Penske Automotive (PAG) 25 Oct 232023 Q3 Earnings call transcript

Ladies and gentlemen, good afternoon. Welcome to the Penske Automotive Third Quarter 2023 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately 1 hour after completion through November 2, 2023, on the company's website under the Investors tab at www.penskeautomotive.com. [Operator Instructions] I'd now like to introduce Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Lea. you, Thank and everyone, for us joining Good thank today. afternoon, you our detailing A morning third on the the company's Penske in quarter assist release designed and along to presentation XXXX posted results. this Group's understanding issued Automotive press you with was financial is website, results

any As always, for I'm may you e-mail by questions available have. phone or follow-up

International Officer; Joining Operations, Controller. Interoperations; Hulgrave, EVP Shelley Chair and me CEO; American our Facione, for today's Tony North Chief and call Rich Financial Vice is Randall Corporate of Roger Seymore, Penske, our and Shearing and President

discussion about growth potential, amortization or Our interest, today of also operations, may our and measures, and liquidity EBITDA non-GAAP statements include business events, before ratio. our such future certain depreciation We earnings may forward-looking discuss taxes, outlook, and assessment leverage conditions. earnings plans, financial as

We reconciled presented comparable release available have most to GAAP the morning's measures investor the non-GAAP on presentation, have and press the this are measures. which website and in prominently comparable our GAAP measures directly

for future XX-K now from Form and filed XX-Qs could Our because call outlined over cause the discussion turn and of At Form also that filings, future this our you under results release to risks previously our statements. direct forward-looking including expectation from factors today's press uncertainties our materially in differ I'll and to SEC additional expectations. time, may vary to results I'd Roger.

us for Thank you, Tony. joining today. Good thanks and everyone, afternoon,

expense Transportation offset our equity commercial earnings lower from from in operations. investment our performance business by North diversified The Our produced and partially higher earnings in automotive quarter, operations, from America strong another really truck lower was Penske interest U.K. North our by Solutions. and solid American automotive driven performance strong

Texas. loss million worth quarter third Austin, damage inventory, in property a It the Honda and XXX business of previously million vehicles impacted $XX As dealership, to Hyundai hailstorm Toyota, results disruption include in from our costs and $X.X related of approximately announced, inventory.

is quarter, X% X,XXX third $X.X to X%, and revenue and increased X% service which billion, the revenue increased in increase increased units total delivered retail XX% XXX,XXX, news to automotive same-store a including includes During Good units. agency parts. our

variable Same-store truck unit second declined profit 'XX increased to the retail of quarter sequentially profit Same-store $XXX from retail $X,XXX. automotive gross per gross commercial X%.

income net $X.XX was by or earnings million was Last we $XXX per Our increased $X.XX share. and to $X.XX. dividend per $X.XX week, the share

Let improving. say, turn solid, auto would to me now I Demand remains our for is vehicles operations. availability, new and

take We continue orders. to forward

U.S. only book vehicle the Our and to U.K. is representing in order awful quarter third gross us our the were is the of stop approximately million. impacted for about And of Automotive a units and presold U.K., In inventory remains operations operation our month, XX%. March challenging during XX,XXX forward key market. challenges, is XX% down registration sales X%, standpoint and by so supply it's used the from profitability. a course, $XX

delivered Orders new to for unable vehicles be in XXX September. were

as used used declined addition, the In pricing market. XX% challenges gross same-store vehicle profit impacted

delivered units in business in been has look XX% revenue same-store profit, revenue by X% gross in basis Parts and collision increased Let's increase Service driven was on XX%. way, of an and retail pay, and growth repair. Total the QX. XX%. increased our a automotive up at Service warranty X% XX% and for parts by customer

variable is higher was $X,XXX in unit the Our variable gross for of $X,XXX levels, than gross profit than remains example, QX per it unit higher per historical XXXX. obviously, strong and

revenue increased XXX,XXX PTS and billion. operating third Penske fleet X% PAG distributions about contract talk now trucks, of increased quarter, of the the currently cash trailers. me which $X.X tractors us a Solutions. Transportation XX%. owns bit provides over to PTS, and XX.X% cash savings. with revenue equity little Let income, Full tax In service manages

increased logistics PTS rental while X%. X%, $XXX Our of income. million revenue generated declined net

