PENSKE AUTOMOTIVE GROUP, INC.

Previous wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired, disposed, and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Current wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired, disposed, and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Previous wording

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,800 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs nearly 41,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 387,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Current wording

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,600 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs over 40,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 379,200 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Previous wording

During the three months ended March 31, 2026, our business generated $7.9 billion in total revenue, which is comprised of approximately $7.0 billion from retail automotive dealerships, $694.6 million from retail commercial truck dealerships, and $201.9 million from commercial vehicle distribution and other operations. We generated $1.3 billion in gross profit, which is comprised of $1.1 billion from retail automotive dealerships, $128.2 million from retail commercial truck dealerships, and $46.2 million from commercial vehicle distribution and other operations.

Current wording

During the six months ended June 30, 2026, our business generated $16.4 billion in total revenue, which is comprised of approximately $14.3 billion from retail automotive dealerships, $1.6 billion from retail commercial truck dealerships, and $485.8 million from commercial vehicle distribution and other operations. We generated $2.7 billion in gross profit, which is comprised of $2.3 billion from retail automotive dealerships, $271.0 million from retail commercial truck dealerships, and $103.9 million from commercial vehicle distribution and other operations.

Previous wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $27.5 billion in total retail automotive dealership revenue we generated in 2025. We are diversified geographically with 56% of our total retail automotive dealership revenues in the three months ended March 31, 2026, generated in the U.S. and Puerto Rico and 44% generated outside of the U.S. We offer over 40 vehicle brands with 72% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Lexus, Mercedes-Benz, and Porsche, and 22% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the three months ended March 31, 2026. As of March 31, 2026, we operated 368 retail automotive franchised dealerships, of which 149 are located in the U.S. and 219 are located outside of the U.S., principally in the U.K. As of March 31, 2026, we also operated 15 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, eight dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 147,000 vehicles in the three months ended March 31, 2026.

Current wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $27.5 billion in total retail automotive dealership revenue we generated in 2025. We are diversified geographically with 58% of our total retail automotive dealership revenues in the six months ended June 30, 2026, generated in the U.S. and Puerto Rico and 42% generated outside of the U.S. We offer over 40 vehicle brands with 71% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Lexus, Mercedes-Benz, and Porsche, and 23% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the six months ended June 30, 2026. As of June 30, 2026, we operated 362 retail automotive franchised dealerships, of which 146 are located in the U.S. and 216 are located outside of the U.S., principally in the U.K. As of June 30, 2026, we also operated 13 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, six dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 296,000 vehicles in the six months ended June 30, 2026.

Previous wording

During the three months ended March 31, 2026, we acquired two retail automotive franchises and sold one retail automotive franchise in the U.S., opened one retail automotive franchise in the U.K., and opened one retail automotive franchise in Germany. Retail automotive dealerships represented 88.6% of our total revenues and 86.6% of our total gross profit in the three months ended March 31, 2026.

Current wording

During the six months ended June 30, 2026, in the U.S. we acquired two retail automotive franchises and sold four retail automotive franchises; in the U.K. we opened one retail automotive franchise, closed three retail automotive franchises, and sold two used vehicle dealerships; and in Germany we opened one retail automotive franchise. Retail automotive dealerships represented 87.1% of our total revenues and 85.9% of our total gross profit in the six months ended June 30, 2026.

Previous wording

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of March 31, 2026, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 3,668 new and used trucks in the three months ended March 31, 2026. This business represented 8.8% of our total revenues and 9.9% of our total gross profit in the three months ended March 31, 2026.

Current wording

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of June 30, 2026, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 9,152 new and used trucks in the six months ended June 30, 2026. This business represented 9.9% of our total revenues and 10.2% of our total gross profit in the six months ended June 30, 2026.

Previous wording

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, energy solutions, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.6% of our total revenues and 3.5% of our total gross profit in the three months ended March 31, 2026. We also own and operate three Porsche dealerships in Melbourne, Australia, which results are included within our retail automotive segment described above.

Current wording

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, energy solutions, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 3.0% of our total revenues and 3.9% of our total gross profit in the six months ended June 30, 2026. We also own and operate three Porsche dealerships in Melbourne, Australia, the results of which are included within our retail automotive segment described above.

Previous wording

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various businesses, which articulates the breadth of their services. PTS is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, supply chain management, and dry van truckload carrier services. We recorded $41.1 million and $33.2 million in equity earnings from this investment for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various businesses, which articulates the breadth of their services. PTS is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, supply chain management, and dry van truckload carrier services. We recorded $98.5 million and $86.7 million in equity earnings from this investment for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Tariffs. 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. 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 the vehicles, trucks and parts we sell remain fluid, and we continue to monitor the potential impact of tariffs on our business and results of operations.

