Penske Automotive Reports Third Quarter Results

--Adjusted EPS Increases 21% to $0.34

--Adjusted SG&A Decreases 90 Basis Points to 81.3% of Gross Profit

Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported third quarter adjusted income from continuing operations attributable to PAG of $30.9 million, or $0.34 per share attributable to common shareholders, which compares to $26.6 million, or $0.28 per share, in the third quarter last year. Actual third quarter income from continuing operations attributable to PAG was $27.6 million, or $0.30 per share, compared with $23.9 million, or $0.25 per share, in the prior year. Net income attributable to common shareholders in the third quarter was $27.4 million, or $0.30 per share, compared with $22.2 million, or $0.24 per share, in the prior year.

Adjusted third quarter 2009 earnings exclude $3.4 million ($0.04 per share) of after-tax expenses, including: $1.9 million ($0.02 per share) incurred in connection with the Company's terminated acquisition of the Saturn brand; $0.8 million ($0.01 per share) relating to our decision to close three franchises in the U.S.; and $0.7 million ($0.01 per share) relating to interest rate hedges of our variable rate floor plan notes payable due to decreases in outstanding floor plan notes payable below levels anticipated when the hedges were initiated. Adjusted third quarter 2008 earnings exclude an aggregate of $2.7 million ($0.03 per share) of after-tax costs related to severance, the termination of an acquisition agreement, and insurance deductibles relating to Hurricane Ike.

Total revenue in the third quarter was $2.6 billion compared to $3.0 billion in the same period last year. Total retail sales revenues decreased 10.4% versus the comparable prior year period, driven by continuing broad-based weakness in the U.S. automotive market compared to the prior year. Same-store total retail revenues declined 12.4%. Excluding changes relating to exchange rates, total same-store retail revenues declined 8.0%, including 3.5% for service and parts revenues.

"Our retail operations performed well during the third quarter, experiencing continued sequential improvement compared with the second quarter," said Penske Automotive Chairman Roger Penske. "The cash for clunkers program provided a welcome boost to our U.S. business during the quarter, and our U.K. operation continues to outperform in its market. Most importantly, our adjusted selling, general and administrative expenses declined by $32.1 million versus the prior year, improving 90 basis points as a percentage of gross profit, as our business continues to demonstrate the resiliency of the automotive retail model."

Total revenues for the nine months ended September 30, 2009, decreased 25.4% to $7.1 billion. Adjusted income from continuing operations attributable to PAG for the nine months was $60.5 million, or $0.66 per share attributable to common shareowners, which compare to $97.4 million and $1.03 per share, in the comparable period in the prior year. Adjusted 2009 earnings exclude $6.5 million, or $0.07 per share, of after-tax gain relating to the repurchase in the first quarter of $69 million principal amount of the Company's 3.5% Senior Subordinated Convertible Notes due 2026 and the third quarter costs outlined above relating to Saturn, the franchise closures and hedging. Adjusted 2008 earnings exclude the severance, transaction termination costs and deductibles outlined above. Actual income from continuing operations attributable to PAG and net income for the nine months ended September 30, 2009, were $63.6 million, or $0.69 per share, and $57.8 million, or $0.63 per share, respectively.

smart USA

During the third quarter, smart USA wholesaled 3,401 units. The challenging new vehicle sales environment in the U.S. continues to impact smart fortwo vehicle sales. In response, smart USA introduced new finance and marketing campaigns in October designed to sell through the balance of the 2009 model year inventory, which resulted in an after-tax reserve of $3.1 million, or $0.03 per share, in the third quarter. For the year, smart USA now expects to wholesale approximately 15,700 units.

Securities Repurchase Authority

The Company's Board of Directors previously approved repurchases of up to $150 million of the Company's outstanding common stock, debt and convertible debt. During the third quarter, the Company did not repurchase any securities and has $44 million remaining under the program.

