Penske Automotive Group Stock

Penske Automotive Group, Inc. operates as a diversified international transportation services company. The company is the world's premier automotive and commercial truck retailer. The company operates dealerships in the United States, the United Kingdom, Canada, Germany, Italy, and Japan. The company is one of the largest retailer of commercial trucks in North America for Freightliner. The company also distributes and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand.

The company owns 28.9% of Penske Transportation Solutions, a business that employs over 44,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 439,000 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Business

Retail Automotive: The company is the largest global automotive retailer. The company is diversified geographically with 56% of its total retail automotive dealership revenues in 2023 generated in the U.S. and Puerto Rico and 44% generated outside of the U.S. The company offers over 35 vehicle brands with 71% of its retail automotive franchised dealership revenue in 2023 generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of December 31, 2023, the company also operated 19 used vehicle dealerships, with seven dealerships in the U.S. and 12 dealerships in the U.K., which retailed used vehicles under a one price, no-haggle methodology under the CarShop brand. The company retailed and wholesaled, including agency units, more than 587,000 vehicles in 2023.

Each of the company’s franchised dealerships offers a wide selection of new and used vehicles for sale. In addition to selling new and used vehicles, it generates higher-margin revenue at each of its dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of its locations, collision repair services. The company operates its franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Beginning in 2023, the company transitioned its Mercedes-Benz U.K. dealerships to an agency model under which these dealerships, and a limited number of its other dealerships in Europe, receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. The company continues to provide new vehicle customer service under the agency model, and the Mercedes-Benz U.K. agency model at this time has not changed its used vehicle sales operations or service and parts operations, although the long-term impact of the agency model at these dealerships as well as other agency models proposed by its manufacturer partners is uncertain.

Retail automotive dealerships represented 85.4% of the company’s total revenues and 84.6% of its total gross profit in 2023. In January 2024, the company acquired Rybrook Group Limited, consisting of retail automotive franchises in the U.K., including BMW franchises, MINI franchises, Volvo franchises, Land Rover franchises, Jaguar franchise, and Porsche franchise. Three of the BMW locations also retail BMW Motorrad motorcycles.

The company’s diversified retail automotive income streams help to mitigate the historical cyclicality found in some elements of the automotive sector. Revenues from higher margin service and parts sales include warranty work, customer paid work, rapid repair, collision repair services, and wholesale parts sales. Service and parts sales are typically less cyclical than retail vehicle sales and generate the largest part of the company’s retail automotive gross profit.

Retail Commercial Truck Dealership: The company operates Premier Truck Group (PTG), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across nine U.S. states and the Canadian provinces of Ontario and Manitoba. During 2023, the company acquired three full-service dealerships and two service and parts centers in Canada. As of December 31, 2023, PTG operated 44 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. The company retailed and wholesaled 21,846 new and used trucks in 2023. This business represented 12.5% of the company’s total revenues and 12.0% of its total gross profit in 2023.

Penske Australia: Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, the company is also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.1% of the company’s total revenues and 3.4% of its total gross profit in 2023.

Penske Transportation Solutions: The company holds a 28.9% ownership interest in Penske Truck Leasing Co., L.P. (PTL). PTL is owned 41.1% by Penske Corporation, 28.9% by it, and 30.0% by Mitsui & Co., Ltd. (Mitsui). Penske Transportation Solutions (PTS) is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistic services, such as dedicated contract carriage, distribution center management, freight management, and dry van truckload carrier services.

Outlook

Retail Automotive: The company’s new vehicle days' supply is 39 as of December 31, 2023. The company’s used vehicle days' supply is 48 as of December 31, 2023.

Representatives of the U.K. government have proposed a ban on the sale of gasoline engines and gasoline hybrid engines in new cars and new vans that would take effect in 2035 while also providing government incentives on certain electric vehicles to entice consumers to transition from internal combustion vehicles to electric vehicles. In the U.K., new registrations of electric vehicles, including hybrid, represented 36.5% of the overall market for 2023. During 2023, approximately 2.6% of new vehicle sales in the U.K. were sold by vehicle manufacturers directly to consumers outside of the retail automotive franchised system, principally consisting of Tesla vehicles.

