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☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Penske Automotive Group, Inc.

Delaware (State or other jurisdiction of incorporation or organization)			22-3086739 (I.R.S. Employer Identification No.)
2555 Telegraph Road Bloomfield Hills Michigan (Address of principal executive offices)			48302-0954 (Zip Code)

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Voting Common Stock, par value $0.0001 per share			PAG			New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Large Accelerated Filer x			Accelerated filer o			Non-accelerated filer o			Smaller reporting company ☐
									Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Item						Page
PART I
1			Business			1
1A.			Risk Factors			20
1B.			Unresolved Staff Comments			28
2			Properties			28
3			Legal Proceedings			29
4			Mine Safety Disclosures			29
PART II
5			Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities			29
6			Reserved			30
7			Management's Discussion and Analysis of Financial Condition and Results of Operations			30
7A.			Quantitative and Qualitative Disclosures About Market Risk			55
8			Financial Statements and Supplementary Data			56
9			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			56
9A.			Controls and Procedures			56
9B.			Other Information			57
9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			57
PART III
10			Directors, Executive Officers, and Corporate Governance			58
11			Executive Compensation			58
12			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			58
13			Certain Relationships and Related Transactions and Director Independence			58
14			Principal Accounting Fees and Services			58
PART IV
15			Exhibits, Financial Statement Schedules			59
16			Form 10-K Summary			59

Item 1. Business

Retail Automotive. We are one of the largest global automotive retailers as measured by the $23.7 billion in total retail automotive dealership revenue we generated in 2022. We are diversified geographically with 58% of our total retail automotive dealership revenues in 2022 generated in the U.S. and Puerto Rico and 42% generated outside of the U.S. We offer over 35 vehicle brands with 71% of our retail automotive franchised dealership revenue in 2022 generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche. As of December 31, 2022, we operated 338 retail automotive franchised dealerships, of which 151 are located in the U.S. and 187 are located outside of the U.S. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of December 31, 2022, we also operated 21 used vehicle dealerships, with eight dealerships in the U.S. and 13 dealerships in the U.K., which retailed used vehicles under a one price, "no-haggle" methodology under the CarShop brand. We retailed and wholesaled more than 539,000 vehicles in 2022.

Each of our franchised dealerships offers a wide selection of new and used vehicles for sale. In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Beginning in 2023, we transitioned our Mercedes-Benz U.K. dealerships to an agency model. Under an agency model, our Mercedes-Benz U.K. dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. We continue to provide new vehicle customer service at our Mercedes-Benz U.K. dealerships, and the Mercedes-Benz U.K. agency model is not expected to structurally change our used vehicle sales operations or service and parts operations, although the impact of the agency model at these dealerships as well as other agency models proposed by our manufacturer partners is uncertain. See Item 1A. Risk Factors for a discussion of agency.

Retail Commercial Truck Dealership. We operate Premier Truck Group (“PTG”), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across nine U.S. states and Ontario, Canada. During February 2022, we acquired four full-service dealerships in Ontario, Canada. As of December 31, 2022, PTG operated 39 locations selling new and used trucks, parts and service, and offering collision repair services. We retailed and wholesaled 21,002 new and used trucks in 2022. This business represented 12.7% of our total revenues and 11.5% of our total gross profit in 2022.

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 business lines through which it 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 logistic services, such as dedicated contract carriage, distribution center management, transportation management, lead logistics provider services, and dry van truckload carrier services. We recorded $490.0 million and $365.8 million in equity earnings from this investment in 2022 and 2021, respectively.

Retail Automotive. In 2022, U.S. industry new light vehicle sales decreased 7.9%, as compared to 2021, to 13.9 million units, and U.K. new vehicle registrations decreased 2.0%, as compared to 2021, to 1.6 million registrations. We believe the year over year decrease in new vehicle sales and registrations is primarily attributable to a lower supply of new vehicles available for sale due to disruptions in the supply chain limiting the availability of microchips and other components, the war in Ukraine, and challenges in sourcing labor, coupled with higher interest rates and inflation, impacting the affordability of vehicles for customers. Our new vehicle days' supply is 25 as of December 31, 2022, compared to 17 as of December 31, 2021, and 50 as of December 31, 2020. Our used vehicle days' supply has proved to be more resilient with a 53 days' supply as of December 31, 2022, compared to 60 as of December 31, 2021, and 48 as of December 31, 2020. While we expect increased new vehicle availability in 2023, continued production disruptions and supply shortages could result in suppressed new and used vehicle sales volumes which would impact the availability and affordability of new and used vehicles. When the supply of new vehicles improves, we may experience reduced new and used vehicle gross profit together with higher sales volumes.

Retail Commercial Truck Dealership. In 2022, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, increased 12.1% from last year to 448,723 units. The Class 6-7 medium-duty truck market increased 7.4% from last year to 139,108 units, and Class 8 heavy-duty trucks, the largest North American market, increased 14.4% from last year to 309,615 units. The truck market is experiencing the same production and supply issues noted above, and the Class 6-8 medium- and heavy-duty truck backlog is 357,414 units according to data published by ACT Research. We expect lower inventories of new commercial trucks and parts disruptions to continue until the supply of certain components used to manufacture commercial trucks improves and manufacturers work through backlogs. As a result of the supply constraints, we expect demand for Class 8 commercial trucks to remain strong, driven by replacement demand. When the supply of commercial trucks improves, we may experience reduced new and used commercial truck gross profit per unit together with higher sales volumes.

Commercial Vehicle Distribution and Other. In 2022, the Australian heavy-duty truck market reported sales of 14,966 units, representing an increase of 15.1% from last year, while the New Zealand market reported sales of 3,587 units, representing an increase of 15.0% from last year.

Penske Transportation Solutions. A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. During 2022, PTS continued to expand its managed fleet with over 414,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts. PTS continues to expect strong demand for commercial rental trucks and full-service leasing.

As described in Item 1A. Risk Factors, there are a number of factors that could cause actual results to differ materially from our expectations. For a detailed discussion of our financial and operating results, see Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

In recognition of our people-first philosophy, in 2022, 46 of our dealerships were named to the "Automotive News Best Dealerships To Work For" which ranks the top 100 dealerships in the United States, including seven of the top ten spots and 17 of the top 25 spots nationally in 2022's rankings. Seven of our dealerships were ranked in the top ten nationally for their efforts to promote Diversity, Equity & Inclusion. In 2022, we were ranked in the top ten by Forbes as one of "America's Best Employers for Veterans" which ranks the top 200 companies in the United States.

