PENSKE AUTOMOTIVE GROUP, INC.

Previous wording

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, along with our other periodic reports filed with the Securities and Exchange Commission, which could materially affect our business, financial condition, or future results. The following disclosure further updates the risk factors included in our 2024 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025:

Current wording

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, along with our other periodic reports filed with the Securities and Exchange Commission, which could materially affect our business, financial condition, or future results. The following disclosure further updates the risk factors included in our 2025 Annual Report on Form 10-K:

Previous wording

Our financing activities with customers are subject to truth-in-lending, consumer leasing, equal credit opportunity, and similar regulations as well as motor vehicle finance laws, installment finance laws, insurance laws, usury laws, and other installment sales laws. In the U.K., the Financial Conduct Authority (the "FCA") regulates financial services firms and financial markets, including our activities in acting as broker of vehicle financing. The FCA is currently consulting on an industry-wide compensation scheme. This follows the FCA’s review of the vehicle finance industry concerning certain practices which, in the FCA’s determination, may have been unfair to customers, including with respect to vehicle financing commission disclosures. The FCA’s proposed redress scheme provides that lenders must compensate customers whose financing arrangements are deemed unfair because they involved a discretionary commission arrangement, the commissions paid to dealers were too high, or there was an undisclosed exclusivity or similar arrangement between the lender and broker. This new proposed redress scheme remains subject to comment by industry participants and is expected to be implemented in 2026.

Current wording

Our financing activities with customers are subject to truth-in-lending, consumer leasing, equal credit opportunity, and similar regulations as well as motor vehicle finance laws, installment finance laws, insurance laws, usury laws, and other installment sales laws. In the U.K., the Financial Conduct Authority (the "FCA") regulates financial services firms and financial markets, including our activities in acting as broker of vehicle financing. The FCA has reviewed the vehicle finance industry concerning certain practices which, in the FCA’s determination, may have been unfair to customers, including with respect to vehicle financing commission disclosures. On March 30, 2026, the FCA issued its final industry-wide motor finance consumer redress program of action (the “Program”) requiring lenders to compensate customers whose financing arrangements are deemed unfair because they involved an undisclosed discretionary commission arrangement, undisclosed high levels of commission paid to dealers, or an undisclosed exclusivity or similar arrangement between the lender and broker, in each case subject to exceptions. Under the Program, lenders bear primary responsibility for identifying affected customers, assessing potential liability, and administering and paying redress to customers. Dealers who acted as brokers are required to support lenders by providing relevant documentation and information necessary for lenders to implement the Program. Although the Program is subject to potential legal challenges, implementation is set to begin June 30, 2026, and by the FCA’s estimate, is expected to result in £9.1 billion in total costs for lenders. We will be subject to administrative obligations in connection with the Program, and it is possible that lenders could seek to recover or directly or indirectly offset all or a portion of their redress obligations under the Program from dealers, including under existing dealer-lender agreements, through increased reserve requirements, or by reducing or eliminating future commissions payable to dealers. As a result, the Program could materially and adversely affect our business and results of operations.

Previous wording

It remains difficult to assess how the Automotive Tariffs, Truck Tariffs, other recently announced tariffs, and non-tariff trade barriers will affect our business and results of operations, although these tariffs, if sustained in their current or similar forms, are expected to broadly impact the automotive and transportation industry and supply chain and will affect a substantial portion of the retail automotive and commercial truck vehicles and parts we sell, particularly as many of our key manufacturing partners, including Daimler Trucks North America LLC in its production of Freightliner trucks, produce and assemble certain vehicles and parts outside of the U.S., some of which include imported components. Although tariffs will affect each manufacturer and vehicle model differently, the Automotive Tariffs, Truck Tariffs, and other existing or subsequently announced tariffs affecting the automotive or transportation industry are likely to increase our cost of acquiring vehicles, trucks and parts, as well as our inventory carrying costs. This may lead to increased prices for consumers, which may decrease consumer demand and negatively impact revenue and gross profit with respect to the sale of new vehicles and parts, particularly in light of the prolonged recessionary freight rate environment.

