January 2008. $13 Billion Revenue $13 Billion Revenue Our Business Strategy smart Distribution smart...
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January 2008
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$13 Billion Revenue
$13 Billion Revenue
Our Business Strategy
smart
Distributionsm
art
DistributionIn
tern
atio
nal
Ret
ail
Inte
rnat
iona
lRet
ail
United States Retail
United States Retail
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What is Penske Automotive?
People
Process
Initiative
People
Process
Initiative
World Class
Facilities
World Class
FacilitiesGeogr
aphi
c
Diver
sity
Geogr
aphi
c
Diver
sity
Best i
n Cla
ss
Brand
Mix
Best i
n Cla
ss
Brand
Mix
Customer &
Employee
Satisfaction
Customer &
Employee
Satisfaction
Create Shareholder ValueCreate Shareholder Value
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• 2nd Largest Auto Retailer in the U.S.
• #205 on Fortune 500
• 315 Dealerships:
• U.S. – 170; 65 Locations
• International – 145; 86 Locations
• Operate in 18 States and 4 Countries
• 40 Vehicle Brands
• 26 Collision Repair Centers
• 16,000 Employees
Overview
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Retail Unit Volume(In Thousands)
2001 2002 2003 2004 2005 2006 2007e
Used New Total
3939
9797
136136
5151
117117
168168
6969
149149
218218
6262
135135
197197
Increasing Units in Operation
+14% CAGR+14% CAGR
7575
167167
242242
105105
195195
300300
8989
183183
272272
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YTD Worldwide Revenue Mix
5%5%
66%66%
29%29%
Volume ForeignHigh Line Domestic
(9M ’07)
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U.S. Revenue Mix
7%7%
49%49%
44%44%
Volume Foreign
High Line
Domestic
United States155 Franchises
Puerto Rico15 Franchises
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Intl. Revenue Mix
4%4%94%94%
2%2%
U.K.135 Franchises
Germany10 Franchises4 Joint Ventures
Mexico3 Franchises1 Joint Venture
Volume Foreign
High Line
Domestic
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Highly Productive Dealerships(New Unit Sales Per Dealership)
• Toyota 788 1,872 3,033
• Honda 627 1,346 2,492
• Lexus 531 1,489 1,791
• BMW 145 869 1,656
• Nissan 487 880 1,507
• Mercedes-Benz 146 742 1,052
• General Motors 242 275 973
• Ford 331 343 865
Industry
1991 2007 PAG*
* 2007Same-Store
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Service & Parts Drives Gross Profit
S&P 11%S&P 11%
F&I 2%F&I 2%
Used 24%Used 24%
New 55%New 55%
RevenueMix
S&P 41%S&P 41%
F&I 15%F&I 15%
Used 13%Used 13%
New 31%New 31%
Gross ProfitContribution
W&F 8%W&F 8%
(9M ‘07)
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INDUSTRY CHALLENGES
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Industry Challenges
• Overall Economic Landscape
• Credit Issues
• Housing market
• Fuel Prices
• Changing CAFE Standards
• Balance OEM mandated Facility Requirement Costs
• Getting products to market on a timely basis
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Vehicle Distribution
• It is as fair as an unfair system can be
• Has evolved from highly subjective to highly objective process
• Get the right car in the right quantity, in the right place at the right time
• OEMs today bear a remarkable similarity in their distribution process
• Still too much complexity and wasted time and effort
• UK Distribution
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Positives
• Internet and web based OEM systems allow management of this asset 24/7
• Math based allocation systems create a more level playing field
• Sophisticated market diagnostics add additional science to planning and managing vehicle inventories
• Today’s dealers typically have adequate supply of vehicles
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What Can Be Improved
• Planning horizons far too long at retail
• Decision criteria still based on historical data and behavior
• Retail inventories are the result of product planning/production decisions
• Dealers must understand the system
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smart USA
• Appointed Exclusive Distributor for the smart fortwo in the United
States, including Hawaii; Alaska; and Puerto Rico
• Three Different Versions
• Pure – $11,590
• Passion – $13,590
• Cabriolet – $16,590
• 3.9 Million Website Visits
• Over 30,000 Reservations
• 100,000 smart Insiders
• smart1 Customer Care Center
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smart Distribution
• True build to order system
• Collected $99 fully refundable reservations from 40,000 potential customers
• Each customer selected a model and color preference
• Reconfirmed reservations by providing each customer access to a configurator where they could build the car they wanted
• Kept option and color choices to a minimum
• Interior colors had four options
• Option packages limited
• Used configuration information to build car exactly to customer specification
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