Executive Summary

Mixed but resilient quarter: revenue up 1.4% to $7.70B while EPS fell to $3.23 as freight weakness (Premier Truck Group), a UK OEM cyber incident (JLR), higher UK social program costs, and a higher tax rate trimmed profitability; EBT was $292M .
Core retail auto operations were healthy: same‑store revenue +5% and record service & parts revenue of $818.3M with a 110 bps gross margin expansion, partially offset by UK/JLR disruptions and BEV mix headwinds in the U.S. .
Versus S&P Global consensus, revenue was essentially in line ($7.70B vs $7.72B*), but EPS missed ($3.23 vs $3.40*) and EBITDA lagged ($357M vs $371M*); the estimated total Q3 headwind was ~$23M EBT (≈$0.25 per share) as detailed by management .
Capital returns and balance sheet remained supportive: dividend raised 4.5% to $1.38 (20th straight increase), $1.9B liquidity, leverage at 1.0x, and 1.09M shares repurchased YTD through Oct 24; $262.3M remains on buyback authorization .

Values marked with * are from S&P Global consensus estimates.

What Went Well and What Went Wrong

What Went Well
- Record retail auto service & parts revenue ($818.3M) with gross margin +110 bps; U.S. fixed absorption +380 bps; same‑store retail auto revenue +5% and gross profit +3% .
- U.S. retail auto held up: same‑store new units +9% in the U.S., with strong Lexus and stable premium demand; management improved inventory days and maintained pricing discipline in key brands .
- Balance sheet/capital allocation: repaid $550M notes, leverage to 1.0x, $1.9B liquidity; dividend increased to $1.38; 1,086,560 shares repurchased through Oct 24 .
What Went Wrong
- Freight recession compressed Premier Truck Group: same‑store unit sales −19% YoY; EBITDA −$15M YoY in Q3, service & parts −3% YoY; segment EBT fell to $41.5M (from $56.5M) .
- UK headwinds: JLR cyber incident constrained September deliveries and service; higher government social program costs raised SG&A; combined UK items reduced EBITDA by ~$5M .
- BEV mix diluted new‑vehicle GPU in the U.S. (average ~$7,100 discount below MSRP) and broader BEV mix reduced per‑unit new gross by ~ $100; total Q3 EBT impact from all items ≈$23M .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025	Q3 2025 Consensus
Revenue ($USD Millions)	$7,590.8	$7,662.3	$7,695.3	$7,718.7*
Diluted EPS ($)	$3.39	$3.78	$3.23	$3.40*
Gross Margin (%)	16.4%	16.9%	16.2%	—
Operating Margin (%)	4.2%	4.5%	3.9%	—
EBT Margin (%)	4.0%	4.4%	3.8%	—
EBITDA ($USD Millions)	$367.9	$400.6	$357.1	$371.2*

Values marked with * are from S&P Global (S&P Global Market Intelligence/Capital IQ). EPS/revenue/EBITDA consensus and # of estimates retrieved from S&P Global.

Segment revenue and gross profit

Revenue ($USD Millions)

Segment	Q3 2024	Q3 2025
Retail Automotive	$6,340.7	$6,570.1
Retail Commercial Truck	$1,063.3	$918.6
Commercial Vehicle Distribution & Other	$186.8	$206.6
Total	$7,590.8	$7,695.3

Gross Profit ($USD Millions)

Segment	Q3 2024	Q3 2025
Retail Automotive	$1,041.5	$1,066.3
Retail Commercial Truck	$157.1	$136.3
Commercial Vehicle Distribution & Other	$44.6	$46.5
Total	$1,243.2	$1,249.1

