Penske Automotive Group's Q4 2024: Contradictions Surface on Growth Strategy, Used Car Market, and Technician Hiring

These are the key contradictions discussed in Penske Automotive Group's latest 2024Q4 earnings call, specifically including: Allocation Strategy, Used Car Business Growth, and Technician Hiring Outlook:



Revenue and Profit Growth:
- Penske Automotive Group (PAG) reported a revenue increase of 3% to $30.5 billion in 2024, with net income of $919 million and earnings per share of $13.74.
- This growth was driven by successful acquisitions, including expansions in the U.S. and U.K. automotive markets and entry into the Australian market, which added $2.1 billion in expected annualized revenue.

Profitability and Cost Control:
- PAG generated $1.24 billion in earnings before taxes and reported a gross margin of 16.3% in Q4 2024, marking the sixth consecutive quarter of consistent gross margins.
- The company achieved a 70 basis point reduction in selling, general, and administrative expenses as a percentage of gross profit by focusing on cost control measures.

Service and Parts Revenue Increase:
- Service and parts revenue increased by 13% in Q4 2024, with a 130 basis point improvement in fixed absorption in the U.S. to 87.5%.
- This growth was supported by an increase in the average vehicle service age to 6.1 years, enhancing the demand for service and maintenance.

Truck Market Performance:
- In the commercial truck business, PAG sold 4,432 new and used units in Q4, with a 21% increase in gross profit per unit retail, despite a 18% decrease in unit sales compared to Q4 2023.
- The decrease in unit sales was due to supply shortages pushing deliveries from the first half of 2023 to the second half, impacting the timing of sales.