Our last QX million compared million, which to PTS by $XX $XX earnings was year. declined share of

news good the is of earnings $XX PTS QX of share However, when increased XXXX. our compared million to sequentially

over -- items, prior particularly, in let million number drove year was the at PTS of QX. and increased mainly costs X of units look impacted in period me The supply extensions maintenance lease earnings higher operation in older and decline the constraints $XX

$XX average and so far obviously, $X.X the of with XX and increased XX,XXX million granted Interest also to expense outstanding months. over We you declined if lease when from a gain fleet, the growth performance used third due sale was our the levels XX% Commercial XX% XX,XXX and in historically extensions utilization rental this combined billion record the in lower last to refinancings year on XXXX quarter. higher past. million $XX as look debt, in compared in high overall costs, compared higher values to of interest truck the

older in provide the strong, improving which PTS the fleet lower to future, helped Our will QX. and obviously opportunity profitability. stabilizing the historically with maintenance XX% in freight an new near very the in future, full-service long-term replace of increasing begin in has remains Also, contract near expense. is trucks business the vehicles We remarketing believe rates supply will and will this drive we our believe

discuss our now operation retail to me the Shearing turn call commercial Let Rich over trucks. to

Roger. you, Thank

expectation are annualized in important our acquisition, been $X performing operations Winnipeg, significantly in this Canada integrated existing and locations an diversification. adding into new locations Earlier annualized estimated new represents These fully North new important year, approaching our Truck in expanded million operations area, an America market Canada. XX operations the in is Canada revenue. Dealership Including part in expanding into our Premier of have billion dealerships acquiring Our market to Manitoba greater and are revenue. we in X our $XXX and and business

Trucks America. We retailers remain truck one commercial of the largest for Daimler North

up current representing X continues for is to months XX, approximately our New were demand. Class out. allocation remains XX% sales XXX,XXX X commercial truck units. X remains Class units, of retail truck to The be North X sold sales. by Through and backlog driven solid Class demand XXXX XXX,XXX replacement September American industry

and the sales delays the delivery retail XX% decreased quarter, XXXX, During calendar in production year. in third year prior retail to in compared later same-store to higher-than-normal timing year unit sales when resulting due

gross same-store highest history. XX% margin and on of increased used increased However, sales. covered as in XXX% gross and in was profit new and record Service quarter. EBT QX total XX% the fixed a and profit to million Parts $XX the both truck represented company third gross X% of quarter costs the increased

front. to and declining As on freight news are rates, forward of recently nearly X years year our There's sales. book expect of X in freight recovery orders order good also a forecasted Class and we we look year securing another also strong XXXX, is XXXX. opened, calendar After the

as like to Lastly, for workforce improvement and Shelley the now over civic the Truck Dealer congratulate would Year at for for XXXX call being Truck Group Premier I'd -- I like recognized of customer its engagement. in its to the the to areas responsiveness, team of turn Hulgrave.

now Thank you, Rich. through our highlights afternoon, financial strength everyone. walk key like would of the and to Good balance I discuss several you sheet.

quarter, lower help over gross automation gross operational in averages. SG&A last points than We SG&A costs XX.X% to to to points third is continue on which reductions, SG&A to in approximately years includes gained to several profit. XXXX, XXX XX.X% the of through and hail basis the maintain to historical basis represented and gross profit of SG&A levels below during related other improvements profit was focus damage the us efficiencies cost quarter XX the sustained

points when XX of a has basis efficiencies gross last to to As year. Parts improved has automotive ratio by gain our to result our compared U.S. expenses in points efforts absorption improved and while basis profit control and compensation XXX operations, Service

Looking in at X cash XXXX. We $X cash from months flow over the September our ended billion XX, flow. generated in operations

million returned our million shareholders. almost $X.XX $XXX share. million we shares week, for to During repurchased in increased Last to and the per this XX% dividend $XXX period, X.X we by dividends

we've year, $X.XX. cash $X.XX increased the So from far to dividend XX% by this

We maintain to a and allocation. balanced continue approach to capital disciplined

acquired we a Year-to-date, in of have annualized $X.X revenue, billion more pipeline than estimated consideration. million under we and $XXX have

went of operations from plan. and CapEx share For XX% our used cash to expansion, to months from floor to the flow dividends. X% our growth repay XX% for was XX% acquisitions X XXXX, first remaining cash funded repurchases, of and operations non-trade XX% flow The of to

is notes maturing with subordinated nearly quarter, billion. $X our $X.X debt the maturing Approximately At represents of million $X.X in debt EBITDA the was end XXXX XX-month our billion. $XXX long-term $XXX long-term and million trailing billion other Our in of the the XXXX.