Key operating KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Retail Auto – New Units	49,523	47,546	48,809
Retail Auto – Used Units	57,738	54,999	54,708
Retail Auto – Total Units	107,261	102,545	103,517
Service & Parts Revenue ($M, Retail Auto)	$778.0	$816.6	$818.3
Service & Parts Gross Margin (Retail Auto)	57.8%	58.9%	58.9%
New GPU (ex‑agency, $/veh)	$5,072	$5,443	$4,726
Used GPU ($/veh)	$1,882	$2,326	$2,112
Equity in Earnings of Affiliates ($M)	$60.7	$53.6	$58.4
Premier Truck Group EBT ($M)	$56.5	—	$41.5

Additional context: Management cited total Q3 EBT headwinds of ~$23M (JLR cyber, UK social costs, freight/PTG, PTS bad debt) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend	Payable Dec 2, 2025	$1.32 (Q2 declaration)	$1.38 (20th consecutive increase)	Raised
Share Repurchase Authorization Remaining	As of Jun 30, 2025	$295.7M	$262.3M as of Oct 24, 2025	Updated (lower balance)
Cash Tax Benefit from PTS Bonus Depreciation	2025–2027	~$150M/year expected	~$125–$150M/year expected	Maintained (range clarified)
M&A Pipeline (Acquired Revenue)	Q4 2025	Target to acquire ~$1.5B revenue in 2025	Pipeline >$1.5B in Q4; “expect to meet” acquired revenue target	Maintained

Note: PAG does not provide formal revenue/EPS/margin/tax-rate guidance in the Q3 package; management commentary focuses on capital allocation, M&A pipeline, and macro sensitivities .

Earnings Call Themes & Trends

Topic	Q1 2025 (4/30)	Q2 2025 (7/30)	Q3 2025 (10/29)	Trend
Service & parts strength	Same‑store S&P +4% U.S.; record fixed ops; U.S. fixed absorption +310 bps	Same‑store S&P +7% U.S.; margin +50 bps; technician base +2%	Record S&P revenue $818.3M; U.S. fixed absorption +380 bps	Improving
Freight/commercial trucks	PTG outperformed market in Q1; used GPU >$7.5K; freight still weak	PTG units +2% total; backlog ~90K; some tariff pull-forward	Same‑store PTG units −19%; EBITDA −$15M; service & parts −3%	Deteriorated
BEV dynamics & pricing	BEV inventories improving but discounts >$7,400; GPU dilution vs ICE	BEV discounting ~2x ICE incentives; active inventory balancing	BEV mix >10% of U.S. new sales; ~$7,100 avg discount; ~−$100 to new GPU	Mixed (dilutive to GPU)
UK operations (Sytner Select/JLR)	Sytner Select improved used GPU; better inventory discipline	Realignment still drags units but boosts used GPU; macro remains tough	JLR cyber incident reduced deliveries/service; UK social cost increase	Deteriorated ST
AI/tech in operations	Scaling service tools; digital scheduling benefits cited	Continued digital efficiency and shop load improvements	Using AI in service scheduling/reception; higher effective labor rate	Improving
Australia energy solutions	Backlog ~$300–$350M; data center demand growing	Backlog ~$350M; path to $1B revenue by 2030	Energy solutions seen as $1B by 2030; strong growth reiterated	Improving
Tariffs/macro	Monitoring; premium leasing as mitigant	Some Q2 pull-forward; OEMs clarified pricing through Q2/Q3	Freight tariffs and EPA 2027 uncertainty weighed on demand	Mixed

Management Commentary

“Overall, I am pleased with our performance during the third quarter… increased retail automotive service and parts revenue to a quarterly record of $818.3 million… However, overall profitability… was impacted by continued weakness in the North American freight market… challenges in the U.K. auto retail market from a cyber security incident at one of our OEM partners… higher tax rate. As a result, third quarter earnings before taxes was negatively impacted by approximately $23 million.” — Roger Penske .
“We estimate the higher percentage of BEVs sold during the quarter reduced total new vehicle gross per unit by approximately $100.” — Roger Penske .
“We’re using AI in our service scheduling and reception answering… effective labor rate… up 4% or almost $7 per hour.” — Rich Shearing .
“Premier Truck Group… EBITDA declined $15 million… as the prolonged recessionary freight environment impacted orders… and fixed operations.” — Rich Shearing .
“We increased our dividend by 4.5% to $1.38… 20th consecutive quarterly increase… leverage declined to 1.0x… repaid $550 million of senior subordinated notes.” — Shelley Hulgrave .

