Penske Automotive Group (NYSE:PAG) reviewed fourth-quarter and full-year 2025 results, highlighting continued profitability amid softer premium vehicle demand in the U.S. and U.K., a prolonged freight downturn affecting its commercial truck and transportation businesses, and ongoing portfolio changes through acquisitions and divestitures.
Management also noted that results in the company’s press release were retrospectively recast to include the full quarterly and annual results of Penske Motor Group, which Penske Automotive acquired during the quarter from a commonly controlled affiliate, consistent with GAAP common control accounting.
Full-year 2025 results and portfolio activity
On the acquisition front, management pointed to growth in the U.S. and Italy, citing purchases of two Toyota and two Lexus dealerships and one Ferrari dealership. The company also announced plans to acquire two additional Lexus dealerships in Orlando, Florida in the first quarter. In total, the acquisitions discussed on the call represented an estimated $2 billion in annualized revenue, according to management.
Penske Automotive also completed divestitures representing approximately $700 million in revenue, generating $200 million in proceeds that were redeployed into “higher returning assets,” the CEO said. Management expects an additional $140 million in proceeds from further divestitures planned for 2026.
Fourth-quarter performance and key headwinds
For the fourth quarter, Penske Automotive reported revenue of $7.8 billion, down 4%. The company attributed part of the decline to lower unit sales and said strategic dealership divestitures reduced quarterly revenue by roughly $200 million.
Fourth-quarter EBT was $256 million, net income was $186 million, and EPS was $2.83. On an adjusted basis, EBT was $263 million, net income was $192 million, and EPS was $2.91.
Roger Penske said the quarter was impacted by weaker premium sales in both the U.S. and U.K., as well as comparisons to unusually high prior-year activity tied to “tariff and BEV-related pull forward.” He also cited a Jaguar Land Rover cyber incident that reduced sales by about 800 units in the quarter and described macroeconomic pressures in the U.K. The company said new sales of German luxury brands fell 20% in the U.S. and 22% in the U.K. year over year during the quarter.
Within retail automotive, management said same-store units delivered declined 8% and used units declined 4%. Gross profit per unit retailed in the quarter was $4,689, up $47 sequentially. Used vehicle gross profit per unit was $1,770, essentially flat with the prior year and “in line with seasonal expectations,” according to management.
Management also quantified a $29 million, or $0.32 per share, estimated impact to fourth-quarter EBT from several items, including U.K. social programs, the Jaguar Land Rover cyber incident, freight weakness affecting Premier Truck Group and equity income from Penske Transportation Solutions (PTS), and costs associated with strategic divestitures. The company added that a higher tax rate versus the prior year reduced net income by about $8 million, or $0.12 per share.
Operations update: U.S. auto, trucks, and PTS
In the U.S. retail automotive business, North American operations leader Rich Shearing said same-store new and used unit sales decreased 4% in the quarter, with new down 6% and used down 1%. He attributed part of the decline to pull-forward activity tied to tariffs and the expiration of BEV credits, and he said Land Rover new unit sales dropped 37% due to a six-week production halt that constrained inventory.
Shearing said service and parts remained a strong contributor. U.S. same-store service and parts revenue rose 6% and related gross profit increased 5.5%, with customer-pay gross up 7% and warranty up 9%. He noted the company’s U.S. automotive technician count increased 2% from the prior year-end and said the business continues focusing on higher bay utilization.
In commercial trucks, Shearing said Premier Truck Group outperformed the market despite the “continuing freight recession.” Premier Truck’s retail sales of new trucks declined 14%, compared with an industry decline of 28% for Class 8 sales, he said. Premier Truck retailed 3,789 new and used trucks, generated $725 million in revenue and $121 million in gross profit. Segment EBT declined to $34 million from $45 million a year earlier, which management attributed to the freight environment weighing on orders, unit sales, and fixed operations activity.
At PTS, Shearing said operating revenue declined 5% to $2.6 billion in the quarter, with rental revenue down 17% and logistics revenue down 3%. PTS sold 9,750 units in the quarter and 41,500 units for the year, ending 2025 with a fleet of just under 397,000 units, down from 435,000 at the end of 2024. Management said the weak freight market continued to pressure gains on sale, which declined by $18 million in the quarter and $87 million for the full year. Equity earnings from PTS were down less than 10% to $48 million, Shearing said, adding that cost actions and fleet rightsizing were showing benefits entering January, including improved rental utilization and profitability versus the prior year.