Current wording

Tariffs. During 2025 and 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. 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, and many of the tariffs affected by the ruling were subsequently re-implemented under a temporary statutory authority. In July 2026, that temporary authority expired and in response, the U.S. implemented new tariffs on imports from a broad range of countries under different statutory authority, which tariffs may directly or indirectly affect certain of the vehicles, trucks, and parts we sell. Developments regarding U.S. trade policy and the applicability and impact of tariffs on the vehicles, trucks and parts we sell remain fluid, and we cannot predict the timing, scope, or outcome of future tariff-related actions or their potential effect, if any, on our results of operations. We continue to monitor tariff policies and their impact on our business and results of operations.

Previous wording

Macroeconomic and Geopolitical Conditions. During 2026, higher fuel and energy prices, inflation, and broader geopolitical uncertainty may result in a more challenging operating environment, weaker consumer sentiment, and cost pressures in our markets. For additional discussion, see Item 1A. Risk Factors, "Macro-economic and geo-political conditions" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

Macroeconomic and Geopolitical Conditions. During 2026, higher fuel and energy prices, inflation, and broader geopolitical uncertainty, including the conflict between the United States and Iran, may result in a more challenging operating environment, weaker consumer sentiment, and cost pressures in our markets. For additional discussion, see Item 1A. Risk Factors, "Macro-economic and geo-political conditions" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Electric Vehicle ("EV") and Emissions Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles, in many cases requiring vehicle manufacturers to achieve progressively higher penetration of EVs or lower emissions of new internal combustion engine vehicle sales. The U.K. government requires in 2026 that 33% of new cars sold shall be electric vehicles (with limited allowances) and that manufacturers pay significant penalties if such amount is not achieved and has confirmed a ban on the sale of internal combustion engines in new cars and new vans beginning in 2030, while allowing hybrid vehicles to be sold until 2035 with limited exceptions. These U.K. regulations increase now through 2035 and continue to affect the profitability and mix of vehicles sold by our U.K. dealerships. In the U.S. commercial vehicle market, the EPA’s 2027 heavy-duty engine emissions standards establish more stringent requirements for model year 2027 and later heavy-duty engines, and we believe the recent clarity regarding those standards has contributed to increased order activity in recent months, with related sales expected to occur primarily in the second half of 2026 as discussed further below. For an additional discussion of certain risks associated with our business related to the EV and emissions, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

Electric Vehicle ("EV") and Emissions Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles, in many cases requiring vehicle manufacturers to achieve progressively higher penetration of EVs or lower emissions of new internal combustion engine vehicle sales. Under the U.K. Zero Emission Vehicle Mandate ("ZEV Mandate"), manufacturers must ensure that 33% of new cars sold in 2026 are electric vehicles (with limited allowances) and are subject to significant penalties if the required percentage is not achieved. By publicly available estimates, 25% of the U.K. new car registrations through June 2026 were zero emission vehicles. The U.K. government has also confirmed a ban on the sale of new cars powered solely by internal combustion engines beginning in 2030, subject to limited exceptions for certain low-volume manufacturers, while allowing certain hybrid cars and vans with internal combustion engines to be sold until 2035 with limited exceptions. The ban does not apply to used vehicle sales. These U.K. regulations currently increase annually through 2035 and continue to affect the profitability and mix of vehicles sold by our U.K. dealerships. In June 2026, the U.K. government announced a review of, and public consultation regarding, its ZEV Mandate, including a potential reduction of the 2030 zero-emission vehicle sales targets, although the outcome and timing of any resulting changes remain uncertain. In the U.S. commercial vehicle market, the EPA’s 2027 heavy-duty engine emissions standards establish more stringent requirements for model year 2027 and later heavy-duty engines, and although the EPA recently proposed amendments to certain compliance provisions of those standards, it has retained the underlying model year 2027 emissions start date and the stringency of the standards. We believe that the recent clarity regarding these emission standards contributed to increased order activity during the first half of 2026, with related sales expected to occur primarily in the second half of 2026. For an additional discussion of certain risks associated with our business related to EV and emissions regulation, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Retail Automotive. During the three months ended March 31, 2026, U.S. industry new light vehicle sales decreased 6.2%, to 3.7 million units, including a 7.2% decrease in retail sales, partially offset by a 5.5% increase in fleet sales, as compared to the same period last year. In the U.S., we believe our comparative new vehicle sales overall were negatively impacted by weather-related disruptions during January and February, the benefit in the prior period from tariff-related pull-forward of retail sales, and a 61.3% decrease in our new EV sales in the U.S., driven by reduced EV and emissions regulations in the U.S. and the elimination of certain tax incentives for the purchase of vehicles, including the previous $7,500 per new vehicle tax incentive on September 30, 2025. Following the expiration of those incentives, EV sales in the U.S. have remained lower than prior-year levels. For the remainder of 2026, we expect continued lower EV sales in the U.S. as compared to 2025 and lower availability of certain products from select manufacturers as compared to 2025. We expect continued strong demand for our service and parts operations driven by the increased average age of vehicles, recall campaigns, increased miles driven, and vehicle complexity. Affordability remains a consideration for consumers, given higher average vehicle prices and the resulting impact on monthly payments.