Country						% of Total 2022 Revenue						% of Total 2022 Gross Profit
United States						60		%				66		%
United Kingdom						30		%				25		%
Germany/Italy						5		%				4		%
Japan						1		%				1		%
Canada						2		%				1		%
Australia/New Zealand						2		%				3		%

We are also diversified within our automotive retail operations by brand. We represent over 35 brands in our markets and our automotive dealership revenue mix consists of 71% related to premium brands, 21% related to volume non-U.S.

Community Participation. We believe community participation and charitable giving enrich the neighborhoods where we work, live, and play. We are proud of these efforts and we encourage participation by all dealerships and employees, including through our commitment to the Paralyzed Veterans of America ("PVA"). Since 2015, our dealerships have supported the PVA, an organization working to ensure paralyzed and disabled veterans receive the care, benefits, and job opportunities they deserve. Each year, we match certain donations from our customers and team members to the PVA and have contributed more than $8.5 million to the group. As a company with a presence spanning four continents, we are able to make positive impacts well beyond the borders of the communities where our dealerships are located. After the outbreak of the war in Ukraine, we and our affiliate Penske Transportation Solutions made a $1 million contribution to World Central Kitchen, an organization working to supply meals to those in need at the front lines of humanitarian, climate, and community crises. We encouraged team members to also donate to this cause, raising over $150,000 from employees of both Penske Automotive and PTS.

Environmental Sustainability — Electric Vehicles. Our dealerships sell and service vehicles that are engineered and manufactured by over 35 of the world's automotive OEMs, including hybrid, plug-in hybrid, and pure electric vehicles (“EVs”). EVs can reduce the emissions that contribute to climate change and smog, improve public health, and reduce ecological damage.

Managing our Energy Use and Reducing Waste. We are committed to monitoring and managing our energy use and the environmental impacts of our business. We recognize our responsibility to advocate for a cleaner environment through self-awareness, leveraging our global partnerships, promoting cleaner driving vehicles through our dealerships, and reducing pollution and waste. We have deployed several strategies for reducing or optimizing our energy use, such as installing LED lighting, occupancy sensors, energy-efficient glass, and high-efficiency heating, ventilation, and air conditioning (HVAC) systems.

Retail Automotive Franchises. We routinely acquire and dispose of retail automotive franchises. The following table exhibits our retail automotive franchises by location and manufacturer as of December 31, 2022:

Location						Franchises						Franchises						U.S.						Non-U.S.						Total
Arizona						26						BMW/MINI						25						54						79
Arkansas						4						Toyota/Lexus						24						—						24
California						30						Mercedes-Benz/Sprinter/smart						18						31						49
Connecticut						9						Audi/Volkswagen/Bentley						17						38						55
Florida						3						Chrysler/Jeep/Dodge						3						—						3
Georgia						4						Honda/Acura						19						—						19
Indiana						4						Ferrari/Maserati						2						13						15
Maryland						2						Porsche						9						11						20
Michigan						1						Jaguar/Land Rover						14						18						32
Minnesota						2						Lamborghini						1						5						6
New Jersey						24						Nissan/Infiniti						3						—						3
North Carolina						2						Cadillac/Chevrolet						4						—						4
Ohio						7						Others						12						17						29
Puerto Rico						4						Total						151						187						338
Rhode Island						8
Tennessee						1
Texas						11
Virginia						7
Wisconsin						2
Total U.S.						151
U.K.						135
Germany						21
Italy						21
Japan						10
Total Non-U.S.						187
Total Worldwide						338

Retail Automotive CarShop Used Vehicle Dealerships. The following table exhibits the CarShop used vehicle dealerships we currently operate by geographic location as of December 31, 2022:

Location						Number of Dealerships
U.S.
Arizona						1
Pennsylvania						5
New Jersey						2
Total U.S.						8
U.K.						13
Total						21

New Vehicle Retail Sales. In 2022, we retailed 185,831 new vehicles which generated 42.4% of our retail automotive dealership revenue and 30.2% of our retail automotive dealership gross profit. New vehicles are typically acquired by dealerships directly from the manufacturer. We strive to maintain outstanding relationships with the automotive manufacturers based in part on our long-term presence in the retail automotive market, our commitment to providing premium facilities, our commitment to drive customer satisfaction, the reputation of our management team, and the consistent sales volume at our dealerships. Our dealerships finance the purchase of most new vehicles from the manufacturers through floor plan financing provided primarily by various manufacturers' captive finance companies.

Used Vehicle Retail Sales. In 2022, we retailed 261,739 used vehicles, including 71,242 from our CarShop used vehicle dealerships, which generated 38.0% of our retail automotive dealership revenue and 13.2% of our retail automotive dealership gross profit. We acquire used vehicles from various sources, including trade-ins from consumers in connection with their purchase of a new or used vehicle from us, purchases of used vehicles directly from consumers, lease expirations, public auctions, and auctions open only to authorized new vehicle dealers. To improve customer confidence in our used vehicle inventory, we provide vehicle history reports for all used vehicles, and virtually all of our franchised new vehicle dealerships participate in manufacturer certification processes for used vehicles. If certification is obtained, the used vehicle owner is typically provided benefits and warranties similar to those offered to new vehicle owners by the applicable manufacturer.

Vehicle Finance and Insurance Sales. Finance and insurance sales represented 3.6% of our retail automotive dealership revenue and 20.6% of our retail automotive dealership gross profit in 2022. At our customers' option, our dealerships can arrange third-party financing or leasing in connection with vehicle purchases. We typically receive a flat fee or a portion of the cost of the financing or leasing paid by the customer for each transaction. While these services are generally non-recourse to us, we are subject to chargebacks in certain circumstances, such as default under a financing arrangement or pre-payment. These chargebacks vary by finance product but typically are limited to the fee we receive.

Service and Parts Sales. Service and parts sales represented 10.2% of our retail automotive dealership revenue and 34.9% of our retail automotive dealership gross profit in 2022. We generate service and parts sales in connection with warranty work performed at each of our franchised dealerships and non-warranty work. We believe our service and parts revenues benefit from the increasingly complex technology used in vehicles that makes it difficult for independent repair facilities or vehicle owners to maintain and repair today's automobiles.

Fleet and Wholesale Sales. Fleet and wholesale sales represented 5.8% of our retail automotive dealership revenue and 1.1% of our retail automotive dealership gross profit in 2022. Fleet activities represent the sale of new units to customers that are deemed to not be retail customers, such as cities, municipalities, or rental car companies and are generally sold at contracted amounts. Wholesale activities relate to the sale of used vehicles generally to other dealers and occur at auction. Vehicles sold through this channel generally include units acquired by trade-in that do not meet certain standards or aged units. In the U.K., we offer used vehicles to wholesalers and other dealers via a proprietary online auction.

