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January 2008

January 2008. $13 Billion Revenue. Our Business Strategy. smart Distribution. International Retail. United States Retail. Geographic Diversity. World Class Facilities. People Process Initiative. Customer & Employee Satisfaction. Best in Class Brand Mix.

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January 2008

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  1. January 2008

  2. $13 Billion Revenue Our Business Strategy smart Distribution International Retail United States Retail

  3. Geographic Diversity World Class Facilities People Process Initiative Customer & Employee Satisfaction Best in Class Brand Mix Create Shareholder Value What is Penske Automotive?

  4. Overview • 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

  5. +14% CAGR Retail Unit Volume (In Thousands) Increasing Units in Operation 300 272 242 218 197 195 183 168 167 149 136 135 117 105 97 89 75 69 62 51 39

  6. YTD Worldwide Revenue Mix (9M ’07) 66% 5% 29% High Line Volume Foreign Domestic

  7. United States 155 Franchises Puerto Rico 15 Franchises U.S. Revenue Mix 49% 7% 44% High Line Volume Foreign Domestic

  8. U.K. 135 Franchises Germany 10 Franchises 4 Joint Ventures Mexico 3 Franchises 1Joint Venture Intl. Revenue Mix 4% 94% 2% High Line Volume Foreign Domestic

  9. 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

  10. Service & Parts Drives Gross Profit (9M ‘07) Used 13% Used 24% F&I 15% New 55% New 31% F&I 2% S&P 11% S&P 41% W&F 8% Revenue Mix Gross Profit Contribution

  11. INDUSTRY CHALLENGES

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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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