Current wording

Retail Automotive. During the six months ended June 30, 2026, U.S. industry new light vehicle sales decreased 2.7%, to 7.9 million units, including a 4.0% decrease in retail sales, partially offset by a 4.3% increase in fleet sales, as compared to the same period last year. In the U.S., we believe our comparative new vehicle sales overall were negatively impacted by weather-related disruptions during January and February, the benefit in the prior period from tariff-related pull-forward of retail sales, and a 49.5% decrease in our new EV sales in the U.S., driven by reduced EV and emissions regulations in the U.S. and the elimination of certain tax incentives for the purchase of vehicles, including the previous $7,500 per new vehicle tax incentive on September 30, 2025. We expect continued strong demand for our service and parts operations driven by the increased average age of vehicles, recall campaigns, increased miles driven, and vehicle complexity. Affordability remains a consideration for consumers, given higher average vehicle prices and the resulting impact on monthly payments.

Previous wording

Although U.K. new vehicle registrations increased 5.9% to 0.6 million registrations, including a 9.9% increase in retail sales and a 2.8% increase in fleet sales, as compared to the same period last year, the sale of new premium brand vehicles across the U.K., representing a significant portion of our U.K. portfolio, remained flat over such period. We believe this performance relative to the broader U.K. market was driven in part by a difficult comparison to the prior year, which benefited from product releases at certain premium brands and sales pulled forward into the first quarter of 2025, coupled with higher business and consumer-related taxes and fees, including increased emissions-based charges on higher-emission vehicles, as well as the increased market share of Chinese manufacturers (which doubled their market share from 7.1% to 14.3% in the first quarter of 2026), and lower availability of certain products from select manufacturers.

Current wording

U.K. new vehicle registrations increased 9.2% to 1.1 million registrations, including a 12.6% increase in retail sales and a 6.8% increase in fleet sales, as compared to the same period last year. The sale of new premium brand vehicles across the U.K., representing a significant portion of our U.K. portfolio, increased 4.2% over such period. We believe premium brand performance during the first six months of 2026 benefited in part from an overall growth in the U.K. new vehicle market, including continued consumer demand for electric vehicles. However, premium brand performance in the U.K. continues to be impacted by market dynamics, including higher business and consumer-related taxes and fees, increased emissions-based charges on higher-emission vehicles, the increased market share of Chinese manufacturers (which grew from 7.6% to 15.3% in the first six months of 2026), and higher fuel prices, which we expect may continue to affect the U.K. premium vehicle market.

Previous wording

Our new vehicle days' supply is 44 as of March 31, 2026, compared to 49 as of December 31, 2025. Our used vehicle days' supply is 39 as of March 31, 2026, compared to 49 as of December 31, 2025.

Current wording

Our new vehicle days' supply is 51 as of June 30, 2026, compared to 49 as of December 31, 2025. Our used vehicle days' supply is 44 as of June 30, 2026, compared to 49 as of December 31, 2025.

Previous wording

Retail Commercial Truck Dealership. During the three months ended March 31, 2026, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 17.1% from the same period last year to 85,901 units. The Class 6-7 medium-duty truck market decreased 11.1% from the same period last year to 34,192 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 20.6% from the same period last year to 51,709 units. Lower order intake related to the weak freight environment during the third and fourth quarters of 2025 negatively impacted truck deliveries during the first quarter of 2026. However, order activity has begun increasing in recent months as the freight environment began to show signs of improvement, driven in part by customer orders placed ahead of anticipated 2027 emissions requirements. In addition, service and parts operations benefited from increased demand from delayed maintenance, as well as from an aging vehicle fleet. We expect related sales from increased order activity to occur primarily in the second half of 2026 and demand for service and parts operations to remain strong. As of March 31, 2026, the Class 6-8 medium- and heavy-duty truck backlog is 231,158 units according to data published by ACT Research compared to 170,568 as of December 31, 2025.

Current wording

Retail Commercial Truck Dealership. During the six months ended June 30, 2026, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 9.4% from the same period last year to 191,418 units. The Class 6-7 medium-duty truck market decreased 3.6% from the same period last year to 73,542 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 12.7% from the same period last year to 117,876 units. Lower order intake related to the weak freight environment during the third and fourth quarters of 2025 negatively impacted truck deliveries during the first six months of 2026. However, order activity began increasing in late 2025 as the freight environment has strengthened, driven in part by customer orders placed ahead of anticipated 2027 emissions requirements. Demand for used trucks also increased during the first half of 2026, which we believe was due to higher freight rates and capacity constraints in the freight market. In addition, service and parts operations benefited from increased demand from delayed maintenance, as well as from an aging vehicle fleet. We expect related sales from increased new truck order activity to occur primarily in the second half of 2026 and demand for new and used trucks and service and parts operations to remain strong. As of June 30, 2026, the Class 6-8 medium- and heavy-duty truck backlog is 236,771 units according to data published by ACT Research compared to 170,568 as of December 31, 2025.