The X.X%. these average notes rate interest is on

borrowings We $XXX quarter. in at subsidiaries. in mortgages million at XX.X% at improved other Debt-to-total end the second of the end September. capitalization from $XXX the Xx at of Leverage XX.X% to also sits have million and

shareholders. to lease-adjusted a leverage opportunity We returning to significant also capital ability and flex on have our for up the basis, leaving acquisitions to Xx

in investments Our of plan increase from acquisitions, up end purposes was expenditures, XX, in At U.S. working loans our of million $X.X for $XXX million XX. credit we in the agreement September million inventory provides $X.X representing availability an at agreement. vehicle and other billion $XXX billion. debt $XXX under billion credit to and was had in $X.X and equity was for cash, billion, capital, December Floor September. corporate Total $X revolving fully available capital

supply premium Days volume XX and was XX-day in XX. in was of of for days and new XX a new XX had U.K. including U.S. vehicles the vehicles, We the supply foreign days

U.K. in for the and to At of inventory supply. some vehicle turn will is XX Roger back supply remarks. call had XX-day I this the Used days in days current Our vehicles new days the electric battery final XX U.S. a time,

our a have leverage secure, our to strong, allocation. Thank XX% to Shelly. of mentioned Yes. a flex with She and balance X.Xx, safe balance ratio ratio capitalization maximize capital is and the you, ability of sheet sheet obviously, we

shareholders. As $X.X to we we returned billion since over XXXX, our earlier, said

X before we XX, that's XXXX. taxes in taxes, believe for before in and billion For the the earnings if full we September it, XXXX, can you year months generated approximately, generated double ended earnings $X.X

demonstrate of industries, across the capital I diversification results allocation our retail, truck think cost commercial continue and benefit our control disciplined strategy. a automotive, to

on model today. our confident business. to I Thanks We efficiency. I the simplification questions. drive look your cost forward to and performance our the remain and joining focusing to challenge continue of optimization digitization us and for while in

our from And is John question first Instructions] [Operator Murphy.

Just a question. first

business? reality the how talked you will numbers. there. think much thinking take think shortages? as levels, the commercial and When as I sound I hampered the the those as inventory Shelley real are some far got gave done, some too the well, U.S. I some But don't chip these there. bit, is guys do the having U.K., in by mean, think us shortages are numbers of we this you shortage I mean light you people bad, business the impacts that were on vehicle -- as time? You about but like it a about kind of and some And think And resolved, it sounds then side is there's get hiccups still what on and

Okay.

-- perspective, I in Let's put John. it

inventory months at X the $XXX up Our only went million. total of end

still a And is at in inventory think look today, hit And is that we're million quarter because tight pre-pandemic look on some a I the it what when that obviously, million. us at almost U.K., X.X inventory, at it's So we our X point, inventory I not obviously, had obviously, you sale, month, in units impact for then months. U.S. at situation. cost only but don't up, obviously, know units impact. is in there, is this the that X And third much and it's XXX a registration at the

right the our they Honda, and might is with think obviously, the continues in we of we're domestics our lowest day companies. now, other that the it But And Toyota in one premium, I along supply foreign, to swings have there. get remember, don't be big volume so

about, inventory, So let we go Rich, trucks. you forward the Rich see I'll about do on it think anyhow, where you talk heavy what as truck

clarification just John, Yes, on comps.

standpoint. steadier seen year beginning the commercial The to and to the this third related vehicles peak challenges a trucks. the XXXX, from the quarter commercial supply of of related the So was last and of year a chain production semiconductors mostly to at we've comparison supply

more those than would year last fourth so and retail of year into sales quarter last early delays say, normally the And pushed third occurred. have, what

from now comparison the we're delivery so of last comps of year. to the a in And back more to look -- QX and that normal down OEMs, compared were even distribution

by still, we're standpoint, said, given truck that out had who We've inventory haven't cancellations every over been last other that's being trucks enough an I have us. from the minor up to sucked customers as So couple years. of on sold got

fact some chassis we're ended we're you million a goes supply to numbers their million of sort down after commercial somewhat is we the in well. inventory, last at in builders. if And as from seeing body XXX overall company just inventory, perspective, delays body This the a improving come chain then and And look year at XXX manufacturing that cab truck today. is at