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, 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.

Full-service truck leasing, truck rental, and contract maintenance. Full-service truck leasing, truck rental, and contract maintenance of commercial trucks, tractors, and trailers constitutes PTS' largest business. PTS manages a fleet of over 414,500 trucks, tractors, and trailers, consisting of over 271,300 vehicles owned by PTS and leased to customers under full-service lease or rental agreements and over 143,200 customer-owned and -operated vehicles for which they provided contract maintenance services. Lease terms under its full-service leases generally range from four to seven years for tractors and trucks and six to ten years for trailers. Its commercial and consumer rental fleet as of December 31, 2022, consisted of approximately 109,000 vehicles for use by its full-service truck leasing, small business, and consumer customers for periods generally ranging from less than a day to 12 months. Most of its leased vehicles are configured according to customer specifications, including custom painting and lettering, while its rental trucks bear Penske branding.

Retail Automotive. Approximately 58% of our retail automotive dealership revenues are generated in the U.S. and Puerto Rico, which in 2022 was one of the world's largest automotive retail markets as measured by units sold. In 2022, sales of new cars and light trucks were approximately 13.9 million units, a decrease of 7.9% from 2021, and were generated at approximately 16,700 franchised new-car dealerships. According to data from the National Automobile Dealers Association, dealership revenue is generally derived as follows: 49% from new vehicle sales, 40% from used vehicle sales, and 11% from service and parts sales. Dealerships also offer a wide range of higher-margin products and services, including extended service contracts, financing arrangements, and credit insurance. The National Automobile Dealers Association figures noted above include finance and insurance revenues within either new or used vehicle sales, as sales of these products are usually incremental to the sale of a vehicle.

Dealership. Generally, new vehicle unit sales are cyclical, and historically, fluctuations have been influenced by factors such as manufacturer incentives, interest rates, fuel prices, unemployment, inflation, weather, the level of personal discretionary spending, credit availability, consumer confidence, and other general economic factors. However, from a profitability perspective, automotive and truck retailers have historically been less vulnerable than manufacturers and parts suppliers to declines in new vehicle sales. We believe this is due to the retailers' more flexible expense structure (a significant portion of the retail industry's costs are variable) and their diversified revenue streams, such as used vehicle sales and service and parts sales. In addition, manufacturers may offer various dealer incentives when sales are slow, which further increases the volatility in profitability for manufacturers and may help to decrease volatility for franchised automotive retailers.

Retail Commercial Truck Dealership. In 2022, North American sales of Class 6-8 medium- and heavy-duty trucks, the principal vehicles sold by our PTG business, increased 12.1% from last year to 448,723 units and were generated at

Commercial Vehicle Distribution and Other. Our commercial vehicle distribution and other business operates principally in Australia and New Zealand. In 2022, heavy-duty truck sales in Australia and New Zealand combined were 18,553 units, representing an increase of 15.1% from 2021.

Retail Automotive. Our integrated marketing strategy empowers each dealership to capitalize on local branding while being supported by corporate programs and web presence, allowing us to leverage scale and our parent brand recognition. We align ourselves with the marketing implemented by our vehicle manufacturer partners for their respective brands and integrate those initiatives and resources across the brands we represent.

Retail Commercial Truck Dealership and Commercial Vehicle Distribution and Other. We market commercial trucks in the U.S. and Canada and commercial vehicles and other products in Australia and New Zealand, principally through a network of dealership and service locations supported by corporate level marketing efforts. Our digital marketing leverages manufacturer websites supplemented by brand specific websites to promote our brands and services. We also employ local sponsorships to generate brand awareness in our markets and market to customers at various trade shows and other industry events.

Some of our key automotive manufacturer partners have announced plans to explore an agency model of selling new vehicles in the U.K. and other European countries, and Mercedes-Benz U.K. transitioned each of its U.K. dealers to an agency model beginning January 1, 2023. Under an agency model, our dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. We will continue to provide new vehicle customer service at our dealerships. The Mercedes-Benz U.K. agency model is not expected to structurally change our used vehicle sales operations or service and parts operations, although the impact of the agency model implemented by Mercedes-Benz U.K. as well as other agency models proposed by our manufacturer partners is uncertain. The agency model will reduce reported revenues (as only the fee we receive, and not the price of the vehicle, will be reported as revenue), reduce selling, general, and administrative ("SG&A") expenses, and reduce floor plan interest expense, although the other impacts to our results of operations remain uncertain. We believe transition to an agency model in the U.S. would be difficult for our automotive manufacturer partners in light of U.S. franchise laws. See Item 1. Business, "Regulations" and Item 1A. Risk Factors, "Agency" and "Regulatory Issues."

Dealerships. We believe that the principal factors consumers consider when determining where to purchase a vehicle are vehicle pricing (including manufacturer rebates and other special offers), marketing campaigns conducted by manufacturers, the ability of dealerships to offer a wide selection of the most popular vehicles, offering a multi-channel experience to customers so they may purchase a vehicle on site or remotely, the location of dealerships, and the quality of the customer experience. Other factors include customer preference for particular brands of vehicles and warranties. We believe that our dealerships are competitive in all of these areas.

Commercial Vehicle Distribution and Other. With respect to our commercial vehicle distribution and other operations in Australia and New Zealand, we compete with manufacturers, distributors, and retailers of other vehicles and products in our markets.

PTS. As an alternative to using PTS' full-service truck leasing or contract maintenance services, we believe that most potential customers perform some or all of these services themselves. They may also purchase similar or alternative services from other third-party vendors. Its full-service truck leasing operations compete with companies providing similar services on a national, regional, and local level. Many regional and local competitors provide services on a national level through their participation in various cooperative programs. Competitive factors include price, maintenance, service, and geographic coverage. PTS competes with finance lessors, truck and trailer manufacturers, and independent dealers, each of which provides full-service lease products, finance leases, extended warranty maintenance, rental, and other transportation services. Its contract maintenance offering competes primarily with truck and trailer manufacturers and independent dealers who provide maintenance services.

We operate in a highly regulated industry and a number of regulations affect the marketing, selling, financing, servicing, and distribution of vehicles. Under the laws of the jurisdictions in which we currently operate, we typically must obtain a license in order to establish, operate, relocate a dealership, or operate a repair facility. These laws also regulate our conduct of business, including our advertising, operating, financing, employment, distribution, and sales practices. Other laws and regulations include franchise laws and regulations, environmental laws and regulations (see “Environmental Matters” below), laws and regulations applicable to new and used motor vehicle dealers as well as customer and employee privacy, identity theft prevention, wage-hour, anti-discrimination, and other employment practices laws. With respect to online sales, many laws and regulations applicable to our business were adopted prior to the introduction of the Internet, certain digital technologies, and e-commerce, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. See Item 1A. Risk Factors, "Regulatory Issues".