Previous wording

Commercial Vehicle Distribution and Other. During the three months ended March 31, 2026, the Australian heavy-duty truck market reported sales of 3,007 units, representing a decrease of 11.0% from the same period last year, while the New Zealand market reported sales of 573 units, representing a decrease of 5.4% from the same period last year. For 2026, we expect similar performance to 2025 for our on-highway businesses, with higher fuel prices and broader operating cost pressures on transport operators may continue to affect demand. We expect demand for defense and energy systems products to remain strong in 2026, in particular in providing standby power energy solutions for our data systems customers.

Current wording

Commercial Vehicle Distribution and Other. During the six months ended June 30, 2026, the Australian heavy-duty truck market reported sales of 6,466 units, representing a decrease of 9.5% from the same period last year, while the New Zealand market reported sales of 1,137 units, representing a decrease of 0.3% from the same period last year. We expect continued challenging market conditions for our on-highway businesses, with higher fuel prices and broader operating cost pressures on transport operators continuing to affect demand. However, we expect demand for defense and energy systems products to remain strong in the second half of 2026, in particular in providing standby power energy solutions for our data systems customers.

Previous wording

Penske Transportation Solutions. PTS experienced improved operating performance during the first quarter of 2026. As discussed above, in recent months we have seen increased order activity in the Class 8 market which, in addition to continued cost savings strategies, we expect will benefit PTS.

Current wording

Penske Transportation Solutions. PTS experienced improved operating performance during the first six months of 2026. As discussed above, in recent months we have seen increased order activity in the Class 8 market which, in addition to continued cost savings strategies, we expect will benefit PTS.

Previous wording

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Current wording

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Previous wording

Automotive and commercial truck dealerships represent 97.4% of our revenue and 85.0% of our earnings before taxes during the three months ended March 31, 2026. Income from our PTS investment represents 12.7% of our earnings before taxes during the three months ended March 31, 2026. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by vehicle manufacturers.

Current wording

Automotive and commercial truck dealerships represent 97.0% of our revenue and 81.5% of our earnings before taxes during the six months ended June 30, 2026. Income from our PTS investment represents 14.5% of our earnings before taxes during the six months ended June 30, 2026. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by vehicle manufacturers.

Previous wording

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar, our U.K. results of operations would translate into less U.S. Dollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $227.6 million and $34.9 million, respectively, for the three months ended March 31, 2026. Foreign currency average rate fluctuations increased earnings per share by approximately $0.05 per share for the three months ended March 31, 2026. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit decreased 4.0% and decreased 4.3%, respectively, for the three months ended March 31, 2026.

Current wording

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. dollars fluctuate. For example, if the British Pound were to weaken against the U.S. dollar, our U.K. results of operations would translate into less U.S. dollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $47.2 million and $8.5 million, respectively, for the three months ended June 30, 2026, and increased revenue and gross profit by $274.8 million and $43.4 million, respectively, for the six months ended June 30, 2026, compared to the same periods in 2025. Foreign currency average rate fluctuations increased earnings per share by approximately $0.02 per share for the three months ended June 30, 2026, and increased earnings per share by approximately $0.07 per share for the six months ended June 30, 2026, compared to the same periods in 2025. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increased 5.4% and decreased 0.3%, respectively, for the three months ended June 30, 2026, and increased 0.7% and decreased 2.3%, respectively, for the six months ended June 30, 2026, compared to the same periods in 2025.

Previous wording

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, service vehicle loaner expenses, vehicle delivery and preparation expenses, utilities, and other expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

Current wording

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, customer service vehicle loaner expenses, vehicle delivery and preparation expenses, utility expenses, and various other miscellaneous expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

Previous wording

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on sales of new and used vehicles, service and parts, and repair and maintenance services, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, tariffs and non-tariff trade barriers, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; changes in the retail model from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of EVs; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on our acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes or work stoppages by its employees, a reduction in PTS' asset utilization rates, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning its vehicle fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicles sales, including those related to the sales process, emissions standards or electrification; the success of our distribution of commerci…

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Current wording

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on sales of new and used vehicles, service and parts, and repair and maintenance services, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, tariffs and non-tariff trade barriers, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; changes in the retail model from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of EVs; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; the rate of inflation, including its impact on vehicle affordability; our ability to consummate, integrate, and realize returns on our acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes or work stoppages by its employees, a reduction in PTS' asset utilization rates, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning its vehicle fleet, changes in the values of used trucks, which affect PTS' profitability on truck sales, and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicle sales, including those related to the sales process, emissions standards or electrification; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters;…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our results for the three months ended March 31, 2026, include a gain of $60.4 million from the sale of one retail automotive franchise in the U.S., resulting in an after-tax gain of $44.8 million, or $0.68 per share. This gain was partially offset by disposals and other charges in the first quarter of 2026 of $13.0 million (none of which was individually material), resulting in an after-tax expense of $10.9 million, or $0.17 per share. This resulted in a net after-tax gain of $33.9 million, or $0.51 per share.

