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Penske Automotive Group SWOT & PESTLE Analysis

ID : 52556953| Dec 2019| 15 pages

COMPANY PROFILE -Penske Automotive Group

Business Sector :Automotive Retailing

Operating Geography :U.S, U.K, Germany, Italy, Spain, Japan, Canada, Australia, New Zealand, the Pacific

About Penske Automotive Group :

Penske Automotive Group founded on December 6, 1990, is an international transportation service company. The company is headquartered in Bloomfield Hills, Michigan. The organization works in Automotive and Commercial truck dealership principally in the US, Canada, and Western Europe and distributes business vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. The Company operates through four segments: Retail Automotive, Retail Commercial Truck, Non-Automotive investments, and others. The Company is also involved in the sales of new and used motor vehicles of approximately 40 brands, besides offering vehicle maintenance and repair services. It also engages in the sale and placement of third-party finance and insurance products, third-party extended service contracts, and replacement and aftermarket automotive products. The company features in the Fortune 500 list and employs more than 27000 people worldwide as of 2019. In 2019, the Company was honoured as one of the “World’s Most Admired Companies” by Fortune Magazine.

Penske Automotive Group Revenue :

$ 22.8 Billion – FY ending 31st Dec 2018

Competitive Analysis of Penske Automotive Group

The SWOT analysis for Penske Automotive Group is presented below:
1. Robust Retail Automotive Dealership
2. Key Acquisitions and dispositions across three year span fuelling tremendous growth
3. Strong and smart distribution network
4. Exclusive importer and distributor of certain brands of heavy duty vehicles across Australia, New Zealand and parts of the Pacific
1. There is weak demand for new automobiles
2. Markets in Asia and Africa remain unexplored
1. Sales of vehicles will be increased after removal of several government restrictions
2. The stand-alone supercenters are expected to grow
3. Increasing urbanization and building of smart cities will boost demand for connected cars
1. Macroeconomic conditions
2. The individual reputation of the sold brands
3. Adversities impacting any significant automotive manufacturer or supplier
4. PAG’s business is subject to risk due to property loss, business interruption, and other liabilities
5. Increasing dependence on third-party licensed Information Technology
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Detailed SWOT Analysis of Penske Automotive Group



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1. Sales of vehicles will be increased after removal of several government restrictions: Presently federal and state governments have placed several restrictions and limitation on vehicles sale in the markets in order to combat environmental effects. For examples, in U.S automotive manufacturers are subject to federally mandated corporate average fuel economy standards. Furthermore, numerous states and other jurisdictions, including California, have adopted or are considering regulations requiring the sale of specified numbers of zero-emission vehicles. Removal of such standards will improve the sales of vehicles in old markets and in turn will introduce many opportunities to grow in new markets. Moreover, several countries, including the U.K. and Germany, have announced or are considering plans to ban or restrict the sale of diesel or combustible fuel vehicles. Significant increases in fuel economy requirements and new federal or state restrictions on emissions on vehicles and fuels could adversely affect prices of and demand for the new vehicles that they sell, which could materially adversely affect them. In September 2018, new fuel economy testing and Co2 emissions legislation known as “Worldwide Harmonized Light Vehicle Testing Procedure” (WLTP) was implemented and required all vehicles sold in the United Kingdom and Europe to comply with new fuel economy testing and Co2 emissions standards. Compliance with the new rules has proven to be challenging for certain manufacturers, resulting in a shortage of product availability. Increased tariffs, import product restrictions, and foreign trade risks that may impair our ability to sell foreign vehicles profitably, including any eventual tariffs, resulting from the threats from the Trump Administration to add 25% tariffs on foreign vehicles or parts. This will be a great opportunity for the company to go into electrify their vehicle offerings. They can sell electric and hybrid/gas vehicles more through their franchised dealership. The relaxation of this rules will come when the sales of electrify and battery operated cars will be more, which ultimately help Penske to enter into an improvised new technology business and earn more revenue. Also the relaxation of the rules depends upon the government ruling over that country, as soon as the government changes rules and policy changes. For e.g. Trump’s EPA is fighting California over a fuel economy rule, so the results of this case will decide the fate of the companies like Penske Automotive in California.

2. The stand-alone supercenters are expected to grow: The Company operates in 14 supercenters, five in the U.S and nine in U.K plus one reconditioning center in U.K. In 2018, PAG retail to nearly 70,000 vehicles through the supercenters and generated approximately $1.2 billion in revenue. The company is expected to grow the stand-alone used business through a mix of e-commerce and new market presentation. The company is developing four new stand-alone sites, which are expected to be open in the latter half of 2019. This will help in spreading their business and generating more revenue.

3. Increasing urbanization and building of smart cities will boost demand for connected cars: Penske Truck Leasing has entered a coalition of industry leaders to educate and assure the public about automated cars. The techniques are not just complete autonomy — what industry leaders call "level 5" autonomy — but a variety of alternatives including driver support software. Penske Automated has started selling smart cars from 2008 only. Penske, who runs retail outlets of most U.S. and UK brands, scheduled to add a second Smart model, a bigger hatchback constructed by Nissan, but Daimler AG said its Mercedes-Benz USA subsidiary intends to take over the U.S. distribution and marketing of the Smart mini vehicle brand from the Penske Automotive Group Inc. dealership chain. Smart for two sales jumped an impressive 63 percent this year in the U.S. Till April 2019 Smart operated under the Mercedes-Benz Cars division of Daimler AG, offering the for two coupe, for two cabrio and for four hatchback. In 2019 Daimler announced a new production plant that will be built in China with the support from Geely and will start production of next-generation Smart Cars in 2022. But Penske Automotive wanted to enter into this market again and this is the best time due to urbanization and building of smart cities. Penske had tried to spread the vehicles through a 77-dealer network, but the sales of the only model of Smart USA, the two-seater for two, continued to slow down. Spain's worldwide sector leaders addressed future transport alternatives in a smart city at the latest Smart Mobility Congress in Barcelona. In just a few years, the use of linked sensors, big data, mobile apps, and mobile payments can make transport much more effective and meaningful. Cities are getting smarter every day. Municipalities are increasingly using information and communication technologies (ICT) to enrich and enhance city life, which is paramount in planning the cities of the future. The rapid growth and expansion of the Internet of Things (IoT) result in a fundamental impact on the development of smart cities and their mobility options. A broad range of apps, services, and techniques can connect a car to other cars (V2V), infrastructure and environment. A connected vehicle involves the communication equipment that can be integrated or a mobile in the car that allows in-car connectivity to other machines in the same car. Hence, for PAG this will be a huge opportunity now and in the future.


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Check Out Analysis of Other Relevant Companies

References used in Penske Automotive Group Analysis Report

1. Penske Annual Report 2017 -

2. Penske Earnings Report 2018 -

3. Penske Company Website -

4. Penske Automotive Reports Record Results -

5. Company Overview of Penske Automotive Group -

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Penske Automotive Group SWOT and PESTLE analysis has been conducted by Suparna Chakraborty and reviewed by senior analysts from Barakaat Consulting.

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