Current wording

Tariff and trade risk. During 2025 and continuing into 2026, the U.S. enacted various tariffs on automobiles, automobile parts, and medium- and heavy-duty trucks and related parts which have impacted certain of our automotive and commercial vehicle suppliers, as well as our and PTS' operations. These tariffs have impacted the retail price of vehicles sold by us and used in the operations of PTS. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized under that statute, although the ruling did not disturb other previously enacted tariffs. Developments regarding U.S. trade policy and the applicability and impact of tariffs on vehicles, trucks and parts we sell remain fluid. It also remains difficult to assess how these tariffs will affect our business and results of operations, particularly as each manufacturer has responded differently to the impact of tariffs with some increasing retail prices and some absorbing more of the tariff cost. Moreover, many manufacturers have announced plans to relocate production to the U.S. to mitigate the impact of the tariffs, although the timelines and implementation of such relocation plans remains uncertain. Existing or subsequently announced tariffs affecting the automotive or transportation industry may increase our cost of acquiring vehicles, trucks and parts, as well as our inventory carrying costs. This may lead to increased prices for consumers, which may decrease consumer demand and negatively impact revenue and gross profit with respect to the sale of new vehicles, trucks and related parts, particularly in light of the prolonged recessionary freight rate environment.

Previous wording

In October 2025, the Dutch government invoked emergency powers to seize control of Nexperia, a subsidiary of a Chinese company and an important supplier of basic chips used in vehicles, prompting the Chinese government to ban exports of the company's finished products. The Alliance for Automotive Innovation reported that OEMs could experience significant production delays if Nexperia does not resume shipments. Should this situation not be resolved, we could experience delays in acquiring vehicles or parts or experience other events which could materially and adversely affect us.

Current wording

In October 2025, the Dutch government invoked emergency powers to seize control of Nexperia, a subsidiary of a Chinese company and an important supplier of basic chips used in vehicles, prompting the Chinese government to ban exports of the company's finished products. This shortage impacted several manufacturers, most notably, Honda, who experienced reduced production in the fourth quarter of 2025. In September 2025, a fire at a major U.S. aluminum production facility caused significant damage which impacted supplies to various manufacturers. Rare earth minerals are broadly used within the vehicle supply chain. Trade tensions have resulted in China threatening to withhold some of those minerals. These and other events could affect the timing of new vehicle deliveries to our dealerships, which may materially and adversely affect us.

Previous wording

Changes or increases in tariffs, trade restrictions, the negotiation of new trade agreements, non-tariff trade barriers, local content requirements, uncertainty surrounding global trade policies, and the imposition of retaliatory tariffs or trade barriers against certain countries or covering certain products, including vehicles and parts, may affect our competitive position and negatively impact our gross profit with respect to affected vehicles and parts. The ultimate impact of any tariffs is uncertain and will depend on various factors, including whether such tariffs are maintained and/or implemented, the scope and nature of applicable exemptions, the duration of the tariffs and the timing of their implementation, the amount, scope, and nature of the tariffs, and the related responses from impacted countries, manufacturers, and/or consumers.

Current wording

Changes or increases in tariffs, trade restrictions, the negotiation of new trade agreements, non-tariff trade barriers (such as those imposed on Nexperia noted above), local content requirements, uncertainty surrounding global trade policies, and the imposition of retaliatory tariffs or trade barriers against certain countries or covering certain products, including vehicles and parts, may affect our competitive position and negatively impact our gross profit with respect to affected vehicles and parts. The ultimate impact of any tariffs on our business and results of operations is uncertain and will depend on various factors, including whether such tariffs are maintained and/or implemented, the scope and nature of applicable exemptions, the duration of the tariffs and the timing of their implementation, the amount, scope, and nature of the tariffs, and the related responses from impacted countries, manufacturers, and/or consumers.