Penske Automotive Reports 2008 Third Quarter Results

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BLOOMFIELD HILLS, Mich. October 30, 3008: Penske Automotive Group, Inc. , an international automotive retailer, today reported third quarter 2008 adjusted income from continuing operations of $27.9 million, or $0.30 per share, compared to income from continuing operations of $42.9 million, or $0.45 per share, in the third quarter last year. Adjusted third quarter 2008 earnings exclude an aggregate of $2.7 million ($0.03 per share) of after-tax severance costs, costs associated with the termination of an acquisition agreement, and insurance deductibles relating to damage sustained at the Company’s dealerships in the Houston market during Hurricane Ike. Including these items, actual third quarter income from continuing operations was $25.1 million, or $0.27 per share. Net income in the third quarter was $24.2 million, or $0.26 per share, compared with net income of $43.4 million, or $0.46 per share, in the prior year.

Third quarter revenues were $3.0 billion, which compare to $3.4 billion in the prior year. Same-store retail revenues decreased 17.0%, as same-store unit sales of new vehicles fell 19.3% during the quarter. “Obviously, it was a difficult quarter for auto retailers in our markets,” said Penske Automotive Group Chairman Roger Penske. “We experienced a rapid decline in consumer interest for new vehicles in both the United States and the United Kingdom. We believe the challenges in our markets relate mainly to consumer confidence, not credit availability. In fact, the Company’s largest captive finance partners are responsible for funding more than 75% of the vehicles financed at our dealerships in the United States and remain committed to the needs of our customers.”

During the third quarter, adjusted selling, general and administrative expenses increased to 82.5% as a percentage of gross profit, due in part to the decline in vehicle sales during the period. Penske continued, “In an effort to address the impact of these challenging market conditions, we took steps during the third quarter to better align variable expenses with current business levels. These actions included a 4.3% reduction in worldwide employment levels, resulting in an estimated $24.0 million reduction in annualized personnel expense. We continue to evaluate staffing levels and other selling, general and administrative expenses, and are making further reductions as warranted by market conditions.”

For the nine months ended September 30, 2008, revenues were $9.6 billion, which compare to $9.8 billion in the prior year. Adjusted income from continuing operations for the nine months was $102.3 million, or $1.09 per share, compared to adjusted income from continuing operations of $112.0 million, or $1.18 per share, in the prior year. Adjusted 2008 earnings exclude the severance, transaction termination costs and deductibles outlined above, and adjusted 2007 earnings exclude $12.3 million ($0.13 per share) of after-tax costs relating to the redemption of the Company’s 9.625% Senior Subordinated Notes in March of 2007. Actual income from continuing operations and net income for the nine months ended September 30, 2008, were $99.6 million, or $1.06 per share, and $98.0 million, or $1.04 per share, respectively.

During the third quarter, the Company utilized $50 million of its previously announced share buyback authority. In total, the Company repurchased 3,565,143 shares of its common stock at an average price of $14.04 per share, and currently has approximately 91.9 million shares outstanding. The Company has an additional $100 million of repurchase capacity outstanding under that program.

smartUSA

Commenting on smartUSA, Penske said, “During the third quarter, our distribution business continued to perform well, despite the difficult retail market conditions. The Company wholesaled 6,683 units in the quarter, bringing our total wholesale deliveries to 19,329 for the first nine months. During the quarter, smartUSA also appointed three additional retail centers, bringing the total number of retail centers to 73.”

During October, the smart fortwo was recognized as the most fuel efficient, non-hybrid, all gas powered vehicle in the United States according to the U.S. Environmental Protection Agency’s 2009 Fuel Economy Guide. The 2009 smart fortwo achieves an average of 41 miles per gallon on the highway, already exceeds the 2020 Corporate Average Fuel Economy (CAFE) standards, and is classified as an Ultra-Low Emissions Vehicle by the California Air Resources Board (CARB). The 2009 smart fortwo is expected to begin arriving at dealerships in November.

Consistent with recent practice, the Company is not providing quarterly earnings guidance for the upcoming quarter, and is therefore withdrawing previously issued guidance relating to the full year. It is the Company’s current intention to provide annual earnings guidance for 2009 at a later date.

Penske Automotive will host a conference call discussing financial results relating to the third quarter of 2008 on October 30, 2008, at 2:00 p.m. EDT. To listen to the conference call, participants must dial (866) 205-3921 [International, please dial (612) 332-0923]. The call will be simultaneously broadcast over the Internet through the Penske Automotive Group website at PENSKE AUTO.