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. Some jurisdictions regulate finance fees that may be paid as a result of vehicle sales. In recent years, private plaintiffs, state attorneys general, and federal agencies in the U.S. have increased their scrutiny of advertising, sales, and finance and insurance activities in the sale and leasing of motor vehicles. Moreover, in 2022, the Federal Trade Commission proposed new regulations for automotive dealers that would change industry-accepted practices with regard to sales and advertising, require an extensive series of oral and written disclosures to consumers in regard to the sale price of vehicles, credit terms, and voluntary protection products, mandate the posting of certain pricing and other information on dealer websites, and impose burdensome recordkeeping requirements which, if implemented as proposed, may lead to additional transaction times for the sale of vehicles, complicate the transaction process, decrease customer satisfaction, and enhance compliance cost and risk, among other effects. See Item 1A. Risk Factors, "Regulatory Issues."

In the U.S., we benefit from the protection of numerous state franchise laws that generally provide that a manufacturer or distributor may not terminate or refuse to renew a franchise agreement unless it has first provided the dealer with written notice setting forth good cause and stating the grounds for termination or non-renewal. Some state franchise laws allow dealers to file protests or petitions or to attempt to comply with the manufacturer's criteria within the notice period to avoid the termination or non-renewal. Our international locations generally do not have these laws, and as a result, our international operations operate without these types of protections. See Item 1. Business, "Agreements with Vehicle and Equipment Manufacturers."

Item 1A. Risk Factors

Macro-economic and geo-political conditions. Our performance is impacted by geo-political conditions such as the war in Ukraine and by general economic conditions overall and in particular by economic conditions in the markets in which we operate. These economic conditions include levels of new and used vehicle sales, availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, the rate of inflation, personal discretionary spending levels, interest rates, and unemployment rates. When the worldwide economy faltered early in 2020, we were adversely affected, and we expect a similar relationship between general economic and industry conditions and our performance in the future. Any geo-political developments that adversely affect the economies of our markets will also likely affect us. Moreover, geo-political conditions can affect the vehicle supply chain as has recently happened with the war in Ukraine. Certain vehicle manufacturers and suppliers are experiencing difficulty sourcing certain parts which is further exacerbating the supply chain difficulties resulting from the COVID-19 pandemic, demand for labor, and the shortage of microchips and other components.

Adverse conditions affecting one or more significant automotive manufacturers or suppliers will affect us. Our success depends on the overall success of the automotive industry generally and in particular, on the success of the brands of vehicles that each of our dealerships sell. In 2022, revenue generated at our BMW/MINI, Audi/Volkswagen/Porsche/Bentley, Toyota/Lexus, and Mercedes-Benz/Sprinter/smart dealerships represented 26%, 21%, 14%, and 10%, respectively, of our total automotive dealership revenues. In addition, our retail commercial truck operations rely principally on Freightliner and Western Star trucks (both Daimler brands).

The success of our commercial vehicle distribution and other business is directly impacted by availability and demand for the vehicles and other products we distribute. We are the exclusive distributor of Western Star commercial trucks, MAN commercial trucks and buses, and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. We are also the distributor of diesel and gas engines and power systems in these same markets. The profitability of these businesses depends upon the number of vehicles, engines, power systems, and parts we distribute, which in turn is impacted by demand for these products. We believe demand is subject to general economic conditions, exchange rate fluctuations, regulatory changes, competitiveness of the products, and other factors over which we have limited control. In the event sales of these products are less than we expect, our related results of operations and cash flows for this aspect of our business may be materially adversely affected. The products we distribute are principally manufactured at a limited number of locations. In the event of a supply disruption, sufficient quantities of the vehicles, engines, power systems, and parts are not made available to us, or if we accept these products and are unable to economically distribute them, our cash flows or results of operations may be materially adversely affected.

Australian economic conditions. Our commercial vehicle distribution and other operations in Australia and New Zealand may be impacted by local and regional economic conditions and in particular, the price of commodities such as copper and iron ore, which may impact the desire of our customers to operate their mining operations and replace their vehicle fleets. Adverse pricing concerns of those, and other commodities, may have a material adverse effect on our ability to distribute, and/or retail, commercial vehicles and other products profitably. These same conditions may also negatively impact the value of the Australian Dollar versus the U.S. Dollar, which negatively impacts our U.S. Dollar reported financial results and the pricing of products sold by Penske Australia, which are manufactured in the U.S., U.K., and Germany.

Additional risks relating to PTS. PTS' business has additional risks to those in the retail business:

Customers. PTS has a more concentrated customer base than we do and is subject to changes in the financial health of its customers, changes in their asset utilization rates, and increased competition for those customers.

Workforce. PTS requires a significant number of qualified drivers and technicians, which may be difficult to hire, and is subject to increased compliance costs or work stoppages relating to those employees, particularly in regard to changes in labor laws and time of work rules regarding those employees. PTS contributes to several U.S. multi-employer pension plans that provide defined benefits to approximately 2,590 associates covered by collective bargaining agreements. If they withdraw or are deemed to withdraw from participation in any of these plans, then applicable law could require them to make withdrawal liability payments to the plan. If any of those plans were deemed to be underfunded, PTS could be subject to additional assessments, which could be substantial.

Fleet risk. As one of the largest purchasers of commercial trucks in North America, PTS requires continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, which may be uncertain, in particular if a significant recall were to occur. PTS is affected by the same supply issues noted above and any failure of the supply chain resulting in limited availability of new trucks or parts may have a material adverse impact on PTS. In addition, because PTS sells a large number of trucks each year and is subject to residual risk for the vehicles it leases to customers, changes in values of used trucks affects PTS' profitability.

Capital markets risk. PTS relies on banks and the capital markets to fund its operations and capital commitments. PTS had a significant amount of total indebtedness at December 31, 2022, which it uses in part to purchase its vehicle fleet and therefore, is subject to changes in, and continued access to, capital markets.

Regulatory Requirements, Vehicle Mandates, and Consumer Sentiment. Global, federal, state, and local legislative and regulatory efforts to address the effects of global warming and climate change have affected and will likely continue to affect PTS' businesses and may require restrictions on PTS' activities or require PTS to take certain actions,

Centralized Information Systems. PTS relies heavily on centralized information systems to process lease and rental transactions, manage its fleet of vehicles, account for its activities, and otherwise conduct its business. A failure of a major system, or a major disruption of communications between the system and the locations it serves, could cause a loss of reservations, interfere with PTS' ability to manage its fleet, impede real-time diagnostics of vehicles, slow leasing, rental, and sales processes, and otherwise adversely affect PTS' ability to manage its business.