In the U.S., sales of Electric Vehicles increased approximately 46% to 1.2 million units from 0.8 million units in the prior year. Electric Vehicle sales represented 7.6% of the overall U.S. market in 2023. During 2023, approximately 4.6% of new vehicle sales in the U.S. were sold by vehicle manufacturers directly to consumers outside of the retail automotive franchised system, principally consisting of Tesla vehicles.

Retail Commercial Truck Dealership: As of December 31, 2023, the Class 6-8 medium- and heavy-duty truck backlog is 278,616 units according to data published by ACT Research.

Commercial Vehicle Distribution and Other: During 2023, the Australian heavy-duty truck market reported sales of 17,569 units, representing an increase of 17.4% from last year, while the New Zealand market reported sales of 3,993 units, representing an increase of 10.4% from last year. Additionally, the company’s power system operations continue to grow through sales in the off-highway segments, such as power generation solutions for large data centers, mining, and military applications.

Penske Transportation Solutions: A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. During 2023, PTS continued to expand its managed fleet with over 439,000 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts.

Business Strategy

The key elements of the company’s strategy are to provide a superior customer experience that exceeds expectations, and establishes trust and loyalty through honesty, transparency, and accountability; deliver long-term value for its stakeholders through continuous improvement, organic growth, and strategic acquisitions; and provide opportunities for team members to succeed by cultivating talent, rewarding achievement, and maintaining the highest standards of respect for each other.

The company operates in the highly fragmented automotive retail and commercial truck dealership markets. During 2023, in its retail automotive business, the company acquired two dealerships located in the U.S. representing BMW and Porsche brands and two dealerships located in Italy representing BMW and MINI brands. In its commercial retail truck business, the company acquired three full-service dealerships and two service and parts centers in Canada. In January 2024, the company acquired Rybrook Group Limited, consisting of retail automotive franchises in the U.K., including four BMW dealerships, four MINI dealerships, four Volvo dealerships, two Land Rover dealerships, one Jaguar dealership, and one Porsche dealership. Three of the BMW locations also retail BMW Motorrad motorcycles.

Diversification

The company’s business benefits from a diversified revenue and gross profit mix, including multiple revenue and gross profit streams in its traditional vehicle and commercial truck dealerships (new vehicles, used vehicles, finance and insurance, and service and parts operations) across many geographies, its commercial vehicle distribution and power systems operations, and returns relating to its joint venture investments, which helps to mitigate the cyclicality that has historically impacted some elements of the automotive sector. Furthermore, PTG provides diversification both by business line and by its business being represented across the U.S. and in Canada. Finally, the company’s ownership interest in PTS provides it with additional diversification.

The company is also diversified within its automotive retail operations by brand. The company represents over 35 brands in its markets and its automotive dealership revenue mix consists of 71% related to premium brands, 21% related to volume non-U.S. brands, 1% related to brands of U.S. based manufacturers, and 7% related to its CarShop used vehicle dealerships.

Digital Strategy/Omnichannel

The company focuses on executing a comprehensive omnichannel digital strategy with emphasis on customization, personalization, and creating a connection with its customers. The company endeavors to build and optimize its presence across all digital platforms and deliver a seamless, convenient, and transparent experience that gives customers the ability to purchase, sell, or schedule service for their vehicles on their terms.

To stay at the forefront of technological innovations, the company continues to develop and test platforms for end-to-end digital retailing through its industry and OEM relationships. Fully online retailing includes features like personalized monthly payments across all inventories, accurate trade-in capabilities, financing, digital contracting, and digital signatures. The company is actively testing these technologies at both its franchise and U.S. CarShop locations to ensure it is gaining an understanding of best practices and customer adoption of these initiatives. In addition, the company has implemented AI-driven technologies at certain of its dealerships, including a voice assistant to answer and appoint inbound service calls and an engagement system to address customer lead inquiries and schedule sales and service appointments. These technologies are designed to improve the company’s customer experience and are available 24/7.

