges relating to our other indefinite-lived intangible assets during 2024.
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
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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 currently have and 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.
One Big Beautiful Bill Act
On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was signed into law. The OBBBA 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, which will benefit the tax treatment of PTS vehicle purchases. The bill also provides certain consumers with a tax deduction for the interest on loans for certain U.S.-assembled vehicles and eliminated federal EV tax credits for vehicles purchased or leased after September 30, 2025. 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. The expiration of the EV tax credit noted above at the end of September 2025 positively impacted sales of EVs in third quarter, while negatively impacting sales of EVs in the fourth quarter. While we expect lower new U.S. EV sales as a result of the elimination of the EV tax credits, we continue to evaluate additional impact of the OBBBA on our consolidated financial statements and any cash flow implications.
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.
On November 19, 2025, we acquired PMG from a commonly controlled affiliate, which was accounted for as a transaction between entities under common control. Accordingly, our consolidated financial statements and related notes have been retrospectively recast for all historical comparative periods presented to include the operations of PMG as if the entities had been combined since the beginning of the earliest period presented. Furthermore, the assets and liabilities of PMG were recognized at the historical carrying amounts, and the difference between the consideration transferred and the carrying value of the net assets received was recorded to equity within retained earnings.
This change in reporting particularly impacts our reporting of income tax. Historically, PMG was treated as a pass-through partnership for income tax purposes and therefore did not record income tax expense in its stand-alone financial statements. Because we have retrospectively recast prior periods to include PMG as if it had always been part of our consolidated reporting, those historical periods do not reflect federal and state income taxes that would have been incurred had PMG been included in our taxable consolidated group. Beginning on the acquisition date, the results of PMG are included in our consolidated federal and state income tax filings and therefore are subject to income tax. As a result, period-over-period comparisons of net income and earnings per share may not be directly comparable due to the change in tax status of PMG.
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Our results for 2025 include a gain of $52.3 million from the sale of a retail automotive franchise in the U.S., 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 2025 of $32.5 million (none of which was individually material), resulting in an after-tax expense of $26.3 million, or $0.39per share. This resulted in a net after-tax gain of $12.6 million, or $0.19 per share. Our results for 2023 include a goodwill impairment charge of $40.7 million (before and after tax), or $0.60 per share, relating to our former Used Vehicle Dealerships International reporting unit.
Retail Automotive Dealership New Vehicle Data
(In millions, except unit and perunit amounts)
Units
Retail unit deliveries of new vehicles decreased from 2024 to 2025 due to a 4,579 unit decrease from net dealership dispositions, coupled with an 823 unit, or 0.3%, decrease in same-store new retail unit deliveries. Same-store retail units delivered increased 2.2% in the U.S. and decreased 3.9% internationally. Overall, new retail unit deliveries increased 1.4% in the U.S. and decreased 7.0% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to continued strong consumer demand throughout the year, increased EV sales in the U.S. due to the expiration of certain tax credits during the third quarter, and an improved economic environment, including lower interest rates. 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. driven by macroeconomic pressures from inflation, as well as higher business and consumer-related taxes and fees, including increased emissions-based charges on higher-emission vehicles, increased market share of Chinese manufacturers which represent a small portion of our overall U.K. sales, and lower availability of certain products from select manufacturers.
Retail unit deliveries of new vehicles increased from 2023 to 2024 due to a 12,274 unit increase from net dealership acquisitions, coupled with a 2,487 unit, or 1.0%, increase in same-store new retail unit deliveries. Same-store retail units delivered increased 2.3% in the U.S. and decreased 1.0% internationally. Overall, new retail unit deliveries increased 4.2% in the U.S. and increased 8.4% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to continued consumer demand for new vehicles and increasing new vehicle availability, coupled with the
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pent-up demand resulting from lower vehicle availability in prior years. We believe the decrease in same-store unit sales internationally is primarily due to a decline in sales of certain premium brand sales in the U.K. driven in part by a decline in retail and private registrations in lieu of fleet sales.