Q&A Highlights

Freight cycle and PTG recovery: Freight rates appear to have bottomed but capacity remains elevated; regulatory enforcement on CDL holders and potential rate relief/housing could tighten capacity; PTG fixed coverage remains strong at 122% .
Luxury GPU and BEV mix: New GPU was pressured sequentially by BEV mix and JLR disruptions; removing those effects would place new GPU “just under $5,000,” comparable to Q1; brand-by-brand dynamics in Q4 (e.g., Lexus vs BMW comps) .
Data center opportunity: Australia energy solutions business tied to data center power is growing fast; U.S. replication harder due to distribution structure, but relationship with supplier remains strong .
“One big beautiful bill” tax depreciation: Expected cash tax benefit of ~$125–$150M per year over next three years via PTS CapEx; impact shows in cash flow (deferred taxes) not tax rate .
Chinese-brand strategy/Sytner Select: Piloting Chery and Geely in U.K. Sytner Select locations with minimal capex; initial used GPU uplift in U.K. tied to Sytner Select discipline .

Estimates Context

Metric (Q3 2025)	Actual	S&P Global Consensus*	Delta
Revenue ($USD Millions)	$7,695.3	$7,718.7*	−$23.4
EPS ($)	$3.23	$3.40*	−$0.17
EBITDA ($USD Millions)	$357.1	$371.2*	−$14.1

Values marked with * are from S&P Global (S&P Global Market Intelligence/Capital IQ). PAG does not provide formal guidance ranges; estimate adjustments will likely reflect freight/UK timing headwinds, continued S&P strength, and BEV mix normalization .

Key Takeaways for Investors

Core dealership engine is intact: same‑store retail auto revenue +5% and record service & parts with margin expansion offset freight and UK one‑offs; fixed absorption and AI‑enabled service efficiencies support resilient gross profit .
Short‑term headwinds are identifiable and quantified: management attributed ~$23M EBT hit to discrete items (freight, JLR cyber, UK social costs, PTS bad debt); these are more cyclical/timing than structural .
Commercial trucks likely remain a drag near term, but setup improves into 2026: PTG tracked industry declines; watch Class 8 order trends, EPA 2027 developments, and tariff policy; service & parts down modestly with lower miles driven .
BEV mix management and inventory discipline should stabilize variable gross: OEMs are rebalancing BEV wholesales; PAG is prioritizing ICE/hybrid mix in some brands and managing BEV discounts .
Capital return remains robust and well‑covered: dividend raised to $1.38 (fwd yield ~3%+) with leverage at 1.0x, $1.9B liquidity, ongoing buybacks ($262.3M remaining) .
M&A pipeline active into Q4: >$1.5B revenue pipeline expected to close; tuck‑ins (e.g., Modena Ferrari) deepen brand relationships; inorganic growth should supplement organic S&P strength .
Watch catalysts: resolution of JLR supply normalization post‑cyber, freight cycle stabilization (orders/backlog), holiday luxury incentives/pricing, and any tariff/regulatory clarity affecting 2026 truck pre‑buy .

Sources:

Q3 2025 8‑K and press release exhibit (financials, segments, KPIs, capital allocation): .
Q3 2025 earnings call (themes, quant headwinds, operational detail): .
Q2 2025 press release/earnings call (trend comps): .
Q1 2025 earnings call (trend comps): .
Dividend increase release (Q3): .

S&P Global estimates: Revenue/EPS/EBITDA consensus and # of estimates retrieved from S&P Global (S&P Global Market Intelligence/Capital IQ).*

PENSKE AUTOMOTIVE GROUP, INC. (PAG)·Q3 2025 Earnings Summary