For U.S. customers who wish for a hybrid online/in-person transaction at its franchise locations, the company offers the respective OEM provided digital solution or its own Preferred Purchase as its digital retailing solutions. These tools provide a digital buying process including trade-value, pricing, leasing, and financing options with customized payments. Customers can add insurance and protection products to their purchase, evaluate manufacturer and lender incentive programs, and pre-qualify for credit all online or in combination with an in-store experience. These tools are designed to serve a customer wherever they are at in their buying journey, whether they want to evaluate payment options or complete their purchase online through a secure link where they can sign documents digitally and arrange for curbside or home delivery.

Similarly, in the U.K., the company offers online resources that enhance customers’ overall dealership experience. With its internally developed digital retailing program called Click & Collect, customers can fully pay for a vehicle online with a debit or credit card and request vehicles be transferred between dealerships by paying a transfer fee online. CarShop U.K. customers can access a bespoke finance eligibility tool, which helps them gauge their likelihood for financial acceptance.

The company also promotes its the U.S. and U.K. automotive retail new and pre-owned vehicle inventory online through PenskeCars.com, Agnewcars.com, CarShop.com, Sytner.co.uk, and CarShop.co.uk (the latter two built in-house and hosted on a proprietary technology platform). These websites are designed to streamline the car-buying process and allow consumers to view and compare new, certified, and pre-owned vehicles.

Retail Automotive Dealership Operations

Retail Automotive Franchises: The company routinely acquires and disposes retail automotive franchises.

New Vehicle Retail Sales: In 2023, the company retailed, including agency units, more than 229,742 new vehicles which generated 44.7% of its retail automotive dealership revenue and 29.7% of its retail automotive dealership gross profit. Beginning in 2023, the company transitioned its Mercedes-Benz U.K. dealerships to an agency model under which these dealerships, and a limited number of its other dealerships in Europe, receive a fee for facilitating the sale by the manufacturer of a new vehicle.

Used Vehicle Retail Sales: The company acquires used vehicles from various sources, including trade-ins from consumers in connection with their purchase of a new or used vehicle from it, purchases of used vehicles directly from consumers, lease expirations, public auctions, and auctions open only to authorized new vehicle dealers.

Vehicle Finance and Insurance Sales: Finance and insurance sales represented 3.3% of the company’s retail automotive dealership revenue and 20.1% of its retail automotive dealership gross profit in 2023.

The company also offers its customers various vehicle warranty and extended protection products, including extended service contracts, maintenance programs, and voluntary vehicle protection products. The extended service contracts and other products that its dealerships offer to customers are underwritten by independent third parties, including the vehicle manufacturers' captive finance companies. Similar to finance transactions, the company is subject to chargebacks relating to fees earned in connection with the sale of certain protection products. The company also offers for sale other aftermarket products, including security systems and protective coatings.

The company offers finance and insurance products using a menu process, which is designed to ensure that it offers its customers a complete range of finance, insurance, protection, and other aftermarket products in a transparent manner. The company utilizes docuPAD at its U.S. dealerships, an interactive electronic interface designed to improve document processing and menu presentation of finance and insurance options during the purchase or lease transaction.

Service and Parts Sales. Service and parts sales represented 10.8% of the company’s retail automotive dealership revenue and 38.4% of its retail automotive dealership gross profit in 2023. The company generates service and parts revenue in connection with providing a wide range of services, such as vehicle maintenance, repair, manufacturer recalls, warranty, out-of-warranty, and collision repair services. The company also reconditions used vehicles that it intends to sell in its dealerships.