Revenues
New vehicle sales revenue decreased from 2024 to 2025 due to a $53.5 million decrease from net dealership dispositions, coupled with a $51.7 million, or 0.4%, decrease in same-store revenues. Excluding $121.6 million of favorable foreign currency fluctuations, same-store new revenue decreased 1.4%. Same-store revenue (excluding agency) decreased due to the decrease in same-store new retail unit sales, which decreased revenue by $398.0 million, partially offset by a $1,582 per unit increase in same-store comparative average retail selling price (including a $571 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $326.4 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to the increased costs of acquiring vehicles from the manufacturer due to the impact from tariffs and a change in mix of products sold, including the sale of more hybrids and electric vehicles, coupled with the transition to the agency model for MINI brand in the U.K., which increased average retail selling price.
New vehicle sales revenue increased from 2023 to 2024 due to a $597.7 million increase from net dealership acquisitions, coupled with a $176.3 million, or 1.5%, increase in same-store revenues. Excluding $75.3 million of favorable foreign currency fluctuations, same-store new revenue increased 0.8%. Same-store revenue (excluding agency) increased due to a $1,430 per unit increase in same-store comparative average retail selling price (including a $347 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $302.8 million, partially offset by the decrease in same-store new retail unit sales (excluding agency), which decreased revenue by $145.4 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 and the increased costs of acquiring vehicles from the manufacturer.
Gross Profit
Retail gross profit from new vehicle sales decreased from 2024 to 2025 due to a $68.0 million, or 5.8%, decrease in same-store gross profit, coupled with a $2.8 million decrease from net dealership dispositions. Excluding $13.2 million of favorable foreign currency fluctuations, same-store gross profit decreased 6.9%. Same-store gross profit (excluding agency) decreased due to a $237 per unit decrease in same-store comparative average gross profit (despite a $48 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $48.9 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $35.4 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a change in the brand mix of units sold, coupled with increased EV sales in the U.S. due to the expiration of certain tax credits during the third quarter, and vehicle affordability considerations.
Retail gross profit from new vehicle sales decreased from 2023 to 2024 due to a $164.2 million, or 12.5%, decrease in same-store gross profit, partially offset by a $61.6 million increase from net dealership acquisitions. Excluding $7.2 million of favorable foreign currency fluctuations, same-store gross profit decreased 13.0%. Same-store gross profit (excluding agency) decreased due to a $785 per unit decrease in same-store comparative average gross profit (despite a $25 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $166.2 million, coupled with the decrease in same-store new retail sales (excluding agency), which decreased retail gross profit by $15.3 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to an improved supply of many of the new vehicles we sell and the mix of sales. We believe the resulting compression on gross margin is due to higher gross profit realized in the prior year as vehicle supply was constrained, coupled with affordability challenges and a more competitive environment due to higher supply of vehicles as our days' supply increased to 49 from 39 as of December 31, 2024, and 2023, respectively.
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Retail Automotive Dealership Used Vehicle Data
(In millions, except unit and per unit amounts)
Same-store gross margin % — used 5.2 % 5.2 % — % — % 5.2 % 4.9 % 0.3 % 6.1 %
Units
Retail unit sales of used vehicles decreased from 2024 to 2025 due to a 19,700 unit, or 8.3%, decrease in same-store used retail unit sales, coupled with a 9,227 unit decrease from net dealership acquisitions/dispositions. Our same-store units decreased 1.7% in the U.S. and decreased 14.6% internationally.Overall, our used units decreased 2.2% in the U.S. and decreased 19.7% internationally. Same-store unit sales were impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships during the third quarter 2024 which sell fewer units. Excluding the decrease of 14,001 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles decreased by 5,699 units. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed decreased 5.1% internationally and decreased 3.5% overall and same-store used units decreased 4.1% internationally and decreased 2.7% overall. We also believe the decrease in same-store retail sales of used units was impacted by affordability concerns, limited availability of lower mileage, higher quality used vehicles, and comparatively fewer lease returns primarily in the U.S.