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the third quarter of 2009 on October 30, 2009, at 2:00 p.m. EDT. To listen to the conference call, participants must dial (800) 230-1085 [International, please dial (612) 288-0340]. The call will be simultaneously broadcast over the Internet through the Penske Automotive Group website at www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 310 retail automotive franchises, representing 40 different brands and 25 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents. Penske Automotive has 160 franchises in 17 states and Puerto Rico and 150 franchises located outside the United States, primarily in the United Kingdom.

Penske Automotive, through its wholly-owned subsidiary smart USA Distributor LLC, is the exclusive distributor of the smart fortwo vehicle and related parts in the United States. smart USA supports 79 smart retail centers in the United States. Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 14,000 employees. smart and fortwo are registered trademarks of Daimler AG.

Caution Concerning Forward Looking Statements

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s future sales potential. Actual results may vary materially because of risks and uncertainties, including external factors such as consumer credit conditions, any potential restructuring of the U.S. automotive sector, macro-economic factors, interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about Penske Automotive's business, markets, conditions and other uncertainties which could affect Penske Automotive's future performance. These risks and uncertainties are addressed in Penske Automotive's Form 10-K for the year ended December 31, 2008, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive disclaims any duty to update the information herein.

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations attributable to PAG and related earnings per share, which exclude certain items disclosed in the release. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure and the period-to-period comparability of the Company's results from operations.

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
                                                     Third Quarter
                                                     2009          2008
Revenues:
New Vehicle                                          $1,339,016    $1,548,507
Used Vehicle                                         672,764       711,750
Finance and Insurance, Net                           60,761        67,594
Service and Parts                                    336,313       359,186
Distribution                                         36,451        85,567
Fleet and Wholesale Vehicle                          142,617       197,811
Total Revenues                                       2,587,922     2,970,415
Cost of Sales:
New Vehicle                                          1,226,127     1,421,906
Used Vehicle                                         613,384       659,814
Service and Parts                                    150,511       159,526
Distribution                                         36,353        72,362
Fleet and Wholesale Vehicle                          138,592       199,489
Total Cost of Sales                                  2,164,967     2,513,097
Gross Profit                                         422,955       457,318
SG&A Expenses                                        347,968       380,176
Depreciation and Amortization                        14,011        13,966
Operating Income                                     60,976        63,176
Floor Plan Interest Expense                          (9,080     )  (15,312    )
Other Interest Expense                               (13,468    )  (16,159    )
Debt Discount Amortization                           (3,135     )  (3,496     )
Equity in Earnings of Affiliates                     7,536         8,995
Income from Continuing Operations Before             42,829        37,204
Income Taxes
Income Taxes                                         (15,033    )  (13,150    )
Income from Continuing Operations                    27,796        24,054
Loss from Discontinued Operations, Net of Tax        (134       )  (1,682     )
Net Income                                           27,662        22,372
Income Attributable to Non-Controlling Interests     (239       )  (189       )
Net Income Attributable to Common Shareholders       $27,423       $22,183
Income from Continuing Operations Per Diluted Share  $0.30         $0.25
Income Per Diluted Share                             $0.30         $0.24
Diluted Weighted Average Shares Outstanding          91,625        93,801
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations           $27,796       $24,054
Income Attributable to Non-Controlling Interests     (239       )  (189       )
Income from Continuing Operations, net of tax        27,557        23,865
Loss from Discontinued Operations, net of tax        (134       )  (1,682     )
Net Income                                           $27,423       $22,183