International markets: U.K. actions, Australia strength, and Chinese OEM exposure
International operations leader Randall Seymore said fourth-quarter international revenue was $2.8 billion, down 2%. He described the U.K. market as challenging due to inflation, higher taxes, affordability, and policy pressure toward electrification. In response, the company reduced the footprint of its Sytner Select locations, closed unprofitable franchise dealerships, and reduced headcount by 1,000 employees over the past year. Seymore also said the company shifted its management approach in January from “brand-driven” to “market-driven.”
In the U.K., Seymore said same-store new units were pressured by weaker German luxury demand, but new vehicle gross improved by $34 per unit. Same-store used units declined 10%, including an impact from Sytner Select retailing 1,000 fewer cars due to fewer locations and the macro backdrop. He said used vehicle gross increased by $150 per unit. Same-store service and parts revenue increased 2%, driven by a 9% rise in customer pay that was partially offset by an 18% decrease in warranty.
In Australia, Seymore said the fourth quarter was “very strong,” with EBT nearly doubling year over year. He highlighted progress implementing a “One Ecosystem” strategy across three Porsche stores in Melbourne and described strength in off-highway commercial vehicle and power systems, particularly in energy solutions, mining, and defense. He said the company completed projects worth nearly $700 million in revenue last year and had $500 million in secured orders so far for 2026, while also stating that Energy Solutions could potentially generate at least $1 billion in revenue by 2030.
In response to an analyst question on Chinese OEMs, Seymore said Chinese brands have gained share in the U.K. and that Penske Automotive has begun selling Chinese brands through its Sytner Select network, including Chery in three locations and Geely in five, with one BYD store being opened. He said the company retailed 176 Chinese vehicles in the fourth quarter, noting the effort began in earnest in early November, with the first full quarter expected in the first quarter of 2026.
Capital allocation, balance sheet, and 2026 commentary
EVP and CFO Shelley Hulgrave said 2025 SG&A expenses increased 2.1%, in line with inflation, and SG&A was 72.1% of gross profit for the year (71.5% on an adjusted basis, excluding certain one-time items). The company generated $1.0 billion in cash flow from operations and $1.5 billion in EBITDA for 2025, with free cash flow of $651 million after capital expenditures.
Hulgrave outlined key uses of cash in 2025, including repayment of $550 million of senior subordinated notes at maturity and $325 million in capital expenditures. The company paid $344 million in dividends and repurchased 1.2 million shares for $182 million, with $247.5 million remaining under its repurchase authorization as of year-end.
Management also announced a 2-cent increase in the quarterly dividend to $1.40 per share, marking the 21st consecutive quarterly increase. Hulgrave said the forward dividend yield was approximately 3.4% and the payout ratio was 37.4% over the last 12 months.
On the balance sheet, the company ended 2025 with $2.17 billion in non-vehicle long-term debt and $4.1 billion in floor plan financing. Total inventory was $4.8 billion, up $104 million from the prior year. New vehicle supply was 49 days, and used vehicle supply was also 49 days, with the U.S. at 34 days and the U.K. at 66 days. The company ended the year with $65 million in cash and $1.6 billion in liquidity.
Looking ahead, Roger Penske said he was “quite optimistic” about 2026 and beyond, citing expectations for a recovery in the commercial truck market and a stronger U.S. macro environment. During Q&A, management discussed expected year-over-year comparability headwinds in the first quarter tied to prior-year pull-forward effects, while noting that seasonality historically makes the second quarter a stronger period in the U.S. business.
About Penske Automotive Group (NYSE:PAG)
Penske Automotive Group, Inc (NYSE: PAG), headquartered in Bloomfield Township, Michigan, is an international transportation services company primarily focused on automotive and commercial truck dealerships. The company retails new and pre-owned vehicles across a broad spectrum of brands, while offering parts, maintenance, collision repair and reconditioning services. In addition, Penske provides financing and insurance products through its integrated finance and insurance operations, supporting both retail customers and commercial clients.
Formed in 1990 as United Auto Group and publicly traded since 1999, Penske Automotive Group has grown through organic expansion and strategic acquisitions to establish a network of dealerships and service centers across the United States and Europe.