Retail unit sales of used vehicles decreased from 2023 to 2024 due to a 10,957 unit, or 4.5%, decrease in same-store used retail unit sales, partially offset by a 1,280 unit increase from net dealership acquisitions. Excluding the decrease of 11,758 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles increased by 801 units. Our same-store units increased 1.5% in the U.S. and decreased 10.1% internationally.Overall, our used units increased 2.2% in the U.S. and decreased 8.5% internationally. Same-store unit sales are being impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships as well as a lower supply of lower mileage, higher quality used vehicles due to the fewer number of new vehicles sold in recent years and lower lease returns particularly in the U.S. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed increased 7.4% internationally and increased 4.4% overall and same-store used units decreased 1.2% internationally and increased 0.4% overall.
Revenues
Used vehicle retail sales revenue decreased from 2024 to 2025 due to a $140.9 million decrease from net dealership acquisitions/dispositions, partially offset by a $42.0 million, or 0.5%, increase in same-store revenues. Excluding $138.4 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 1.1%. The increase in same-store revenue is due to a $3,422 per unit increase in same-store comparative average selling price (including a $633 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $748.4 million,
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partially offset by the decrease in same-store used retail unit sales, which decreased revenue by $706.4 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, coupled with lower availability of used vehicles which contributed to higher used vehicle pricing.
Used vehicle retail sales revenue decreased from 2023 to 2024 due to a $368.4 million, or 4.2%, decrease in same-store revenues, partially offset by a $240.6 million increase from net dealership acquisitions. Excluding $105.5 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 5.5%. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales, which decreased revenue by $389.2 million, partially offset by an $89 per unit increase in same-store comparative average selling price (including a $452 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $20.8 million. We believe the decrease in same-store comparative average selling price, excluding favorable foreign currency, is primarily due to a decrease in used vehicle acquisition costs.
Gross Profit
Retail gross profit from used vehicle sales increased from 2024 to 2025 due to a $2.0 million increase from net dealership acquisitions/dispositions, coupled with a $1.8 million, or 0.4%, increase in same-store gross profit. Excluding $7.0 million of favorable foreign currency fluctuations, same-store gross profit decreased 1.2%. The increase in same-store gross profit is due to a $177 per unit increase in same-store comparative average gross profit (including a $32 per unit increase attributable to favorable foreign currency fluctuations), which increased gross profit by $38.7 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $36.9 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.
Retail gross profit from used vehicle sales increased from 2023 to 2024 due to a $21.7 million increase from net dealership acquisitions, coupled with a $1.2 million, or 0.3%, increase in same-store gross profit. Excluding $4.8 million of favorable foreign currency fluctuations, same-store gross profit decreased 0.8%. The increase in same-store gross profit is due to an $89 per unit increase in same-store comparative average gross profit (including a $21 per unit increase attributable to favorable foreign currency fluctuations), which increased gross profit by $20.8 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profit by $19.6 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to the transition of our U.K. CarShop locations to Sytner Select dealerships which improved our selection of more profitable vehicles.
Retail Automotive Dealership Finance and Insurance Data
(In millions, except unit and perunit amounts)
Finance and insurance revenue decreased from 2024 to 2025 due to a $17.7 million decrease from net dealership dispositions, coupled with a $6.8 million, or 0.8%, decrease in same-store revenue. Excluding $8.0 million of favorable
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foreign currency fluctuations, same-store finance and insurance revenue decreased 1.8%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $47.1 million, partially offset by a $90 per unit increase in same-store comparative average finance and insurance retail revenue (including an $18 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $38.3 million. Same-store finance and insurance revenue per unit (excluding agency) increased 1.2% in the U.S. and increased 10.9% 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 improved finance and insurance product offerings and availability internationally.