The company’s dealerships keep records of its customers' maintenance and service histories, and many dealerships send reminders to customers when vehicles are due for periodic maintenance or service. The company also offers rapid repair services, such as paintless dent repair, tire sales, and windshield replacement at most of its facilities in order to offer its customers the convenience of one-stop shopping for all of their automotive requirements.

Fleet and Wholesale Sales. Fleet and wholesale sales represented 5.8% of the company’s retail automotive dealership revenue and 1.4% of its retail automotive dealership gross profit in 2023.

Retail Commercial Truck Dealership Operations

Premier Truck Group (PTG) is a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands) with 44 locations across nine U.S. states and the Canadian provinces of Ontario and Manitoba. PTG dealerships provide a similar suite of services as the company’s automotive dealerships, offering new trucks and a large selection of used trucks for sale, a full range of parts, maintenance and repair services, collision centers, and finance and insurance options by facilitating truck and trailer financing and leasing, extended maintenance plans, physical damage insurance, voluntary vehicle protection products, roadside relief, and other programs.

The maintenance and repair of commercial trucks is an essential service and a key area of differentiation for the company’s business. The company offers Elite Support certified locations to help maximize vehicle uptime. Elite Support certified locations provide an express assessment whereby it communicates a primary diagnosis, check parts availability, and provide an estimate of cost and repair time within a few hours of service write-up. As part of this service, many of the company’s locations offer a comfortable environment for customers with amenities, such as customer lounges, lockers, showers, and laundry facilities. The company also offers roadside remote service for certain repairs and provide 24/7 technician support for breakdown/emergency service.

The collision centers at PTG are full-service, heavy-duty paint and collision repair facilities with certified professionals that can handle everything from light cosmetic issues to complete vehicle reconstruction, including mechanical engine repairs. PTG also carries an extensive inventory of parts for the new and used trucks they sell and service. The service and parts business of its PTG commercial truck dealerships represents approximately 65% of its retail commercial truck dealership gross profit.

Commercial Vehicle Distribution and Other Operations

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, the company is also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region.

Penske Australia distributes commercial vehicles and parts for Western Star, MAN, and Dennis Eagle to a network which comprises on average of more than 70 dealership locations across Australia, New Zealand, and portions of the Pacific. The company’s dealership in Brisbane, Australia is the largest retailer of Western Star Trucks in Australia by volume, and its dealership in Perth, Australia is the largest retailer of MAN Trucks in Australia by volume. The company finances its purchases of these vehicles under floor plan agreements with a local Daimler affiliate and a local Volkswagen affiliate with terms similar to its other floor plan agreements.

Western Star trucks are manufactured by Daimler Trucks North America in Portland, Oregon. These technologically advanced, custom-built vehicles are ordered by customers to meet their particular needs for line haul, long distance road train, mining, logging, and other heavy-duty applications. The company is also the exclusive importer of MAN trucks and buses. MAN Truck and Bus, a VW Group company, is a leading producer of medium- and heavy-duty trucks, as well as city and coach buses. These cab-forward, fuel efficient vehicles are principally produced in several sites in Germany and are ordered by customers for line haul, local distribution, mining, and other off-road applications. Dennis Eagle refuse collection vehicles are manufactured by Ros Roca in Warwick, England. These brands represented 3.2% of heavy-duty truck units sold in Australia and 2.8% in New Zealand during 2023.

The company also distributes diesel gas engines and power systems to over 100 dealer locations that are strategically located throughout Australia, New Zealand, and portions of the Pacific. Most of the dealers represent the Detroit Diesel brand, with the majority aligned to Western Star and/or Freightliner truck manufacturers. The remaining dealers represent the MTU and Allison Transmission brands. The off-highway business principally includes the sale and servicing of power systems directly to customers in the commercial, defense, mining, maritime, and power generation sectors from 20 facilities the company operates across Australia and New Zealand. The company also utilizes mobile remote field service units to travel directly to customer premises.