The COVID-19 pandemic has disrupted, and may continue to disrupt, our business, which could adversely affect our financial performance. The outbreak of the COVID-19 pandemic across the globe has adversely impacted each of our markets and the global economy, leading to disruptions to our business. If shelter-in-place orders are re-enacted or other restrictions are placed on our business, we may be adversely impacted. The COVID-19 pandemic remains highly fluid and continues to, among other things, impact production levels from our manufacturing partners and impose other unintended consequences, and while we continue to adjust our operations to conform to regulatory changes and consumer preferences in the evolving environment, we cannot anticipate with any certainty the length, scope, or severity of the business impact from the COVID-19 pandemic in each of the jurisdictions that we operate.

Brand reputation. Our businesses and our commercial vehicle operations, in particular, as those are more concentrated with a particular manufacturer, are impacted by consumer demand and brand preference, including consumers' perception of the quality of those brands. A decline in the quality and brand reputation of the vehicles or other products we sell or distribute, as a result of events such as manufacturer recalls or legal proceedings, may adversely affect our business. If such events were to occur, the profitability of our business related to those manufacturers could be adversely affected.

Our business is very competitive. We generally compete with other franchised dealerships in our markets, used vehicle dealerships, private market buyers and sellers of used vehicles, an increasing number of internet-based vehicle sellers, electric vehicle manufacturers that sell direct to consumers, national and local service and repair shops and parts retailers with respect to commercial vehicles, distributors of similar products, and manufacturers in certain markets. Purchase decisions by consumers when shopping for a vehicle are extremely price sensitive. The level of competition in the market can lead to lower selling prices and related profits. If there is a prolonged drop in retail prices or if new vehicle sales are

Changes to the retail delivery model, including increased digital retailer competition, efforts to sell vehicles direct outside the franchise system, and transition to an “agency model” of distribution each could adversely affect our business, results of operations, financial condition, and cash flows. The retail automotive industry is experiencing a period of unprecedented change and disruption in several respects:

Competition from online retailers. The automotive retail industry is experiencing growing competition in the used vehicle market from companies with a primarily online business model, including companies such as Carvana, Vroom, Shift, Cazoo, and others. We and the other traditional automotive retailers are implementing digital retail strategies, providing consumers with online vehicle purchasing experiences, including at-home delivery. We also continue to develop technology solutions to improve the online buying experience. We may face increased competition for market share with these non-traditional delivery models and digital retailers over time which could materially and adversely affect our results of operations. We cannot be sure that our initiatives will be successful or that the amount we invest in these initiatives will result in our maintaining or enhancing market share and continued or improved financial performance.

Sales outside the franchise system. In recent years, new electric vehicle manufacturers have been able to conduct new vehicle sales outside of the franchised automotive system as new entrants. While the sales levels of these new entrants was approximately 4% of new vehicles in the U.S. and approximately 3% of new vehicles in the U.K. for the year ended December 31, 2022, continued market share gains by manufacturers operating outside the franchise system may materially and adversely affect us. Moreover, while we expect continued good relations with our manufacturer partners, should U.S. franchise laws be repealed or amended to allow our existing manufacturer partners to effectively operate outside the franchised system, our results of operations may be materially and adversely impacted. Our franchised automotive dealers in the U.K., European Union, and Japan operate effectively without U.S. franchise law protections.

Agency. Some of our key automotive manufacturer partners, including Audi, BMW/MINI, and Land Rover, have announced plans to explore an agency model of selling new vehicles in the U.K. and other European countries, and Mercedes-Benz U.K. has transitioned to an agency model with its U.K. dealers as of January 1, 2023. Under an agency model, our dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. We will continue to provide new vehicle customer service at our dealerships. The Mercedes-Benz U.K. agency model is not expected to structurally change our used vehicle sales operations or service and parts operations, although the impact of the agency model implemented by Mercedes-Benz U.K. as well as other agency models proposed by our manufacturer partners is uncertain. The agency model will reduce reported revenues (as only the fee we receive, and not the price of the vehicle, will be reported as revenue), reduce SG&A expenses, and reduce floor plan interest expense, although the other impacts to our results of operations remain uncertain. We believe transition to an agency model in the U.S. would be difficult for the manufacturers in light of U.S. franchise laws. See the risk captioned "Sales outside the franchise system" above.

New mobility models and vehicle electrification will continue to result in rapid changes to the automotive and trucking industries. Shared vehicle services such as Uber and Lyft provide consumers with increased choice in their personal mobility options. The effect of these and similar mobility options on the retail automotive industry is uncertain and may include lower levels of new vehicles sales but with increasing miles driven, which could require additional demand for vehicle maintenance. Most major vehicle manufacturers have announced plans to electrify some or all of their new vehicle fleets in response to concerns about the environment and due to regulatory requirements to limit vehicle emissions. We expect to continue to sell electric and hybrid gas/electric vehicles through our franchised dealerships; however, our service revenues may decline over time as these vehicles may require less physical maintenance than gas and hybrid vehicles due to the absence of certain parts systems. Moreover, while increasing consumer adoption of electric vehicles may present new service opportunities, including with respect to range maintenance and optimization, cooling protection, torque protection, battery replacement, and warranty on newly released models.

The effects of the eventual adoption of driverless vehicles are uncertain. Technological advances are facilitating the evolution of driverless vehicles. While many manufacturers offer varying degrees of driver assistance technology, the timing of adoption of true driverless vehicles remains uncertain due to regulatory requirements, additional technological requirements, and uncertain consumer acceptance of these vehicles. The effect of driverless vehicles on the automotive retail and trucking industries is uncertain and could include changes in the level of new and used

Key personnel. We believe that our success depends to a significant extent upon the efforts and abilities of our senior management and in particular, upon Roger Penske who is our Chair and Chief Executive Officer. To the extent Mr. Penske, or other key personnel, were to depart from our Company unexpectedly, our business could be significantly disrupted.

Leverage. Our significant debt and other commitments expose us to a number of risks, including:

Cash requirements for debt and lease obligations. A significant portion of the cash flow we generate must be used to service the interest and principal payments relating to our various financial commitments, including $3.0 billion of floor plan notes payable, $1.6 billion of non-vehicle long-term debt, and $5.4 billion of future lease commitments (including extension periods that are reasonably assured of being exercised and assuming constant consumer price indices). A sustained or significant decrease in our operating cash flows could lead to an inability to meet our debt service or lease requirements or to a failure to meet specified financial and operating covenants included in certain of our agreements. If this were to occur, it may lead to a default under one or more of our commitments and potentially the acceleration of amounts due, which could have a significant and adverse effect on us.