Finance and insurance revenue decreased from 2023 to 2024 due to a $36.8 million, or 4.4%, decrease in same-store revenue, partially offset by a $7.9 million increase from net dealership acquisitions. Excluding $6.9 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 5.2%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $24.8 million, coupled with a $35 per unit decrease in same-store comparative average finance and insurance retail revenue (despite a $15 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased revenue by $15.6 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 0.6% in the U.S. and decreased 6.6% in the U.K. We believe the decrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to high interest rates impacting overall customer affordability, coupled with an increase in lease penetration in the U.S. and the increase in fleet transactions in the U.K. which limits our finance and insurance product sale opportunities.
Retail Automotive Dealership Service and Parts Data
(In millions)
Revenues
Service and parts revenue increased from 2024 to 2025, with an increase of 6.1% in the U.S. and an increase of 6.1% internationally. The increase in service and parts revenue is due to a $164.5 million, or 5.3%, increase in same-store revenues, coupled with a $30.6 million increase from net dealership acquisitions. Excluding $37.1 million of favorable foreign currency fluctuations, same-store revenue increased 4.1%. The increase in same-store revenue is due to a $100.9 million, or 4.6%, increase in customer pay revenue, a $62.5 million, or 9.4%, increase in warranty revenue, and a $1.1 million, or 0.5%, increase in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to vehicles remaining on the road longer due to affordability considerations and increasing vehicle complexity, as well as increases in effective labor rates, the retail cost of parts due to inflation, and additional warranty opportunities due to manufacturer recalls.
Service and parts revenue increased from 2023 to 2024, with an increase of 7.4% in the U.S. and an increase of 18.4% internationally. The increase in service and parts revenue is due to a $172.3 million, or 6.1%, increase in same-store revenues, coupled with a $147.3 million increase from net dealership acquisitions. Excluding $19.3 million of favorable foreign currency fluctuations, same-store revenue increased 5.2%. The increase in same-store revenue is due to an $88.2 million, or 15.8%, increase in warranty revenue, a $76.1 million, or 3.7%, increase in customer pay revenue, and an $8.0 million, or 3.9%, increase in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to vehicles remaining on the road longer due to affordability considerations and increasing vehicle
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complexity, as well as increases in effective labor rates, repair orders, the retail cost of parts due to inflation, and additional warranty opportunities due to manufacturer recalls.
Gross Profit
Service and parts gross profit increased from 2024 to 2025 due to a $120.4 million, or 6.7%, increase in same-store gross profit, coupled with a $5.9 million increase from net dealership acquisitions. Excluding $20.0 million of favorable foreign currency fluctuations, same-store gross profit increased 5.6%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $96.6 million, coupled with a 0.7% increase in same-store gross margin from 58.0% to 58.7%, which increased gross profit by $23.8 million. The increase in same-store gross profit is due to a $60.0 million, or 5.8%, increase in customer pay gross profit, a $38.2 million, or 10.7%, increase in warranty gross profit, and a $22.2 million, or 5.7%, increase in vehicle preparation and body shop gross profit. We believe the increase in gross margin is primarily due to a change in the mix of warranty and customer pay, coupled with an increase in the effective labor rate.
Service and parts gross profit increased from 2023 to 2024 due to a $99.3 million, or 6.0%, increase in same-store gross profit, coupled with a $68.9 million increase from net dealership acquisitions. Excluding $11.6 million of favorable foreign currency fluctuations, same-store gross profit increased 5.3%. The increase in same-store gross profit is primarily due to the increase in same-store revenues, which increased gross profit by $100.8 million, partially offset by a 0.1% decrease in same-store gross margin, which decreased gross profit by $1.5 million. The increase in same-store gross profit is due to a $47.6 million, or 15.8%, increase in warranty gross profit, a $38.6 million, or 3.9%, increase in customer pay gross profit, and a $13.1 million, or 3.5%, increase in vehicle preparation and body shop gross profit. However, we believe the decrease in gross margin is primarily due to a shift in sales mix in the U.K. from customer pay to warranty, which typically has a lower gross margin, coupled with an increase in the effective labor rate.
