Articles

July 30, 2010

Auto dealer chain doubles profit


Penske, a chain of auto dealers, has posted a profit for the second quarter of 2010, signaling that dealers are enjoying the success afforded to them by a rebounding economy.

Reuters reported that the second largest U.S. auto dealer chain doubled its profits from a year earlier, posting a $29.4 million dollar profit as compared to its $14.1 million dollar profit a year earlier. The news source's survey of top analysts found that the company outperformed Wall Street expectations.

Penske's owner, Robert Penske, is the exclusive U.S. dealer for Mercedes-Benz' Smart car brand, the microcars that have proven popular overseas. However, his Smart car business did not perform as well, contributing a two cents per share loss for the dealer. That's still up from the 4 cents per share loss posted a year earlier by the Smart cars.

New car sales rose overall by 24 percent, and consumers were willing to pay a bit more for vehicles, with total profit per vehicle up eight percent. The biggest earners brand-wise for Penske were BMW, at 20 percent of total sales, and Toyota, at 18 percent.

Dealers may want to take note of Penske's successes and failures and use it to tailor their business accordingly. ADNFCR-3173-ID-19913889-ADNFCR

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