So the across fairly flat board.

real just And second then quick. a Okay. one

Your Parts strong think of and if it for talk different particularly some about bright the remains seems spot know those going in pay, customer can even channels, warranty. quarter. you about sort have numbers. business, that a But Service should how Roger, significant and I was we may because I of forward. like don't more opportunity the going that the there's missed forward

that's profit driving the think Video. is really appointments, have the our key same-store I Well, And we're here up after-hour We're that and didn't up meaningful. before. same-store was thing is X.X%, which gross we higher think talk I Tech AI Revenue was implementing XX.X%.

[ ] West our in the now. of using XX% are fact, rows video In tech

better not fixed. of ELR, our effective getting that is see charge ability And but to we also a up then service And being customer So rate clarification the of not our to BEV we also detriment the we're don't upsell. labor X%. only -- our rate

shop fact, parts time. of many because the now and In costs higher for right these to be cars of are better period it's have a the longer really in

good So X% X% is count our is in the up the other and news U.S. I up think tech overall. that

pay that. is rate? in warranty between just The up ELR that and follow-up similar is warranty... And one that for difference on customer Or a work,

to rate give is, show have rate. they to and rate, to XX established the a months, I have manufacturer then at least a on we go to the warranty XX would we say door us

than it from would OEM, So the faster we rate we probably door continuously. could the that higher move the get it somewhat to but customer follows

to go line Ward. will the Michael of we Next,

PTS. supply we truck on fleet, math So we over profitability, growth I the fleet some continue reason being auto the for annually also has both are won't And down that the managed constraints X% of hitting truck. expect you've to the just then on going PTS forward? If heavy-duty last side things. it and And did looks I'm my in PTS some decade. retail the like exponential on But Is see the any despite quirky year-over-year you of basically, is what growth? curious about grown can right, there it had type from that

say this. Well, I can

want it said I've think I we at be XXX,XXX on XXXX. units the by call, to

in down up and on to a move maintain moving bit rental because down we're to period will XX% say, while fleet, at rental it go utilization a our that slower now, Now little XX,XXX right XX,XXX, the to, little we here say, probably utilization. XX% tractors through

And they're fleet trucks, a to the that's one continued trailers. continue one the -- gives see in straight I us not and equipment. And a cetera. our is and no tractors continue next vendors and mix. now, the And the et right now, get has the Remember our But biggest reason world sale, now we stop the is trucks, The light-duty growth. I trucks the grow. tractor from think main -- we getting to is problem --

you to So go remember, I think X contracts XX% X that's X look at year. forward we're contract And contract if our when up X to would for typically, in now these years. for business,

have a trailing really opportunity we here. So

And not to for grow. things to or limited on see side. this us continuing obviously, have other So laws the you grow any automotive fleet. revenue the might We're I it's franchise easy by

the industry? the And seen some any have of in constraints you easing of

want Let to that? you Rich, me answer let do

Yes.

national nationwide an business. really Premier at all levels, American time, than Truck supply -- And challenges side dealers. as dealerships. orders the indicator an for the back parts put was side Mike, there And XX,XXX Daimler from than those its -- Truck, had perspective, the we've back on entity the been XXX,XXX that less orders. nationwide of it given the would of North was prepandemic orders number So business, about XX% the in back XX,XXX less To you of of have which at peak, is we the of at look any

we So sit now, today, right as it's below just XXX,XXX. here

and it's XXx still new back at come just go down levels. improving unit supply And look is pre-COVID componentry was sales. want equipment, I to on say, So chain significantly the it then when but where to our you

up of on lot a XXXX, dynamics a pushed So sales we're supply got the months X% through And chain for year. retail a on of XX% down -- the It's X to quarter. year-to-date the in the basis. later where related that's

So on X% truck year-to-date the side. up basis, on still we're retail sales a

And still the pricing is strong.