Retail Commercial Truck Dealership Data
(In millions, except unit and per unit amounts)
Units
Retail unit sales of new trucks decreased from 2024 to 2025 due to a 1,782 unit, or 10.9%, decrease in same-store new retail unit sales, partially offset by a 568 unit increase from net dealership acquisitions. We believe the decrease in same-store unit sales is due to lower demand for commercial trucks related to the prolonged recessionary freight rate
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environment, coupled with manufacturer price increases and delayed consumer purchase decisions in light of emissions regulatory uncertainty.
Retail unit sales of new trucks decreased from 2023 to 2024 due to a 2,020 unit, or 11.3%, decrease in same-store new retail unit sales, partially offset by a 701 unit increase from net dealership acquisitions. We believe the decrease in same-store unit sales is primarily due to the unusually high number of deliveries in 2023 resulting from production timing and delivery delays throughout 2022 caused by manufacturer supply chain challenges and the prolonged recessionary freight rate environment, partially offset by replacement demand for medium- and heavy-duty trucks.
Revenues
New commercial truck retail sales revenue decreased from 2024 to 2025 due to a $199.9 million, or 8.8%, decrease in same-store revenues, partially offset by a $92.9 million increase from net dealership acquisitions. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $247.5 million, partially offset by a $3,263 per unit increase in same-store comparative average selling price, which increased revenue by $47.6 million. We believe the increase in same-store comparative average selling price is primarily due to manufacturer price increases, in part due to tariffs.
New commercial truck retail sales revenue decreased from 2023 to 2024 due to a $227.4 million, or 9.4%, decrease in same-store revenues, partially offset by a $106.7 million increase from net dealership acquisitions. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $273.9 million, partially offset by a $2,934 per unit increase in same-store comparative average selling price, which increased revenue by $46.5 million. We believe the increase in same-store comparative average selling price is primarily due to higher prices driven by replacement demand and the mix of higher-priced units sold due to an increase in units sold to smaller fleets and retail customers.
Gross Profit
New commercial truck retail gross profit decreased from 2024 to 2025 due to a $30.8 million, or 20.7%, decrease in same-store gross profit, partially offset by a $4.6 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to the decrease in same-store new retail unit sales, which decreased gross profit by $16.2 million, coupled with a $1,004 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $14.6 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shift in the sales mix toward sales to larger fleets, coupled with the prolonged recessionary freight rate environment.
New commercial truck retail gross profit increased from 2023 to 2024 due to an $8.1 million increase from net dealership acquisitions, partially offset by a $0.4 million, or 0.3%, decrease in same-store gross profit. The decrease in same-store gross profit is due to the decrease in same-store new retail unit sales, which decreased gross profit by $16.1 million, partially offset by a $989 per unit increase in same-store comparative average gross profit, which increased gross profit by $15.7 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to a change in sales mix when compared to last year.
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Units
Retail unit sales of used trucks decreased from 2024 to 2025 due to a 445 unit, or 12.4%, decrease in same-store retail unit sales, partially offset by a 58 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, coupled with lower demand due to the prolonged recessionary freight rate environment.
Retail unit sales of used trucks increased from 2023 to 2024 due to a 389 unit, or 12.5%, increase in same-store retail unit sales, coupled with a 101 unit increase from net dealership acquisitions/dispositions. We believe the increase in same-store unit sales is primarily due to the increase in availability and affordability of used trucks when compared with the prior year period.
Revenues
Used commercial truck retail sales revenue increased from 2024 to 2025 due to a $3.6 million increase from net dealership acquisitions, partially offset by a $1.9 million, or 0.8%, decrease in same-store revenues. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales, which decreased revenue by $27.8 million, partially offset by an $8,241 per unit increase in same-store comparative average selling price, which increased revenue by $25.9 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 sales revenue decreased from 2023 to 2024 due to a $10.5 million, or 4.6%, decrease in same-store revenues, partially offset by a $7.6 million increase from net dealership acquisitions/dispositions. The decrease in same-store revenue is due to an $11,151 per unit decrease in same-store comparative average selling price, which decreased revenue by $34.7 million, partially offset by the increase in same-store used retail unit sales, which increased revenue by $24.2 million. We believe the decrease in same-store comparative average selling price is primarily due to the declining value of used trucks, as a result of the prolonged recessionary freight rate environment and improved availability of new trucks when compared to the prior year period.