Credit Availability. Because we finance the majority of our operating and strategic initiatives using a variety of commitments, including floor plan notes payable and revolving credit facilities, we are dependent on continued availability of these sources of funds. If these agreements are terminated or we are unable to access them because of a breach of financial or operating covenants or otherwise, we will likely be materially affected.

Interest rate variability. The interest rates we are charged on a substantial portion of our debt, including the floor plan notes payable we issue to purchase the majority of our inventory, are variable, increasing or decreasing based on changes in certain published interest rates. Increases to such interest rates has resulted and may continue to result in higher interest expense for us, which negatively affects our operating results. Because many of our customers finance their vehicle purchases, increased interest rates may also decrease vehicle sales due to affordability, which would negatively affect our operating results.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined. Regulatory authorities in the U.S. have announced their intention to stop compelling banks to submit rates for the calculation of the London Interbank Offered Rate ("LIBOR"), ending after June 30, 2023, for the LIBOR tenors that are relevant to our business. Our senior secured revolving credit facility in the U.S. and many of our floorplan arrangements utilize LIBOR as a benchmark for calculating the applicable interest rate, although some of our floorplan arrangements and our U.K. credit agreement have already transitioned to utilizing an alternative benchmark rate. Changes in the method of calculating LIBOR, the elimination of LIBOR, or the replacement of LIBOR with an alternative rate or benchmark may require us to renegotiate or amend these facilities, loans, and programs, which may adversely affect interest rates and result in higher borrowing costs. This could materially and adversely affect our results of operations, cash flows, and liquidity. We cannot predict the effect of the potential changes to or elimination of LIBOR or the establishment and use of alternative rates or benchmarks and the corresponding effects on our cost of capital, which may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.

Impairment of our goodwill or other indefinite-lived intangible assets has in the past had, and in the future could have, a material adverse impact on our earnings. We evaluate goodwill and other indefinite-lived intangible assets for impairment annually and upon the occurrence of an indicator of impairment. Our process for impairment testing of these assets is described further under “Impairment Testing” in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates. If we determine that the amount of our goodwill or other indefinite-lived intangible assets are impaired at any point in time, we would be required to reduce the value of these assets on our balance sheet, which would also result in a material non-cash impairment charge that could also have a material adverse effect on our results of operations for the period in which the impairment occurs.

Performance of sublessees. In connection with the sale, relocation, and closure of certain of our franchises, we have entered into a number of third-party sublease agreements. The rent paid by our sub-tenants on such properties in 2022 totaled approximately $17.9 million. In the aggregate, we remain ultimately liable for approximately $112.4 million of such lease payments including payments relating to all available renewal periods. We rely on our sub-tenants to pay the rent and maintain the properties covered by these leases. In the event a subtenant does not perform under the terms of their lease with us, we could be required to fulfill such obligations, which could have a significant and adverse effect on us.

International and foreign currency exchange risk. We have significant operations outside of the U.S. that expose us to changes in foreign currency exchange rates and to the impact of economic and political conditions in the markets where we operate. As exchange rates fluctuate, our results of operations as reported in U.S. Dollars fluctuate. For example, if the U.S. Dollar strengthens against the British Pound, our U.K. results of operations would translate into less U.S. Dollar reported results. Sustained levels or an increase in the value of the U.S. Dollar, particularly as compared to the British Pound, could result in a significant and adverse effect on our reported results.

Joint ventures. We have significant investments in a variety of joint ventures, including retail automotive operations in Germany, Italy, and Spain. We have a 28.9% interest in PTS. We expect to receive annual operating distributions from PTS and the other ventures and in the case of PTS, realize significant cash savings on taxes. These benefits may not be realized if the joint ventures do not perform as expected, or if changes in tax, financial, or regulatory requirements negatively impact the results of the joint venture operations. Our ability to dispose of these investments may be limited. In addition, the relevant joint venture agreement and other contractual restrictions may limit our access to the cash flows of these joint ventures. For example, certain of PTS' debt agreements allow partner distributions only as long as it is not in default under those agreements and the amount it pays does not exceed 50% of its consolidated net income, unless its debt-to-equity ratio is less than 3.0 to 1.0, in which case its distributions may not exceed 80% of its consolidated net income.

Vehicle manufacturers exercise significant control over us. Each of our new vehicle dealerships and distributor operations operate under franchise and other agreements with automotive manufacturers, commercial vehicle manufacturers, or related distributors. These agreements govern almost every aspect of the operation of our dealerships and give manufacturers the discretion to terminate or not renew our franchise agreements for a variety of reasons, including certain events outside our control such as accumulation of our stock by third parties. They also limit our ability to acquire dealerships on a national, regional, and local basis. Without franchise or distributor agreements, we would be unable to sell or distribute new vehicles or perform manufacturer authorized warranty service. If a significant number of our franchise agreements are terminated, not renewed, or, with respect to our distributor operations, a competing distributor were introduced, we would be materially affected.

Regulatory Issues. We are subject to a wide variety of regulatory activities and oversight, including:

Governmental regulations, claims, and legal proceedings. Governmental regulations affect almost every aspect of our business, including the fair treatment of our employees, wage and hour issues, and our financing activities with customers. In California, previous judicial decisions have called into question whether long-standing methods for compensating dealership employees comply with the local wage and hour rules and may do so again. We could be susceptible to claims or related actions if we fail to operate our business in accordance with applicable laws or it is determined that long-standing compensation methods did not comply with local laws. Many laws and regulations applicable to our business were adopted prior to the introduction of online vehicle sales, the Internet and certain digital technology, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. Claims arising out of actual or alleged violations of law which may be asserted against us or any of our dealers by individuals, through class actions, or by governmental entities in civil or criminal investigations and proceedings, may expose us to substantial monetary damages which may adversely affect us.