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
                                                     Nine Months
                                                     2009          2008
Revenues:
New Vehicle                                          $3,401,478    $4,899,269
Used Vehicle                                         1,944,098     2,309,456
Finance and Insurance, Net                           163,664       216,573
Service and Parts                                    995,456       1,076,901
Distribution                                         169,716       247,758
Fleet and Wholesale Vehicle                          388,266       720,190
Total Revenues                                       7,062,678     9,470,147
Cost of Sales:
New Vehicle                                          3,131,177     4,491,775
Used Vehicle                                         1,769,500     2,131,717
Service and Parts                                    449,903       474,857
Distribution                                         150,369       208,584
Fleet and Wholesale Vehicle                          376,725       722,332
Total Cost of Sales                                  5,877,674     8,029,265
Gross Profit                                         1,185,004     1,440,882
SG&A Expenses                                        988,522       1,166,368
Depreciation and Amortization                        40,654        40,623
Operating Income                                     155,828       233,891
Floor Plan Interest Expense                          (27,571    )  (48,512    )
Other Interest Expense                               (41,610    )  (40,451    )
Debt Discount Amortization                           (9,908     )  (10,488    )
Equity in Earnings of Affiliates                     11,716        13,322
Gain on Debt Repurchase                              10,429        --
Income from Continuing Operations Before             98,884        147,762
Income Taxes
Income Taxes                                         (35,059    )  (52,055    )
Income from Continuing Operations                    63,825        95,707
Loss from Discontinued Operations, Net of Tax        (5,794     )  (2,747     )
Net Income                                           58,031        92,960
Income Attributable to Non-Controlling Interests     (247       )  (1,052     )
Net Income Attributable to Common Shareholders       $57,784       $91,908
Income from Continuing Operations Per Diluted Share  $0.69         $1.00
Income Per Diluted Share                             $0.63         $0.97
Diluted Weighted Average Shares Outstanding          91,563        94,841
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations           $63,825       $95,707
Income Attributable to Non-Controlling Interests     (247       )  (1,052     )
Income from Continuing Operations, net of tax        63,578        94,655
Loss from Discontinued Operations, net of tax        (5,794     )  (2,747     )
Net Income                                           $57,784       $91,908

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
                                      9/30/09     12/31/08
Assets
Cash and Cash Equivalents             $29,540     $20,108
Accounts Receivable, Net              322,539     294,048
Inventories                           1,174,393   1,589,105
Other Current Assets                  102,805     88,251
Assets Held for Sale                  6,780       15,534
Total Current Assets                  1,636,057   2,007,046
Property and Equipment, Net           711,766     662,121
Intangibles                           1,009,902   974,035
Other Long-Term Assets                315,175     318,947
Total Assets                          $3,672,900  $3,962,149
Liabilities and Equity
Floor Plan Notes Payable              $708,014    $964,783
Floor Plan Notes Payable - Non-Trade  380,453     506,688
Accounts Payable                      183,143     178,282
Accrued Expenses                      251,076     195,994
Current Portion Long-Term Debt        15,122      11,305
Liabilities Held for Sale             7,718       23,060
Total Current Liabilities             1,545,526   1,880,112
Long-Term Debt                        955,469     1,052,060
Other Long-Term Liabilities           252,936     221,556
Total Liabilities                     2,753,931   3,153,728
Equity                                918,969     808,421
Total Liabilities and Equity          $3,672,900  $3,962,149

