Penske Revenue Growth Accelerates as Margins Keep Slipping
Penske Automotive Group delivered its strongest same-store sales growth in a year even as operating income fell 7.6% and a take-private approach from its own founder surfaced for the first time.
Penske Automotive Group (PAG), the dealership and commercial-truck-leasing operator, reported revenue of $8.5 billion for the second quarter of 2026, up 6% from $8.0 billion a year earlier and a sharp acceleration from the roughly flat $7.9 billion posted in the first quarter. Net income attributable to common stockholders fell 2.3% to $260.4 million, or $3.96 a share, from $266.6 million, or $4.03 a share, a year ago.
The quarter marked a turn in trajectory rather than a full recovery. Total new and used vehicle deliveries rose 5% to 125,401 units, reversing first-quarter declines in both new (-5%) and used (-1%) volumes, and same-store retail automotive revenue growth jumped to 6% from just 1% in the first quarter and roughly flat in the fourth quarter of 2025. The profit decline itself has been narrowing for three straight quarters, from a 25% drop in the fourth quarter of 2025 to a 9% drop in the first quarter of 2026 to the 2.3% decline reported now.
Beneath the top-line recovery, margin pressure persisted. Total retail automotive gross margin compressed 110 basis points to 15.8%, new-vehicle gross margin fell 100 basis points to 8.6%, and used-vehicle gross margin fell 80 basis points to 5.0%. Operating income fell 7.6% to $337.6 million and operating margin declined to 4.0% of revenue from 4.5%, even as SG&A held roughly flat as a share of revenue at 11.4%; measured against gross profit, SG&A worsened to 71.8% from 69.8%, evidence that cost discipline is not keeping pace with thinner vehicle-sale economics. Service and parts stood apart, with same-store gross margin extending a multi-quarter climb to 59.5%, up 80 basis points from a year earlier.
The commercial-truck business showed a similar split between volume and profit. Retail commercial truck deliveries returned to growth, up 1.7% to 5,431 units after a 24% decline in the first quarter, and North American Class 8 order growth accelerated to 118% year-over-year for the first half of 2026 from 91% reported for the first quarter alone, a signal that the freight recession that depressed 2025 orders is easing. Income before taxes from the commercial-truck segment still fell 13% to $47.2 million from $54.2 million, as deliveries reflected orders placed during last year's downturn. Penske Transportation Solutions, the company's truck-leasing joint venture, contributed equity earnings of $57.4 million, up 7% year-over-year on leasing growth and better fleet utilization, partly offset by rental-market weakness.
Acquisitions also flowed through the results for the first time. The February 2026 purchase of Lexus of Orlando and Lexus of Winter Park, with roughly $450 million in estimated annualized revenue, was the sixth dealership deal completed over the trailing nine months, adding an estimated $2 billion in annualized revenue in aggregate. EBITDA rose to $432.3 million from $418.2 million, but Adjusted EBITDA was essentially flat at $401.8 million versus $400.6 million, with the gap reflecting a gain on a dealership sale.
Penske raised its quarterly dividend 1.4%, or two cents, to $1.44 a share in July, the 23rd consecutive quarterly increase and consistent with the similar raise announced alongside fourth-quarter results. The company's leverage ratio climbed to 1.7 times at quarter-end from 1.0 times at the end of the third quarter of 2025, reflecting the pace of acquisition activity.
The company disclosed for the first time an unsolicited, preliminary and non-binding proposal from Penske Corporation and Mitsui & Co. to take the company private, a new risk factor that had not appeared in prior-quarter filings.