indication. another good so that's And

Yes. correct. That's

Daniel from Next, we to a question Imbro. go

vehicle degradation maybe Roger, or I profitability down the have talk XQ. this pretty the new been maybe maybe wanted and the a EV little about side, bit Can the in what strong, starting GPUs for they in tepid best. that And step one double-click half doing EV deeper maybe GPUs has quarter? of are you to And here, then demand GPU at on GPUs reason did step is a maybe been just parse out thinking on what that. part first from into more. saw did? ICE the bit we down about

Well, we growth is see rationalizing.

at talked we've is I prepandemic our at before. not for the to XX% And near about MSRP. business today, going sure in don't it our future, return when I think to believe. of again you We're business look

being we game. luxury not So a we're are, like volume the -- player again, and premium in

might XXX X dealers. don't one as have stores have X,XXX BMW and I we earlier, big -- said has we So the of

the more So lot in competition a market.

early from quarter of average ] time, at XX.X% The think XXX in about me, 'XX certainly I you to this decline that versus look the in or quarter excuse is first thing quarter at Again, sequentially. XXXX [ gone the our or price 'XX ]. was the -- So the present has key $XX,XXX XXX. third first transaction we're year, down [ when

benefit is cost Randall I internationally. it's There's higher a inventory driven. be think to to decline we're So a a the on margin I'm little base. to of higher got pretty margin. bit about overall, you But the base will And more because stay what a amount it. start see much us question to I slightly obviously, let certain of based Well, going no getting availability. this gets will but think about same talk

remember XX.X% is because on I Yes, side, which to slightly an XX% higher our year. new depending on is on BEV, last XX% XX% that. be, the and up versus We're -- going between car think nearly the We're U.K. in the we're that mix, of market -- the average. we range brand, than

So with business year well, year deliveries of bit. better the year some erode towards the BEV seeing interestingly the with we're a beginning last grosses. as margins wrote We this

as But of little on a BEV the bit commission, we agency, the BEVs side, expensive. for it's brands, Interesting on have weaker. Mercedes that. And typically, a more fixed on obviously, the margin some are

our trend little So those a the on better. bucking bit with was margin Mercedes

think MSRP And you when we're sales at talk [indiscernible] here selling inventory about on at BEV under in bit XX% U.S., BEVS or here, I also Rich. the probably look a little

Yes.

then points the look earlier our XXX percentage a percentage the the to you through being second with seen basis alluded XX% from improvement BEV. to sales the days about down more comparable an basis inventory. were about the Shelley at the quarter. that over That's days end from At of XX just sales, inventory end supply of the third is second X.X%. about of represents we've quarter. our inventory quarter, ICE on sequentially So And the second it overall through slightly year-to-date of quarter. XX% our of up That's on we actually a sale than

to [ the on customer -- the the on earlier, sales. And lower demand. as tons we're on brands of profit and with We've that there per money gross OEMs and we to them them ] drive got try Roger's $X,XXX discount point are average, represent putting about seeing and unit to BEV to move

think talking them too. I we're selling about

it's interesting... think I

Yes.

XX% sorry, sales, of XX% at are California. region, our you Texas, actually Arizona if industry sales, year-to-date California. So -- PAG West sales our California, but are XX% at to an BEV which just the are is year-to-date of sales through and look of it in our going

and the So X%, states the average Texas, national in you've now got Jersey. are in only New is sales States that above United and X which rate, right that's California

sales into overall is if XX% QX, were California. then at California in of look And you it sales

little at markets it's the So to going BEVs point, some going the in compared those of national lower adoption average. are that to get saturated. markets more have a And a challenging be to currently rate other

talk U.K. little the about bit sales of a Yes. Europe. and the Randall, in BEV rest

Yes.

an got only fleet's like the we challenging. is look, tax bit Spain, fleet really interesting incentive penetration. as What those I a So incentives between very up, purchases X% and is countries are X% little it, you've the scheme retail X.X% this. they through specific at think statistic in you And then really like coming and the little the Italy BEVs get the like and U.K. up the I percentages look where market's driving you And through there's said, have in said, BEV U.K., but government and very,

followed and all the we've usual incentives. items. an So from infrastructure really standpoint the range the challenge seen anxiety, And that it's

note, to of from important back the the to just of the BEVs couple U.K. last within mandatory XXXX. push that too, decided XXXX it's Randall, to adoption months