Penske Transportation Solutions

The company holds a 28.9% ownership interest in Penske Truck Leasing Co., L.P. (PTL). Penske Transportation Solutions (PTS) is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, freight management, and dry van truckload carrier services. PTS has a highly diversified customer base ranging from multi-national corporations across industries, such as food and beverage, transportation, manufacturing, automotive, retail, and healthcare, with whom they have long-term contracts to individual consumers who rent a single truck on a daily basis.

PTS manages one of the largest, most comprehensive and modern trucking fleets in North America, with approximately 439,000 trucks, tractors and trailers under lease, rental and/or maintenance contracts as of December 31, 2023, through their network of locations throughout North America. Furthermore, PTS has consistently been among the largest purchasers of commercial trucks in North America and had an average full-service leasing Class 8 tractor fleet age of approximately 3.3 years as of December 31, 2023, which is substantially lower than the overall Class 8 tractor fleet age in the United States.

Full-Service Truck Leasing, Truck Rental, and Contract Maintenance: Full-service truck leasing, truck rental, and contract maintenance of commercial trucks, tractors, and trailers constitutes PTS' largest business. PTS manages a fleet of over 439,000 trucks, tractors, and trailers, consisting of over 289,100 vehicles owned by PTS and leased to customers under full-service lease or rental agreements and over 150,500 customer-owned and -operated vehicles for which they provided contract maintenance services. Lease terms under its full-service leases generally range from four to seven years for tractors and trucks and six to ten years for trailers. Its commercial and consumer rental fleet as of December 31, 2023, consisted of approximately 106,800 vehicles for use by its full-service truck leasing, small business, and consumer customers for periods generally ranging from less than a day to 12 months. Most of its leased vehicles are configured according to customer specifications, including custom painting and lettering, while its rental trucks bear Penske branding.

Under a full-service lease, PTS provides and fully maintains the vehicle, which is generally configured for the customer. The services provided under full-service lease and contract maintenance agreements generally include preventive and regular maintenance, advanced diagnostics, emergency road service, fleet services, safety programs, and fuel services through PTS' network of company-operated facilities and a nationwide network of independent truck stops. In addition, PTS makes available to its full-service leasing and contract maintenance customers additional vehicles on a rental basis. PTS' commercial rental operations offer short-term availability of tractors, trucks, and trailers typically to accommodate seasonal, emergency, and other temporary needs. A significant portion of these rentals are to existing full-service leasing and contract maintenance customers who are seeking flexibility in their fleet management. PTS has established a network of approximately 920 locations to provide full-service truck leasing, truck rental, and contract maintenance services to customers. This network enables PTS to meet multi-location customer requirements. PTS' commercial rental business generated 21% of its revenue for 2023 and its full-service lease and contract maintenance business generated 46% of its revenue in 2023.

For consumer customers, PTS provides short-term rental of light- and medium-duty vehicles on a one-way and local basis, typically to transport household goods. Customers typically include local small businesses and individuals seeking a do-it-yourself solution to their moving needs. PTS' consumer fleet generally consists of late model vehicles ranging in size from small vans to 26-foot trucks, and its consumer rentals are conducted through approximately 2,050 independent rental agents and approximately 430 of its company-operated leasing and rental facilities. PTS' consumer business generated 4% of its revenue for 2023.

Logistics. PTS' logistics business offers an extensive variety of services, including dedicated contract carriage, distribution center management, freight management, lead logistics provider, and dry van truckload carrier services. PTS coordinates services for its customers across the supply chain, including inbound material flow, handling and packaging, inventory management, distribution and technologies, and sourcing of third-party carriers. These services are available individually or on a combined basis and often involve its associates performing services at the customer's location. By offering a scalable series of services to its customers, PTS can manage the customer's entire supply chain or any stand-alone service. PTS also utilizes specialized software that enables real-time fleet visibility and provides reporting metrics, giving customers detailed information on fuel economy and other critical supply chain costs.