Privacy Regulation. We are subject to numerous laws and regulations in the U.S. and internationally designed to protect the information of clients, customers, employees, and other third parties that we collect and maintain, including the European Union General Data Protection Regulation (the “EUGDPR”) and the United Kingdom General Data Protection Regulation (the "UKGDPR"). Both the EUGDPR and UKGDPR, among other things, mandate requirements regarding the handling of personal data of employees and customers, including its use, protection, and the ability of persons whose data is stored to correct or delete such data about themselves. The state of California has a similar law called the California Consumer Privacy Act, recently amended and enhanced effective January 1, 2023, by the California Privacy Rights Act (as so amended, the "CCPA"). In addition to enforcement authority granted to the California Attorney General, the CCPA established the "California Privacy Protection Agency," a dedicated state agency charged with the authority to audit and enforce privacy rules, among other responsibilities, and the CCPA permits a private right of action for certain violations of law. Connecticut, Utah, and Virginia, have also enacted comprehensive consumer privacy laws, and other states may follow. These laws pose increasingly complex and rigorous compliance challenges, which may increase our compliance costs and related risk. If we fail to comply with these laws or other similar regulations applicable to our business, we could be subject to reputational harm and significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. For

Recalls. Legislative and regulatory bodies from time to time have considered laws or regulations that would prohibit companies from renting or selling any vehicle that is subject to a recall until the recall service is performed. Whether any such prohibition may be enacted, and its ultimate scope, cannot be determined at this time. If a law or regulation is enacted that prevents the sale of vehicles until recall service has been performed, we could be required to reserve a significant portion of our vehicles from being available for sale for even a minor recall unrelated to vehicle safety. In addition, various manufacturers have issued stop sale notices in relation to certain recalls that require that we retain vehicles until the recall can be performed, whether or not parts are then available. While servicing recall vehicles yields parts and service revenue to us, the inability to sell a significant portion of our vehicles could increase our costs and have an adverse effect on our results of operations if a large number of our vehicles are the subject of simultaneous recalls or if needed replacement parts are not in adequate supply.

Vehicle requirements. Federal and state governments and regulators in both our domestic and international markets have increasingly placed restrictions and limitations on the vehicles sold in the market in an effort to combat perceived negative environmental effects. For example, in the U.S., automotive manufacturers are subject to federally mandated corporate average fuel economy standards, which will increase substantially through 2026. Representatives of the U.K. government have proposed a ban on the sale of gasoline engines in new cars and new vans that would take effect as early as 2030 and a ban on the sale of gasoline hybrid engines in new cars and new vans as early as 2035. The European Parliament provisionally approved a law requiring most automakers to reduce the emissions of new cars sold by 55% in 2030 and achieve a zero carbon-emission standard by 2035, effectively banning the sale of new gasoline and diesel cars and vans by 2035. Similar legislation has been announced in Washington, California, Massachusetts, and New York, which would ban the sale of new vehicles with gasoline-only engines in cars in 2035. The California legislation requires 35% of all new vehicles sold to meet a zero emissions standard by 2026 (with certain allowances for hybrid gas/electric vehicles), which percentage requirement increases until 2035, after which 100% of new vehicles sold must comply. Significant increases in fuel economy requirements and new restrictions on emissions on vehicles and fuels could adversely affect prices of and demand for the vehicles that we sell, which could materially adversely affect us.

Commercial trucks are subject to similar regulatory risks related to emissions standards and other regulatory requirements. PTG sells new and used heavy- and medium-duty commercial trucks, parts and service, and offers collision repair services. PTS, with its broad product offering including full-service truck leasing, contract maintenance, and truck rental, along with logistic services, is one of the largest purchasers of commercial trucks in North America. Should future regulations or consumer sentiment hinder our or PTS' ability to maintain, acquire, sell, or operate trucks, we may be adversely affected.

Tariff and trade risk. Increased tariffs, import product restrictions, and foreign trade risks may impair our ability to sell foreign vehicles profitably. The United States Mexico Canada Agreement allows tariff-free importing of automobiles among the countries only if (i) the vehicles have 75% of their components manufactured in the U.S., Mexico, or Canada, (ii) workers with an hourly wage of at least $16, manufacture at least 40% of the vehicle, or in the case of trucks, 45% and (iii) 70% of the steel and aluminum used in the production of the vehicle is sourced within North America. Should tariffs increase, we expect the price of many new vehicles we sell to increase which may adversely affect our new vehicle sales and related finance and insurance sales. Moreover, new rules in place after the Brexit accord between the European Union and the U.K. require varying levels of content in vehicles to originate in either the U.K. or the European Union to remain tariff free. If automotive manufacturers cannot meet these content rules, there may be import tariffs on any affected vehicles, which could adversely affect our U.K. results.

Franchise laws in the U.S. In the U.S., state law generally provides protections to franchised vehicle dealers from discriminatory practices by manufacturers and from unreasonable termination or non-renewal of their franchise agreements. In many states, the laws require that new vehicle sales be conducted exclusively by automotive retailers (not manufacturers). Should U.S. franchise laws be repealed or amended to allow our existing manufacturer partners to effectively operate outside the franchised system, our results of operations may be materially and adversely impacted. See the risk factor captioned “Sales outside the franchise system” above.

Changes in law. New laws and regulations at the state and federal level may be enacted which could materially adversely impact our business. For example, in 2022, the Federal Trade Commission proposed new regulations for automotive dealers that would change industry-accepted practices with regard to sales and advertising, require an extensive series of oral and written disclosures to consumers in regard to the sale price of vehicles, credit terms, and

Climate change and environmental regulations. Scientific evidence suggests that the globe is warming potentially resulting in an environment more prone to natural disasters, such as flooding. To date, we have seen increases in our cost to insure against such risks, which costs could continue to increase should this trend continue. We are subject to a wide range of environmental laws and regulations, including those governing discharges into the air and water; the operation and removal of storage tanks; and the use, storage, and disposal of hazardous substances. In the normal course of our operations we use, generate, and dispose of materials covered by these laws and regulations. In the face of climate change, these laws could become more stringent. We face potentially significant costs relating to claims, penalties, and remediation efforts in the event of non-compliance with existing and future laws and regulations. Furthermore, should climate change continue, we expect further regulation of internal combustion engines and vehicle emissions which may affect the types of vehicles we sell and service. We cannot predict the future costs to our businesses for these developments.

Accounting rules and regulations. Significant changes to GAAP in the U.S. could significantly affect our reported financial position, earnings, and cash flows upon adoption and effectiveness. In addition, any changes to lease accounting could affect PTS customers' decisions to purchase or lease trucks, which could adversely affect their business if leasing becomes a less favorable option. See the disclosure provided under “Recent Accounting Pronouncements” in Part II, Item 8, Note 1 of the Notes to our Consolidated Financial Statements for additional detail on accounting standard updates that could have an impact on us.