I that into we should and too. that watch play, So think carefully, comes

for will time. in a think, period longer continue more player market, ICE So that to we be a prominent of

Most well. back of similarly, ICE as the California Tony, pushed vehicles too ban

They did. That's right.

we've EV. So a side of still There's got discussion their a today, people I on correct? about range, bought lot have premium think

Yes.

and do What's U.S.? in we're and about talk that think pricing in much papers that the to inventory mean we're reading do we used Obviously, very infrastructure, of how careful And -- It's back day I today. the want. critical. BEV have you about that every it say on have, pushing your we're more would then I also. field, is is to about and working. half talking you're our inventory talking I it you And what

units. XXX Inventory of is BEVs used

again, What the -- the for take new would watching and gross know what and one. in and get actually But don't it we more can on is used a interesting on than be it one trade sell we profit you BEV really U.K. we're a in a can think it I

so can many spend parts it's hour moving it. we and there's an here about So talk

No, maybe all PTS but bit. we helpful. fleet I'm truck on I'll that one Service the PTS, was said costs. the on million moderate commercial Obviously, growth side. delivery extremely solid context did spending quarter, that for with a up and in what overall means profit about Parts maintenance more we fewer follow see trying that to year-over-year understand $XX of

that if So maintenance, I of you would were on moderated more maybe growth truck would and maybe on spending Parts service has why and within growth. side. kind Service commercial fleets Can are and about what drive parts the talk buckets think more piece that the

Yes.

business, Group So Premier we're up prior quarter. Truck up operations the the for year. versus X% We if look fixed in at year-to-date, X% you were

So definitely to compared slightly a slowdown prior year.

If a the business. then deeper majority parts that related to and you that into of and retail constituents Service Parts, wholesale the side of of to little be bit in is the look going the of that

system. the centers. you've big independent or transition business wholesale got we're side, the lot of highway repair side, retail got carriers on So -- to a federal a Then on where transport [indiscernible] goods down you've selling the there

of declined as assets that has and the have of the rates well. as some the freight declined year-over-year activity seen you've So utilization

operations you're that's where a softening the so business. seeing of the slight side fixed in And

a we think out benefit of I price increases. had

depreciation in year. Yes, this in we XXXX have parts calendar well those that comparables year not as be some would

Daniel, we're absorption. XXX% fixed covering still

any by bad a not So means. story

we go Gupta. Next, Rajat to

one SG&A bit. How the by that delivery And little like And the other of GPU for driven might to in of delays weakness I from to SG&A U.K. Could that, you versus just Volkswagen? to quarter have was the in was gross? unpack move call that want might of some BMW, We a influenced much the have just any follow-up. sequential your heard the gross peers items you that out a issue. an the

Rajat, I take that. can

points, areas. it I those main SG&A really As to was XX.X%, mentioned, we've to XXX whittled gross X basis down

mentioned, XX to within quarter. we or as X.X So hail the points the million basis damage related

that. got we've So

in that The another relate XXX points service other, there's maintenance. vehicle basis loaners to

So up $XX million.

But as loaners about, our opportunity saw then struggling we've us. cater then it's our also as excellent all represents sourcing service we have cars. of gross to but It's improve as and an cars. profit the a used for service to we're service certainly talked talked source way used result about, an a And customers of peers

really X,XXX So future that profit service almost will our got customers but with of the we've right also fact helps be loaners available servicing gross us, for it now.

helps service away new concerns, his what is team XX. almost stomach comes more that So in, to. a can't as walking he's to the with if he's and only they wanting line brand-new payment, fleet and buy have But with affordability our to not XX loaner customer, somebody quite the higher an used in we turn can

other out related overall, we've XXX talked, bad XX-ish comfortable in But there's seasonality aren't And increased costs there very again, is eventually everything that always still some range. normalizes a we so that sometimes our and in XX% will ultimately range. as there. here that percent get we're basis think the low costs to thing. points But we'll So or those personnel. to And Simon, then

of that related the Some to vehicles couldn't Randall spoke that delivered was of personnel be some that earlier. to cost

Yes.

as gross far is As down.