Marketing Strategy

Retail Automotive: The company’s integrated marketing strategy empowers each dealership to capitalize on local branding while being supported by corporate programs and web presence, allowing it to leverage scale and its parent brand recognition. The company aligns itself with the marketing implemented by its vehicle manufacturer partners for their respective brands and integrate those initiatives and resources across the brands it represents. The company’s marketing strategy reflects a data-driven approach that combines key metrics and trends from industry and consumer studies, its customer relationship management systems, and performance data from its businesses.

Retail Commercial Truck Dealership and Commercial Vehicle Distribution and Other: The company markets commercial trucks in the U.S. and Canada and commercial vehicles and other products in Australia and New Zealand, principally through a network of dealership and service locations supported by corporate level marketing efforts. The company’s digital marketing leverages manufacturer websites supplemented by brand specific websites to promote its brands and services. The company also employs local sponsorships to generate brand awareness in its markets and market to customers at various trade shows and other industry events.

Agreements with Vehicle and Equipment Manufacturers

The company operates its new vehicle dealerships under separate agreements with the manufacturers or distributors of each brand of vehicle sold at that dealership. These agreements are typical throughout the industry and may contain provisions and standards governing almost every aspect of the dealership, including ownership, management, personnel, training, maintenance of a minimum of working capital, net worth requirements, maintenance of minimum lines of credit, advertising and marketing activities, facilities, signs, products and services, maintenance of minimum amounts of insurance, achievement of minimum customer service standards, and monthly financial reporting. In addition, the General Manager and/or the owner of a dealership typically cannot be changed without the manufacturer's consent. In exchange for complying with these provisions and standards, the company is granted the non-exclusive right to sell the manufacturer's or distributor's brand of vehicles and related parts and warranty services at its dealerships. The agreements also grant the company a non-exclusive license to use each manufacturer's trademarks, service marks, and designs in connection with its sales and service of its brand at its dealership.

Many of these agreements also grant the manufacturer or distributor a security interest in the vehicles and/or parts sold by them to the dealership, as well as other dealership assets and permit them to terminate or not renew the agreement for a variety of causes, including failure to adequately operate the dealership, insolvency or bankruptcy, impairment of the dealer's reputation or financial standing, changes in the dealership's management, owners, or location without consent, sales of the dealership's assets without consent, failure to maintain adequate working capital or floor plan financing, changes in the dealership's financial or other condition, failure to submit required information to them on a timely basis, failure to have any permit or license necessary to operate the dealership, and material breaches of other provisions of the agreement. In the U.S., these termination rights are subject to state franchise laws that limit a manufacturer's right to terminate a franchise. In the U.K., the company operates without such local franchise law protection.

In the U.S., some of the company’s franchise agreements, including those with BMW, Honda, and Toyota, expire after a specified period of time ranging from one to six years. The company expects the manufacturers to renew all of its the U.S. franchise agreements as they expire. In the U.K., many of the company’s agreements have two-year rolling terms. The company’s agreements with BMW, its largest U.K. manufacturer, expire in December 2025.

With respect to its commercial vehicle distribution and other operations in Australia and New Zealand, the company is party to distributor agreements with each manufacturer of products it distributes pursuant to which it is the distributor of these products in those countries and nearby markets. The agreements govern all aspects of the company’s distribution rights, including sales and service activities, service and warranty terms, use of intellectual property, promotion and advertising provisions, pricing and payment terms, and indemnification requirements. The agreement with Western Star expires in 2031, the agreement with MTU expires in 2029, and the agreement with Detroit Diesel expires in 2031. The company is party to shipping agreements with respect to importing those products.

Regulation

In the U.K., the Financial Conduct Authority (the FCA) regulates financial services firms and financial markets, including the company’s activities in acting as broker for the financing of vehicle sales.

Competition

In its retail commercial truck dealership operations, the company competes with other manufacturers and retailers of medium- and heavy-duty trucks, such as Ford, International Kenworth, Mack, Peterbilt, and Volvo.

History

Penske Automotive Group, Inc. was incorporated in the state of Delaware in 1990.