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Gross Profit
Used commercial truck retail gross profit decreased from 2024 to 2025 primarily due to a $0.5 million, or 3.0%, decrease in same-store gross profit, partially offset by a $0.4 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to the decrease in same-store used retail unit sales, which decreased gross profit by $2.1 million, partially offset by a $502 per unit increase in same-store comparative average gross profit, which increased gross profit by $1.6 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 and the mix of higher priced used units sold.
Used commercial truck retail gross profit decreased from 2023 to 2024 primarily due to a $2.6 million, or 13.2%, decrease in same-store gross profit, coupled with a $0.3 million decrease from net dealership acquisitions/dispositions. The decrease in same-store gross profit is due to a $1,446 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $4.5 million, partially offset by the increase in same-store used retail unit sales, which increased gross profit by $1.9 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to the decreased value of used trucks over the prior year, as a result of the prolonged recessionary freight rate environment when compared to the prior year period.
Revenues
Service and parts revenue increased from 2024 to 2025 due to an $11.1 million increase from net dealership acquisitions, partially offset by a $5.0 million, or 0.6%, decrease in same-store revenues. Customer pay work represented 78.8%, warranty represented 18.1%, and collision repair represented 3.1% of PTG's service and parts revenue. The decrease in same-store revenue is due to a $7.0 million, or 4.3%, decrease in warranty revenue, partially offset by a $1.9 million, or 0.3%, increase in customer pay revenue and a $0.1 million, or 0.1%, increase in body shop revenue. We believe the decrease in same-store service and parts revenue is primarily due to the prolonged recessionary freight rate environment.
Service and parts revenue decreased from 2023 to 2024 due to a $55.2 million, or 6.3%, decrease in same-store revenues, partially offset by a $34.2 million increase from net dealership acquisitions. Customer pay work represented approximately 78.0% of PTG's service and parts revenue, largely due to the significant amount of retail sales of parts and accessories. The decrease in same-store revenue is due to a $57.4 million, or 8.1%, decrease in customer pay revenue and a $4.1 million, or 13.4%, decrease in body shop revenue, partially offset by a $6.3 million, or 4.3%, increase in warranty revenue. We believe the decrease in same-store service and parts revenue is primarily due to customers delaying maintenance costs due to the prolonged recessionary freight rate environment.
Gross Profit
Service and parts gross profit decreased from 2024 to 2025 due to a $15.6 million, or 4.2%, decrease in same-store gross profit, partially offset by a $4.3 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to a 1.6% decrease in same-store gross margin, which decreased gross profit by $13.5 million, coupled with the decrease in same-store revenues, which decreased gross profit by $2.1 million. The decrease in same-store gross profit is due to a $10.4 million, or 4.1%, decrease in customer pay gross profit, a $2.7 million, or 3.0%, decrease in warranty gross profit, and a $2.5 million, or 8.4%, decrease in body shop gross profit.
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Service and parts gross profit decreased from 2023 to 2024 due to a $17.9 million, or 4.8%, decrease in same-store gross profit, partially offset by a $14.6 million increase from net dealership acquisitions. The decrease in same-store gross profit is due to the decrease in same-store revenues, which decreased gross profit by $23.7 million, partially offset by a 0.7% increase in same-store gross margin, which increased gross profit by $5.8 million. The decrease in same-store gross profit is due to a $20.8 million, or 7.9%, decrease in customer pay gross profit and a $1.8 million, or 5.8%, decrease in body shop gross profit, partially offset by a $4.7 million, or 5.9%, 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 $922.6 million of revenue during 2025 compared to $777.9 million of revenue during 2024, an increase of 18.6%. This business also generated $192.3 million of gross profit during 2025 compared to $178.2 million of gross profit during 2024, an increase of 7.9%. Excluding $17.0 million of unfavorable foreign currency fluctuations, revenue increased 20.8% primarily due to an increase in higher value power generation units sold, including increases in defense and energy solutions, partially offset by a decrease in commercial vehicle units sold related to the decline in the Australian and New Zealand heavy-duty truck market. Excluding $4.1 million of unfavorable foreign currency fluctuations, gross profit increased 10.3% primarily due to an increase in higher value power generation units sold, including increases in defense and energy solutions, partially offset by a decrease in commercial vehicle units sold related to the decline in the Australian and New Zealand heavy-duty truck market.