We're didn't where million little up cost. X million thing million at And for growth one. there's The hailstorm. talk that the about other get. X in point. only where a had we really we talked we of or gross with course, we've X of say, lost that And the just X quarter then year-over-year, Probably, in we higher don't about this million, things there million X

updated can then from learnings SG&A clear. the went other that? you That's learnings Mercedes from drove XQ. cetera? to share Looks changes, like the on it. XQ And any the just Got profitability, U.K., model. actually et agency Any there sequentially What in GPU up

about... talking I'm Yes,

Rajat, of sell right, again, gross the a the be you're the that's going Yes, commission, sure. fixed car. predicated up. has on to And Yes, price gone profit with

X,XXX, X,XXX So per stores, so I was X,XXX at year we the that's unit. GBP made a per were GBP it pounds look unit, at up. ago, XXXX, unit. which per about was GBP in X,XXX London at the If acquisition we Interestingly,

So of you get we that. benefit from richer get that car. the Obviously, mix

team the of we as the our So a to transact. bit base do is our customers have how a challenge and just what got continues and done paradigm a reduce nice job to we in has shift cost

traffic stores You foot up. down, digital, Internet into but traffic traffic -- our see way the the is our

really we've ratio and compared conversion those to last on trying it's leads points year. to year-to-date by X improved So our convert,

So continue of see Parts be We stuff kind and that's the strong there working to and on. grow. Service we're

So those digitally walking to to We and opportunities those in. just continue got costs drive good. work underneath both on and are margins those to store, look, the

some to given vehicles here, at the over that They've that customer it which site off I cost. got the in lot here salespeople, agency. some cars, think before out and the product We're can lower inquiries didn't are call to guys there's significantly had real the a that which the are good from than than We've which positive. We're barrel getting now incentive by at. the coming our sell beginning have floor. specialists we XX,XXX standpoint news we first on we look XX% PMA -- is of more our were more the is higher as a with us shifting because stock we

have you they're are interesting. agency. going go to So no cost had certain our for we one marketing extent. We I a cost But it's over interest to complained there. very We're rates can no and about paying tell idea thing,

I which an getting good. BEVs, So our understanding our the correct is XXX By base, the points, on of way, fixed cost think margin, on extra basis that.

would that I say we're So is at moment, and certainly I'm learning, the learning Mercedes too.

what's up bit, learning to backed U.K. they're where pushing back parts other they on a the they in it they're little we introduce it, Now about Europe a going were because going understand of lot

overnight, So be we're BEV. bit they're everywhere. like going going to a might it way about little that say

'XX in year, many we got but have BMW, next So and coming over see up we're I think all we'll it. we've

Next, line we of John Healy. go to the

if in for me is like to part an maybe well to I a Explorer, the they just as guys so feels a thoughts lines. looking Obviously, ask of big but the know X, just [indiscernible] whole. I might month or be you is as looking someone industry wanted along something impact kind have those UAW exposure last for on the or minimal early there CRB of Roger, a the just on

about any So grosses QX. of in thought sort

maybe last year that a level subscribe at up to that Do bit theory a you it magic today. do a bump grosses. short the a maybe terms next you of little has long a in so start number we strike of on taking the think that maybe sequential there's in strike at we're for the higher higher maybe when ends run margins where than And

out union have a has is But unfortunate and our profits affect than of This because with put look is look, what's one dealing Toyota, you they having which time not Honda, doesn't I X% their and affected the when paper, they big most point I think adding total base in And much higher at comes only competition. is of it our see mix, the there's already German the the look, and revenue that we we're owned the been are these read of this And when does unions workers. Diesel overseas. brands place thing cost X. Detroit the all have us at brand that happening is that UAW

kind And these glad are negotiations that's years, it's can years, X with instead get with higher mix. or of that trying ways probably I of last page the don't the Big are good to to all things unfortunately, we've cost new for top with you the and they of X. I'm put and the And together. Big they're that And X, in X have, going into But we seen biggest hires rate this. where X our coming with brand think [indiscernible] with and melding concern I mitigate the think

Got up it. And you brought Toyota.

outlook? days, production you communicated last any they suppliers. there or their risk be Does was QX to to in the issue aware just sort year? one Toyota's of Have XQ think guys or next on with of of of anything I of in that couple an [indiscernible] meaningful have

