Penske Automotive Group is buying another used-car retailer in the U.K., a move the group’s chairman says “almost doubles” its standalone pre-owned store business in the country.
The dealer group said Tuesday it has signed a deal to purchase The Car People, a used-car retailer with four large-scale locations that sell a combined total of approximately 18,000 units per year.
The Car People launched in 2000 and has stores in Wakefield, Sheffield, Manchester and Warrington, Penske said.
“I am excited to be joining forces with the team at The Car People, a great business that operates under a similar model to our own,” Penske Automotive Group chairman Roger Penske said in a news release.
“The acquisition of The Car People strengthens the company’s market position in our second largest market, almost doubles the size of our U.K.-based Used Car Supermarket business, and continues to further our diversification strategy within the transportation services industry,” he said.
The purchase, which is subject to certain conditions, will likely close in the first quarter. The dealer group estimates The Car People will bring in about $300 million in annualized revenue, and estimates annualized accretion from the deal at $0.05 to $0.07 per share.
This follows a similar move Penske made in early January, when it announced an agreement to buy CarShop, a U.K. chain of five standalone used-car retail stores. That acquisition was completed in February.
“The acquisition of The Car People enables us to accelerate the expansion of our Used Car Supermarket Division and reinforces our commitment to significantly grow our used-car business,” said Darren Edwards, chief executive of Penske’s U.K. operations.
“Combined with the acquisition of CarShop earlier this year, this new acquisition will provide for potential significant operational synergies within this part of our business,” he said.
Stateside, Penske announced a deal last December to buy U.S.-based used-car retailer CarSense, closing that acquisition in January.
Both moves from earlier this year appear to be bearing fruit for the company.
In the third quarter, Penske Automotive’s CarSense and CarShop standalone used-car business lines retailed a combined 11,626 units, according to company earnings.
Year-to-date, which includes results since acquisition, the standalone platforms had retailed 30,952 used units through three quarters.
Quarterly revenue from the standalone stores in Q3 approached $200 million, while year-to-date revenue was at $535.7 million.
Gross profit per unit retail was at $1,152 in the quarter, with the year-to-date figure at $1,222.
F&I gross profit per unit on these sales were $1,188 in Q3 and $1,182 year-to-date through Q3, putting the total variable gross profit per unit at $2,340 and $2,404, respectively.
During the Q&A portion of Penske’s quarterly earnings call in October, Roger Penske was asked if his viewpoint on CarShop and CarSense had changed since the dealer group purchased the respective used-car standalone retailers.
“Yeah, it’s changed. I like it more,” Penske said with a laugh.
“I think we’re very fortunate to get into this business,” he said. “The technology, the people. We’ve had no turnover with senior management. Both of these businesses, I think they applaud the fact we’ve come in with capital, with ideas, with an expansion mode offense.”
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