Current wording

Our results for the six months ended June 30, 2026, include a gain of $90.9 million from the sale of retail automotive franchises in the U.S., resulting in an after-tax gain of $67.5 million, or $1.03 per share. This gain was partially offset by disposals and other charges of $13.0 million (none of which was individually material), resulting in an after-tax expense of $10.9 million, or $0.17 per share.

Previous wording

Our results for the three months ended March 31, 2025, include a gain of $52.3 million from the sale of one retail automotive franchise in the U.S., resulting in an after-tax gain of $38.9 million, or $0.58 per share. This gain was partially offset by impairments and other charges of $25.2 million (none of which was individually material), resulting in an after-tax expense of $20.9 million, or $0.31 per share. This resulted in a net after-tax gain of $18.0 million, or $0.27 per share.

Current wording

Our results for the six months ended June 30, 2025, include a gain of $52.3 million from the sale of one retail automotive franchise in the U.S. in the first quarter of 2025, resulting in an after-tax gain of $38.9 million, or $0.58 per share. This gain was partially offset by impairments and other charges in the first quarter of 2025 of $25.2 million (none of which was individually material), resulting in an after-tax expense of $20.9 million, or $0.31 per share.

Previous wording

New vehicle sales revenue decreased from 2025 to 2026 due to a $184.1 million, or 5.7%, decrease in same-store revenues, partially offset by a $16.8 million increase from net dealership acquisitions/dispositions. Excluding $67.7 million of favorable foreign currency fluctuations, same-store new revenue decreased 7.9%. Same-store revenue (excluding agency) decreased due to the decrease in same-store new retail unit sales, which decreased revenue by $317.7 million, partially offset by a $2,582 per unit increase in same-store comparative average retail selling price (including a $1,334 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $126.8 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to the increased costs of acquiring vehicles from the manufacturer.

Current wording

New vehicle sales revenue increased from 2025 to 2026 due to a $155.5 million, or 5.0%, increase in same-store revenues, coupled with a $31.8 million increase from net dealership acquisitions/dispositions. Excluding $7.3 million of favorable foreign currency fluctuations, same-store new revenue increased 4.7%. Same-store revenue (excluding agency) increased due to the increase in same-store new retail unit sales, which increased revenue by $116.6 million, coupled with a $690 per unit increase in same-store comparative average retail selling price (including a $131 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $35.8 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to the increased costs of acquiring vehicles from the manufacturer, coupled with a shift in sales mix toward higher-priced hybrid vehicles.

Previous wording

Used vehicle retail sales revenue increased from 2025 to 2026 due to a $182.4 million, or 8.2%, increase in same-store revenues, partially offset by a $17.1 million decrease from net dealership acquisitions/dispositions. Excluding $91.7 million of favorable foreign currency fluctuations, same-store used retail revenue increased 4.1%. The increase in same-store revenue is due to a $2,802 per unit increase in same-store comparative average selling price (including a $1,540 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $165.7 million, coupled with the increase in same-store used retail unit sales discussed above, which increased revenue by $16.7 million. We believe the increase in same-store comparative average selling price is primarily due to the increased costs to acquire vehicles.

Current wording

Used vehicle retail sales revenue increased from 2025 to 2026 due to a $218.3 million, or 9.9%, increase in same-store revenues, partially offset by a $5.8 million decrease from net dealership acquisitions/dispositions. Excluding $9.7 million of favorable foreign currency fluctuations, same-store used retail revenue increased 9.5%. The increase in same-store revenue is due to the increase in same-store used retail unit sales which increased revenue by $116.0 million, coupled with a $1,858 per unit increase in same-store comparative average selling price (including a $167 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $102.3 million. We believe the increase in same-store comparative average selling price is primarily due to the increased costs to acquire vehicles.

Previous wording

Service and parts revenue increased from 2025 to 2026, with an increase of 2.9% in the U.S. and an increase of 7.5% internationally. The increase in service and parts revenue is due to a $37.7 million, or 4.6%, increase in same-store revenues, coupled with a $0.6 million increase from net dealership acquisitions/dispositions. Excluding $22.9 million of favorable foreign currency fluctuations, same-store revenue increased 1.8%. The increase in same-store revenue, which was partially offset by weather-related disruptions during January and February, is due to a $33.6 million, or 5.9%, increase in customer pay revenue and a $4.2 million, or 2.2%, increase in warranty revenue, partially offset by a $0.1 million, or 0.2%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to increasing vehicle complexity, increases in effective labor rates, the retail cost of parts due to inflation and tariffs, and continuing vehicle recalls.