[indiscernible] Well, the look, or our it XX. for days, than a less sure. imply, them, plants, Yes. parts Well, look, impact they supplier, look, stuff imply, what's with issue U.S. XX debt debt for us different for base base XX what's obviously, get if could our an of out comes the of world

Whiston. David And question from our next is

questions. A couple of

of question replenish a be, XX, that them talking could then as you of think how quickly loaner. you use. one my about you your a -- sell I on booking customer loaner can earlier would get example I new First, guess the Shelly, that were

our hampered being that's not I Well, we're looking typically in today. able to were We is XX seeing XXX said, I turn days. think loaners look, at to by loaners. used Everybody turn what cars. we

cars. Now availability that that the suck up some we're supply to is going coming in of loaner

all it's side, key that's -- that's times a But availability. XX,XXX cars. loaners really luxury done year, really So it's the be because to by on used based turn going XX,XXX in that premium can more I X

think fill that's based thoughts the not the Maybe what I my but on you are. But that's want, OEM. individual pipeline kind of what we

cars our from least at were XX%, And were. they what loaner about up

Yes.

[indiscernible].

to business. going more big and a change, the the that's help So turn vehicle drive of used that's for

Think say David, vehicles you have and you X% at about MSRP depreciate it, we the per month. an

along car whether limited of than higher, miles. is, the invoice. new so it out a And loaners on you number vehicle has Some coming of that's get lower programs, of typically, say, this off long financing some as as certain go X%, whatever or it's it X%

we a the vehicle, car that can want with lower take XX, to it's maybe have a car depreciated loaner get up have we XX to So didn't what base. we newer give a a step you, we an rates, customer cost

And these service the OEMs to want us have loaners.

have So incentivized them. we're to

to used more also are CPO up too, CPO of of because business, business, -- year-over-year sales availability. because having the a because return preowned certified of starting we're see We're

returns. leasing. we've other lease our got had impact is We We of hadn't been a lot

XX% down the think, went side, leasing So high premium/luxury overall, XX%, some In months. I were to in we right?

X And we this XX% past leasing quarter. were

leasing what sorry, I'm your penetration this quarter? was

up That's year XX% quarter. from ago, leasing a XX% David. past this

said was that You Tony? 'XX, from up

From 'XX.

you the going a And on opinion few a from discussion ago. to minutes Supercharger for more more non-Tesla way it still lot the models? enough time, of Or EV too demand we your lot EV U.S. the access once get need then to moving? outlets also just out Do charging What team's there network. a think back year is get And is affordable EVs? early over especially to OEMs Or that's Tesla do 'XX. next we get in

think you've hit on I of couple different Well, a things.

than higher still I now think certain ICE. with the price models compared substantially points to right are

environment And you the combine problematic. with in, so when we're rate interest that that's

hurts demand for that thing EVs. one that's So the

about talked Roger the infrastructure.

got XX% standpoint, the you've that's which alarming you a pretty the success rate charger successful being it, pull charging there from of So think out it. got network you when public you about when about into is

some see point. with because I'm the to that that range was Tesla's exclusive charging network, these to reduces the how plays at to So it other obviously, up that was all relates as on owners them I the anxiety. confidence, today interested one still signing then network got And at -- a think OEMs Tesla out that

know not of additional Tesla Now the to with chargers keep everybody off basis it's monthly up to whether this. as been up is head on else. many they'll top don't a I installing how opened my or

now. that Additional have and brands access EVs OEM that other to network

Tesla this if gave more had a assurances charging to would me to that some the proprietary was me bit. a going upset that vehicle I purchased that little that be But convenient. network I'm I owner,

same with OEMs on compete Now I've these network. got other to the all

where supports it's mass of vehicles. adoption the we So be I critical going a to really the think mass to before a while get charging infrastructure

the penetration heard EVs They of gives And you same it U.S. it's if helps, on tell the a David, have still anxiety. it I the in almost U.K., they the range like chargers. us in the Randall's And U.K., and in still preview over can numbers you what have broken

a So still much those penetration, issues despite range higher even with that anxiety there's infrastructure. the and EV

don't So it it's also year, problem. but I a may help think next

questions. And we closing have Penske for I conference turn remarks. other Mr. the no back to over will

see for great a everybody, Thanks, the right. joining day. We'll you next us. of quarter. All Have end at the

Ladies participation. your gentlemen, and conference Thank does you for that for conclude your today.

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