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
                                   Third Quarter           Nine Months
                                   2009        2008        2009        2008
Total Retail Units:
New Retail                         41,486      45,177      105,246     140,402
Used Retail                        25,636      25,997      78,425      79,954
Total Retail                       67,122      71,174      183,671     220,356
smart Wholesale Units              3,401       6,683       12,774      19,329
Same-Store Retail Units:
New Same-Store Retail              40,404      44,806      99,596      137,334
Used Same-Store Retail             24,703      25,813      73,241      78,259
Total Same-Store Retail            65,107      70,619      172,837     215,593
Same-Store Retail Revenue:
New Vehicles                       $1,304,861  $1,539,015  $3,206,608  $4,790,478
Used Vehicles                      646,433     707,390     1,801,094   2,253,792
Finance and Insurance, Net         59,073      67,222      155,275     212,621
Service and Parts                  328,400     356,221     936,472     1,046,463
Total Same-Store Retail            $2,338,767  $2,669,848  $6,099,449  $8,303,354
Same-Store Retail Revenue Growth:
New Vehicles                       (15.2%)     (21.1%)     (33.1%)     (12.0%)
Used Vehicles                      (8.6%)      (13.0%)     (20.1%)     (4.9%)
Finance and Insurance, Net         (12.1%)     (16.1%)     (27.0%)     (5.6%)
Service and Parts                  (7.8%)      (2.8%)      (10.5%)     (0.5%)
Revenue Mix:
New Vehicles                       51.7%       52.1%       48.2%       51.7%
Used Vehicles                      26.0%       24.0%       27.5%       24.4%
Finance and Insurance, Net         2.4%        2.3%        2.3%        2.3%
Service and Parts                  13.0%       12.1%       14.1%       11.4%
Distribution                       1.4%        2.9%        2.4%        2.6%
Fleet and Wholesale                5.5%        6.6%        5.5%        7.6%
Average Retail Selling Price:
New Vehicles                       $32,276     $34,276     $32,319     $34,895
Used Vehicles                      26,243      27,378      24,789      28,885
Gross Margin                       16.3%       15.4%       16.8%       15.2%
Retail Gross Margin - by Product:
New Vehicles                       8.4%        8.2%        7.9%        8.3%
Used Vehicles                      8.8%        7.3%        9.0%        7.7%
Service and Parts                  55.2%       55.6%       54.8%       55.9%

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
                                      Third Quarter               Nine Months
                                      2009            2008        2009      2008
Gross Profit per Retail Transaction:
New Vehicles                          $2,721          $2,802      $2,568    $2,902
Used Vehicles                         2,316           1,998       2,226     2,223
Finance and Insurance                 905             950         891       983
Brand Mix:
BMW                                   21%             23%         21%       22%
Toyota / Lexus                        20%             19%         19%       19%
Honda / Acura                         14%             15%         15%       15%
Audi                                  10%             9%          10%       9%
Mercedes Benz                         9%              10%         9%        10%
Porsche                               4%              3%          4%        3%
Land Rover                            4%              4%          4%        4%
Ferrari / Maserati                    3%              3%          3%        4%
Other                                 15%             14%         15%       14%
                                      100%            100%        100%      100%
Premium                               63%             65%         64%       65%
Foreign                               32%             31%         31%       30%
Domestic Big 3                        5%              4%          5%        5%
                                      100%            100%        100%      100%
Revenue Mix:
U.S.                                  64%             64%         64%       63%
International                         36%             36%         36%       37%
                                      100%            100%        100%      100%
Rent Expense                          $41,067         $40,580     $123,348  $120,197
                                                                  9/30/09   12/31/08
Debt to Total Capital Ratio                                       51%       57%
Debt Covenant Compliance (U.S.):
Current Ratio (min 1.00:1)                                        1.06:1    1.07:1
Fixed Charge Coverage Ratio (min 1.00:1)                          1.16:1    1.24:1
Ratio of Non-Floorplan Debt to Stockholders' Equity (max 1.30:1)  0.69:1    0.86:1
Funded Debt to EBITDA Ratio (max 2.50:1)                          1.44:1    1.26:1
Debt Covenant Compliance (U.K.):
Capital Expenditures (max GBP 50 million)                         GBP 14.8  GBP 29.5
EBITAR to Fixed Charges (min 1.50:1)                              2.21x     1.76x
Debt to EBITAR (max 3.25:1)                                       1.16x     1.45x

SOURCE: Penske Automotive Group, Inc.

Penske Automotive Group, Inc. 
Bob O'Shaughnessy 
Chief Financial Officer 
248-648-2800 
boshaughnessy@penskeautomotive.com 
or 
Anthony R. Pordon 
Senior Vice President 
248-648-2540 
tpordon@penskeautomotive.com