Strong year-end vehicle sales, gains in service and parts gross margins and investments in commercial vehicle businesses pushed Penske Automotive Group Inc. to a 23 % gain in net income during the fourth quarter.
The nation’s second-largest dealership group said today it posted profits of US$73.2 million during the quarter vs. US$59.7 million during the same quarter last year. Revenue increased 16 % to US$4.41 billion during the quarter.
Penske Automotive said it was helped by a stronger performance in all areas of the business: new vehicles, used vehicles, parts and service and finance and insurance.
Fourth-quarter operating income rose 12 % to US$119.4 million.
The overall results appeared to be in line with analyst expectations, but Penske Automotive shares closed down 7.1 % to US$48.46.
During a conference call with analysts today, when asked to explain the drop in the stock price despite meeting expectations, Chairman Roger Penske jokingly said: “I wish I knew what our stock price would be every day.”
Penske predictions
Penske predicted 2015 will be a strong year dominated by sales of SUVs and pickups.
“I go along with the predictions we’ll see about 17 million units sold, but I think the mix will be 50 to 55 % SUV and pickup trucks,” Penske said in an interview today with Automotive News.
The higher truck volume likely will not change the mix Penske stocks because the high-end luxury customer has always had a high demand for trucks regardless of gasoline prices, so “we can’t get enough of those models, typically.”
As to the volume brands, Penske said, “We’ll trade with the market. We’ll see more SUVs and trucks in our mix as we make our projections and order forward with the supply given by the manufacturers.”
Penske said interest rates are likely to remain low, fuel prices will also be cheap, but consumer confidence high.
Penske said his company has a three-prong acquisition approach to its growth this year that centers on the US, Western Europe and commercial vehicle dealership purchases.