Current wording

Service and parts revenue increased from 2025 to 2026, with an increase of 2.4% in the U.S. and an increase of 0.3% internationally. The increase in service and parts revenue is due to a $16.4 million, or 2.0%, increase in same-store revenues, partially offset by a $2.7 million decrease from net dealership acquisitions/dispositions. Excluding $3.0 million of favorable foreign currency fluctuations, same-store revenue increased 1.6%. The increase in same-store revenue is due to a $21.1 million, or 3.6%, increase in customer pay revenue, partially offset by a $4.3 million, or 2.3%, decrease in warranty revenue and a $0.4 million, or 0.7%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to increased customer-pay revenue, implementation of technology in our service operations, increasing vehicle complexity, increases in effective labor rates, and increases in the retail cost of parts.

Previous wording

Retail unit sales of new trucks decreased from 2025 to 2026 due to a 953 unit, or 25.5%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to reduced orders during the third and fourth quarters of 2025 related to the prolonged recessionary freight rate environment and the implementation of tariffs, coupled with market uncertainty prior to the recent clarity regarding the 2027 heavy-duty emissions standards.

Current wording

Retail unit sales of new trucks decreased from 2025 to 2026 due to a 362 unit, or 7.8%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to reduced order activity during the third and fourth quarters of 2025 related to the prolonged recessionary freight rate environment, tariffs, and uncertainty regarding 2027 EPA emission standards for Class 8 heavy-duty trucks.

Previous wording

Service and parts gross profit increased from 2025 to 2026 due to a $0.8 million increase from net dealership acquisitions/dispositions, partially offset by a $0.1 million, or 0.1%, decrease in same-store gross profit. The decrease in same-store gross profit is due to a 1.6% decrease in same-store gross margin, which decreased gross profit by $3.7 million, partially offset by the increase in same-store revenues, which increased gross profit by $3.6 million. Same-store gross profit increased $0.9 million, or 1.5%, in customer pay gross profit, offset by a $0.7 million, or 9.7%, decrease in body shop gross profit and a $0.3 million, or 1.3%, decrease in warranty gross profit.

Current wording

Service and parts gross profit decreased from 2025 to 2026 primarily due to a $1.1 million, or 1.2%, decrease in same-store gross profit. The decrease in same-store gross profit is due to a 2.1% decrease in same-store gross margin, which decreased gross profit by $4.9 million, partially offset by the increase in same-store revenues, which increased gross profit by $3.8 million. The decrease in same-store gross profit is due to a $0.8 million, or 1.1%, decrease in customer pay gross profit and a $0.4 million, or 5.4%, decrease in body shop gross profit, partially offset by a $0.1 million, or 0.4%, increase in warranty gross profit.

Previous wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $201.9 million of revenue during the three months ended March 31, 2026, compared to $211.5 million of revenue in the prior year period, a decrease of 4.5%. This business also generated $46.2 million of gross profit during the three months ended March 31, 2026, compared to $44.2 million of gross profit in the prior year period, an increase of 4.5%. Excluding $19.7 million of favorable foreign currency fluctuations, revenue decreased 13.9%, and excluding $4.4 million of favorable foreign currency fluctuations, gross profit decreased 5.2%. These decreases are primarily due to a decrease in units sold related to the decline in the Australian and New Zealand heavy-duty truck market, coupled with the timing of orders on power system units.

Current wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $283.9 million of revenue during the three months ended June 30, 2026, compared to $201.2 million of revenue in the prior year period, an increase of 41.1%. This business also generated $57.7 million of gross profit during the three months ended June 30, 2026, compared to $44.2 million of gross profit in the prior year period, an increase of 30.5%. Excluding $26.3 million of favorable foreign currency fluctuations, revenue increased 28.0%, and excluding $5.4 million of favorable foreign currency fluctuations, gross profit increased 18.1%. These increases are primarily due to increased demand for energy systems products, including standby power energy solutions for our data systems customers, partially offset by a decrease in units sold related to the decline in the Australian and New Zealand heavy-duty truck market.

Previous wording

Selling, general, and administrative expenses ("SG&A") increased from 2025 to 2026 due to a $13.9 million, or 1.5%, increase in same-store SG&A, coupled with a $0.3 million increase from net dealership acquisitions/dispositions. Excluding $27.0 million of unfavorable foreign currency fluctuations, same-store SG&A decreased 1.4%. SG&A expenses as a percentage of gross profit was 74.3%, an increase of 230 basis points compared to 72.0% in the prior year. SG&A expenses as a percentage of total revenue were 12.3% and 12.0% in the three months ended March 31, 2026 and 2025, respectively. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expenses and rent and related expenses.

Current wording

Selling, general, and administrative expenses ("SG&A") increased from 2025 to 2026 due to a $29.9 million, or 3.2%, increase in same-store SG&A, coupled with a $0.3 million increase from net dealership acquisitions/dispositions. Excluding $5.4 million of unfavorable foreign currency fluctuations, same-store SG&A increased 2.7%. SG&A expenses as a percentage of gross profit was 71.8%, an increase of 200 basis points compared to 69.8% in the prior year. SG&A expenses as a percentage of total revenue were 11.4% and 11.7% in the three months ended June 30, 2026 and 2025, respectively. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expenses, including employee benefits, information technology expenses, rent and rent related expenses, and vehicle maintenance expenses.

