January 2008
$13 Billion Revenue
$13 Billion Revenue
Our Business Strategy
smart
Distributionsm
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DistributionIn
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Ret
ail
Inte
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United States Retail
United States Retail
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
• 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
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
YTD Worldwide Revenue Mix
5%5%
66%66%
29%29%
Volume ForeignHigh Line Domestic
(9M ’07)
U.S. Revenue Mix
7%7%
49%49%
44%44%
Volume Foreign
High Line
Domestic
United States155 Franchises
Puerto Rico15 Franchises
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
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
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)
INDUSTRY CHALLENGES
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
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
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
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
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
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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