This business generated $777.9 million of revenue during 2024 compared to $634.0 million of revenue during 2023, an increase of 22.7%. This business also generated $178.2 million of gross profit during 2024 compared to $165.2 million of gross profit during 2023, an increase of 7.9%. Excluding $5.8 million of unfavorable foreign currency fluctuations, revenue increased 23.6% primarily due to an increase in service and parts sales revenue and an increase in higher value power generation units sold. Excluding $1.3 million of unfavorable foreign currency fluctuations, gross profit increased 8.5% primarily due to an increase in higher value power generation units sold and higher margin service and parts sales.
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Selling, General, and Administrative Data
(In millions)
Selling, general, and administrative expenses ("SG&A") increased from 2024 to 2025 due to an $86.0 million, or 2.4%, increase in same-store SG&A, partially offset by a $7.7 million decrease from net dealership dispositions. Excluding $35.9 million of unfavorable foreign currency fluctuations, same-store SG&A increased 1.4%. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expenses, impairments and other charges (none of which was individually material), other general overhead expenses, as well as the prolonged recessionary freight rate environment on PTG's earnings.
Selling, general, and administrative expenses ("SG&A") increased from 2023 to 2024 due to a $139.5 million increase from net dealership acquisitions, partially offset by a $7.5 million, or 0.2%, decrease in same-store SG&A. Excluding $21.6 million of unfavorable foreign currency fluctuations, same-store SG&A decreased 0.8%. We believe the increase in SG&A as a percentage of gross profit is primarily due to increases in personnel expenses, rent expenses, customer service vehicle loaner expenses, and information technology expenses, relative to gross profit, in part due to inflation.
SG&A expenses as a percentage of total revenue were 11.8%, 11.6%, and 11.5% in 2025, 2024, and 2023, respectively, and as a percentage of gross profit were 72.1%, 70.6%, and 69.0%, in 2025, 2024, and 2023, respectively.
Depreciation
(In millions)
Depreciation increased from 2024 to 2025 due to a $10.5 million, or 6.7%, increase in same-store depreciation due to capital expenditures, coupled with a $0.5 million increase from net dealership acquisitions.
Depreciation increased from 2023 to 2024 due to a $12.4 million, or 8.9%, increase in same-store depreciation due to capital expenditures, coupled with a $5.2 million increase from net dealership acquisitions.
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Floor Plan Interest Expense
(In millions)
Floor plan interest expense decreased from 2024 to 2025 due to a $24.9 million, or 13.7%, decrease in same-store floor plan interest expense, partially offset by a $2.4 million increase from net dealership 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 increased levels of inventory.
Floor plan interest expense increased from 2023 to 2024 due to a $46.8 million, or 35.2%, increase in same-store floor plan interest expense, coupled with an $11.0 million increase from net acquisitions. The overall increase is due to increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory, coupled with increases in applicable rates throughout much of the year.
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 primarily due to our repayment in full at scheduled maturity of our $550 million of 3.50% senior subordinated notes due September 1, 2025, partially offset by decreases in applicable rates.
Other interest expense decreased from 2023 to 2024 due to decreases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by increases in applicable rates throughout much of the year.