Previous wording

Depreciation increased from 2025 to 2026 due to a $3.9 million, or 9.6%, increase in same-store depreciation due to capital expenditures, coupled with a $0.3 million increase from net dealership acquisitions/dispositions.

Current wording

Depreciation increased from 2025 to 2026 due to a $2.8 million, or 6.7%, increase in same-store depreciation due to capital expenditures, partially offset by a $0.5 million decrease from net dealership acquisitions/dispositions.

Previous wording

Floor plan interest expense decreased from 2025 to 2026 due to a $3.5 million, or 8.4%, decrease in same-store floor plan interest expense, coupled with a $0.4 million decrease from net dealership acquisitions/dispositions. The overall decrease is due to decreases in applicable rates, coupled with decreases in average amounts outstanding under floor plan arrangements due to decreasing levels of inventory.

Current wording

Floor plan interest expense decreased from 2025 to 2026 due to a $4.8 million, or 11.2%, decrease in same-store floor plan interest expense, coupled with a $0.5 million decrease from net dealership acquisitions/dispositions. The overall decrease is due to decreases in applicable rates, partially offset by increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory.

Previous wording

Other interest expense increased from 2025 to 2026 due to increases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by decreases in applicable rates throughout the year.

Current wording

Other interest expense increased from 2025 to 2026 due to increases in average revolver borrowing amounts outstanding under our credit agreements due to dealership acquisitions, partially offset by decreases in applicable rates throughout the year.

Previous wording

Equity in earnings of affiliates increased from 2025 to 2026 due to a $7.9 million, or 23.8%, increase in earnings from our investment in PTS, partially offset by the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in our joint venture in Spain during the second quarter of 2025. We believe the increase in our PTS equity earnings was driven by improved operating performance during the first quarter of 2026, including growth in full-service leasing revenue, improved fleet utilization, and lower operating and interest expenses, including maintenance and depreciation expense, resulting from continued fleet reductions. These benefits were partially offset by continued challenging conditions in the rental market, which pressured commercial and consumer rental demand, as well as lower gain on sale of used trucks.

Current wording

Equity in earnings of affiliates increased from 2025 to 2026 due to a $3.9 million, or 7.3%, increase in earnings from our investment in PTS, partially offset by the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in our joint venture in Spain during the second quarter of 2025. We believe the increase in our PTS equity earnings was driven by improved operating performance during the second quarter of 2026, including growth in full-service leasing revenue, improved fleet utilization, and lower operating and interest expenses, including maintenance and depreciation expense, resulting from continued fleet reductions. These benefits were partially offset by continued challenging conditions in the rental market, which pressured commercial and consumer rental demand, as well as a lower gain on sale of used trucks.

Previous wording

Retail unit deliveries of new vehicles decreased from 2025 to 2026 due to a 3,132 unit, or 4.8%, decrease in same-store new retail unit deliveries, coupled with a 31 unit decrease from net dealership acquisitions/dispositions. Same-store retail units delivered decreased 9.5% in the U.S. and increased 1.4% internationally. Overall, new retail unit deliveries decreased 9.7% in the U.S. and increased 1.8% internationally. We believe the decrease in retail unit sales in the U.S. is due to weather-related disruptions during January and February and the benefit in the prior period from tariff-related pull-forward of retail sales, as well as lower demand for electric vehicles subsequent to the elimination of certain U.S. tax incentives as of September 30, 2025. We believe the increase in retail unit deliveries internationally is primarily due to the increase of our sales from Chinese manufacturers, coupled with increases in sales of certain premium brands, partially offset by the elimination of premium vehicles from certain government incentive programs in the U.K.

Current wording

Retail unit deliveries of new vehicles increased from 2025 to 2026 due to a 247 unit increase from net dealership acquisitions/dispositions, partially offset by a 143 unit, or 0.1%, decrease in same-store new retail unit deliveries. Same-store retail units delivered decreased 3.3% in the U.S. and increased 4.4% internationally. Overall, new retail unit deliveries decreased 3.3% in the U.S. and increased 5.1% internationally. We believe the decrease in retail unit sales in the U.S. is due to vehicle availability of certain brands, weather-related disruptions during January and February and the benefit in the prior period from tariff-related pull-forward of retail sales, as well as lower demand for electric vehicles subsequent to the elimination of certain U.S. tax incentives as of September 30, 2025, partially offset by higher sales at our volume and domestic brand dealerships and improved new vehicle availability from certain manufacturers. We believe the increase in retail unit deliveries internationally is primarily due to the increase in deliveries of certain volume brands, partially offset by the elimination of premium vehicles from certain government incentive programs in the U.K.

Previous wording

Retail gross profit from new vehicle sales decreased from 2025 to 2026 due to a $35.9 million, or 12.0%, decrease in same-store gross profit, partially offset by a $3.7 million increase from net dealership acquisitions/dispositions. Excluding $6.9 million of favorable foreign currency fluctuations, same-store gross profit decreased 14.3%. Same-store gross profit (excluding agency) decreased due to the decrease in same-store new retail sales, which decreased retail gross profit by $27.5 million, coupled with a $311 per unit decrease in same-store comparative average gross profit (despite a $100 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $15.3 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a highly competitive selling environment, the benefit in the prior period from tariff-related pull-forward of retail sales, and vehicle affordability considerations.

Current wording

Retail gross profit from new vehicle sales decreased from 2025 to 2026 due to a $56.1 million, or 9.4%, decrease in same-store gross profit, partially offset by a $7.6 million increase from net dealership acquisitions/dispositions. Excluding $7.5 million of favorable foreign currency fluctuations, same-store gross profit decreased 10.6%. Same-store gross profit (excluding agency) decreased due to a $462 per unit decrease in same-store comparative average gross profit (despite a $52 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $47.3 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $18.6 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a highly competitive selling environment, the benefit in the prior period from tariff-related pull-forward of retail sales, the mix of vehicles sold, and vehicle affordability considerations.

Previous wording

Retail unit sales of used vehicles decreased from 2025 to 2026 due to a 775 unit decrease from net dealership acquisitions/dispositions, partially offset by a 414 unit, or 0.7%, increase in same-store used retail unit sales. Our same-store units decreased 2.9% in the U.S. and increased 4.4% internationally. Overall, our used units decreased 3.8% in the U.S. and increased 2.7% internationally. We believe the decrease in same-store retail sales of used units in the U.S. is primarily due to weather-related disruptions during January and February, as well as the limited availability of lower mileage, used vehicles from lower lease returns. We believe the increase in same-store retail sales of used units internationally is primarily due to increased consumer demand due to overall affordability concerns in our international markets.

Current wording

Retail unit sales of used vehicles increased from 2025 to 2026 due to a 3,149 unit, or 2.8%, increase in same-store used retail unit sales, partially offset by a 1,242 unit decrease from net dealership acquisitions/dispositions. Our same-store units increased 0.1% in the U.S. and increased 5.8% internationally. Overall, our used units decreased 0.2% in the U.S. and increased 3.6% internationally. We believe the increase in same-store retail sales of used units in the U.S. is primarily due to increased consumer demand due to overall affordability considerations, coupled with improved vehicle availability, partially offset by weather-related disruptions during January and February. We believe the increase in same-store retail sales of used units internationally is primarily due to increased consumer demand due to overall affordability considerations, coupled with increased operational enhancements internationally focused on growing used vehicle sales.

Previous wording

Retail gross profit from used vehicle sales decreased from 2025 to 2026 due to a $3.3 million, or 2.6%, decrease in same-store gross profit. Excluding $4.8 million of favorable foreign currency fluctuations, same-store gross profit decreased 6.4%. The decrease in same-store gross profit is due to a $71 per unit decrease in same-store comparative average gross profit (despite a $80 per unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $4.2 million, partially offset by the increase in same-store used retail unit sales, which increased gross profit by $0.9 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to higher acquisition costs of vehicles, coupled with the competitive selling environment particularly in the U.S. and U.K. markets.

Current wording

Retail gross profit from used vehicle sales decreased from 2025 to 2026 due to a $9.9 million, or 3.9%, decrease in same-store gross profit, coupled with a $0.2 million decrease from net dealership acquisitions/dispositions. Excluding $5.4 million of favorable foreign currency fluctuations, same-store gross profit decreased 6.1%. The decrease in same-store gross profit is due to a $146 per unit decrease in same-store comparative average gross profit (despite a $47 per unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $16.5 million, partially offset by the increase in same-store used retail unit sales, which increased gross profit by $6.6 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to higher acquisition costs of vehicles.

Previous wording

Finance and insurance revenue decreased from 2025 to 2026 due to a $1.7 million, or 0.8%, decrease in same-store revenue, coupled with a $1.4 million decrease from net dealership acquisitions/dispositions. Excluding $5.0 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 3.3%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $8.8 million, partially offset by a $57 per unit increase in same-store comparative average finance and insurance retail revenue (including a $44 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $6.2 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 0.6% in the U.S. and increased 9.7% in the U.K. We believe the increase in same-store finance and insurance revenue per unit (excluding agency) is primarily due to the increase in average selling price of both new and used vehicles, as well as improved finance and insurance penetration internationally.

Current wording

Finance and insurance revenue decreased from 2025 to 2026 due to a $1.6 million decrease from net dealership acquisitions/dispositions, partially offset by a $1.3 million, or 0.3%, increase in same-store revenue. Excluding $5.5 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 1.0%. Same-store revenue (excluding agency) decreased due to a $20 per unit decrease in same-store comparative average finance and insurance retail revenue (despite a $24 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased revenue by $4.4 million, coupled with the decrease in combined same-store new and used retail unit sales, which decreased revenue by $0.8 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 2.9% in the U.S. and decreased 0.6% in the U.K. We believe the decrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to lower penetration of various finance and insurance products and overall affordability considerations.