Equity in Earnings of Affiliates
(In millions)
Equity in earnings of affiliates decreased from 2024 to 2025 due to a $5.2 million, or 2.6%, decrease in earnings from our investment in PTS, coupled with 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 and the sale of our 50% interest in our joint venture in Spain during the second quarter of 2025. We believe the decrease in our PTS equity earnings is primarily due to the prolonged recessionary freight rate environment, which negatively impacted demand for its transactional products. PTS has also been impacted by lower used vehicle pricing, resulting in lower gains from the sale of revenue earnings vehicles, partially offset by fleet reductions and cost reductions which improved operating profit.
Equity in earnings of affiliates decreased from 2023 to 2024 due to a $91.5 million, or 31.6%, decrease in earnings from our investment in PTS, coupled with the decrease in earnings from our other joint ventures. We believe the decrease in our PTS equity earnings is primarily due to lower commercial and consumer rental revenue as a result of the prolonged decline in freight rates, higher interest rates on fixed rate long term debt, higher average debt balances, higher maintenance expenses on full service leasing, and lower gains from the sale of revenue earning vehicles, partially offset by improved operating results in full-service leasing and logistics.
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Income Taxes
(In millions)
Income taxes increased from 2024 to 2025 despite a $26.2 million decrease in our pre-tax income compared to the prior year. Our effective tax rate was 25.78% during 2025 compared to 24.54% during 2024 primarily due to the annual refinement of U.S. and state tax provisional estimates and fluctuations in our geographic pre-tax income mix.
Income taxes decreased from 2023 to 2024 primarily due to a $185.2 million decrease in our pre-tax income compared to the prior year. Our effective tax rate was 24.54% during 2024 compared to 24.47% during 2023 primarily due to fluctuations in our geographic pre-tax income mix, coupled with an increase to the U.K. corporate tax rate in April 2023.
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, including the purchase of Lexus of Orlando and Lexus of Winter Park noted above. In the event that economic conditions are more severely impacted than we expect due to 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.
In October 2025, we filed an automatic shelf registration statement with the SEC that enables us to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, warrants, subscription rights, depositary shares, stock purchase contracts, and units.
We expect that scheduled payments of our debt instruments will be funded through cash flows from operations or borrowings under our credit agreements. In the case of payments upon the maturity or termination dates of our 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 II, Item 8, Note 10 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 II, Item 8, Note 9 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 II, Item 8, Note 11 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 Daimler Financial Services New Zealand.
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As of December 31, 2025, we had $64.7 million of cash available to fund our operations and capital commitments. In addition, we had an aggregate of approximately $1.5 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. As of December 31, 2025, $247.5 million remained outstanding and available for repurchases under our securities repurchase program. This authority has no expiration. Refer to the disclosures provided in Part II, Item 8, Note 14 of the Notes to our Consolidated Financial Statements for a summary of shares repurchased during 2025.
Dividends
We paid the following cash dividends on our common stock in 2024 and 2025:
Per Share Dividends
First Quarter $ 0.87
Second Quarter $ 0.96
Third Quarter $ 1.07
Fourth Quarter $ 1.19
First Quarter $ 1.22
Second Quarter $ 1.26
Third Quarter $ 1.32
Fourth Quarter $ 1.38
We also announced a cash dividend of $1.40 per share, payable on March 5, 2026, to stockholders of record on February 25, 2026. 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, 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 II, Item 8, Note 9 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.
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Long-Term Debt Obligations
As of December 31, 2025, we had the following long-term debt obligations outstanding:
U.S. credit agreement — revolving credit line $ 333.0
U.K. credit agreement — revolving credit line 87.6
Mortgage facilities 792.5
Total long-term debt $ 2,165.5
Less: current portion (355.0)
Net long-term debt $ 1,810.5
During 2025, we repaid in full at scheduled maturity our $550 million of 3.50% senior subordinated notes due September 1, 2025. As of December 31, 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 II, Item 8, Note 10 of the Notes to our Consolidated Financial Statements set forth below for a detailed description of our long-term debt obligations.
Short-Term Borrowings