Related parties. Our two largest stockholders, Penske Corporation and its affiliates (“Penske Corporation”) and Mitsui & Co., Ltd. and its affiliates (“Mitsui”), together beneficially own approximately 70% of our outstanding common stock. The presence of such significant stockholders results in several risks, including:

Our principal stockholders have substantial influence. Penske Corporation and Mitsui have entered into a stockholders agreement pursuant to which they have agreed to vote together as to the election of our directors. As a result, Penske Corporation has the ability to control the composition of our Board of Directors, which may allow it to control our affairs and business. This concentration of ownership coupled with certain provisions contained in our agreements with manufacturers, our certificate of incorporation, and our bylaws could discourage, delay, or prevent a change in control of us.

Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests. Roger Penske, our Chair and Chief Executive Officer and a director, holds the same offices at Penske Corporation. Robert Kurnick, Jr., our President and a director, is also the Vice Chair and a director of Penske Corporation. Bud Denker, our Executive Vice President, Human Resources, is also the President of Penske Corporation. Each of these officers is paid much of their compensation by Penske Corporation. The compensation they receive from us is based on their efforts on our behalf; however, they are not required to spend any specific amount of time on our matters. The Vice Chair of our Board of Directors, Greg Penske, is the son of our Chair and also serves as a director of Penske Corporation. Michael Eisenson, one of our directors, is also a director of Penske Corporation. Kota Odagiri, one of our directors, is also an employee of Mitsui. Roger Penske also serves as Chairman of Penske Transportation Solutions, for which he is compensated by PTS.

Penske Corporation ownership levels. Certain of our agreements have clauses that are triggered in the event of a material change in the level of ownership of our common stock by Penske Corporation, such as our trademark agreement between us and Penske Corporation that governs our use of the “Penske” name which can be terminated 24 months after the date that Penske Corporation no longer owns at least 20% of our voting stock. We may not be able to renegotiate such agreements on terms that are acceptable to us, if at all, in the event of a significant change in Penske Corporation's ownership.

We have a significant number of shares of common stock eligible for future sale. Penske Corporation and Mitsui own approximately 70% of our common stock, and each has two demand registration rights that could result in a substantial number of shares being introduced for sale in the market. We also have a significant amount of authorized but unissued shares. Penske Corporation has pledged a substantial portion of its shares of our common stock as collateral to secure a loan facility. A default by Penske Corporation could result in the foreclosure on those shares by the lenders, after

Property loss, business interruption, or other liabilities. Our business is subject to substantial risk of loss due to the significant concentration of property values, including vehicle and parts inventories at our operating locations; claims by employees, customers, and third parties for personal injury or property damage; and fines and penalties in connection with alleged violations of regulatory requirements. While we have insurance for many of these risks, we retain risk relating to certain of these perils, including through self-insurance, and certain perils are not covered by our insurance. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. If we experience significant losses that are not covered by our insurance, whether due to adverse weather conditions or otherwise, or we are required to retain a significant portion of a loss, it could have a significant and adverse effect on us.

Information technology. Our information systems are fully integrated into our operations, and we rely on them to operate effectively, including with respect to electronic interfaces with manufacturers and other vendors, customer relationship management, sales and service scheduling, data storage, and financial and operational reporting. The majority of our systems are licensed from third parties; the most significant of which are provided by a limited number of suppliers in the U.S., U.K., and Australia. The failure of our information systems to perform as designed, the failure to protect the integrity of these systems, or the interruption of these systems due to natural disasters, power loss, unexpected termination of our agreements, cyber-attacks, or other reasons could significantly and adversely disrupt our business operations, impact sales and results of operations, expose us to customer or third-party claims, or result in adverse publicity.

Cybersecurity. As part of our business model, we receive sensitive information regarding customers, employees, associates, and vendors from various online and offline channels. We collect, process, retain, and in some cases share this information in the normal course of our business. Our internal and third-party systems are under a heightened level of risk from cyber criminals or other individuals with malicious intent to gain unauthorized access to our systems and exploit the information, including sensitive personal information, that we gather. Cyber-attacks and threats to network and data security are becoming increasingly diverse and sophisticated, with attacks increasing in frequency, scope, and potential harm. In addition, some of our software applications are utilized by third parties who provide outsourced administrative functions. Such third parties may have access to confidential information that is critical to our business operations and services. While our information security program includes enhanced controls to monitor third party providers' security programs, these third parties are subject to their own risks of data breaches, cyber-attacks, and other events or actions that could damage, disrupt, or close down their networks or systems, which in turn may adversely impact our business operations. For an overview of certain of our efforts related to cybersecurity risk management, strategy, and governance and our written Information Security Program, see Item 1. Business — Business Description — "Information Technology, Data Security, Cybersecurity, and Customer Privacy."

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

In October 2022, our Board of Directors increased the authority delegated to management to repurchase our outstanding securities by $250 million. As of February 7, 2023, $3.6 million of that authority remained outstanding and available for repurchases. On February 16, 2023, our Board of Directors delegated to management an additional $250 million in authority to repurchase our outstanding securities, resulting in $253.6 million of authority outstanding and available for repurchases. This authority has no expiration. For further information with respect to repurchases of our shares by us, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — "Securities Repurchases" and Part II, Item 8, Note 14 of the Notes to our Consolidated Financial Statements.

Period						Total Number of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (in millions)
October 1 to October 31, 2022						949,396						$	100.91					949,396						$	262.8
November 1 to November 30, 2022						809,246						$	118.83					809,246						$	166.6
December 1 to December 31, 2022						777,603						$	119.08					777,603						$	74.0
						2,536,245												2,536,245

			Cumulative Total Return
			12/17						12/18						12/19						12/20						12/21						12/22
Penske Automotive Group, Inc.			100.00						86.78						111.91						134.36						247.71						270.55
S&P 500			100.00						95.62						125.72						148.85						191.58						156.89
Peer Group			100.00						74.52						125.57						191.96						251.94						218.97

Item 6. Reserved

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

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 “Item 1A. Risk Factors” and “Forward-Looking Statements.” We have acquired 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.

In 2022, our business generated $27.8 billion in total revenue, which is comprised of approximately $23.7 billion from retail automotive dealerships, $3.5 billion from retail commercial truck dealerships, and $578.8 million from commercial vehicle distribution and other operations. We generated $4.8 billion in gross profit, which is comprised of $4.1 billion from retail automotive dealerships, $555.1 million from retail commercial truck dealerships, and $157.3 million from commercial vehicle distribution and other operations.

Retail Automotive. We are one of the largest global automotive retailers as measured by the $23.7 billion in total retail automotive dealership revenue we generated in 2022. We are diversified geographically with 58% of our total retail automotive dealership revenues in 2022 generated in the U.S. and Puerto Rico and 42% generated outside of the U.S. We offer over 35 vehicle brands with 71% of our retail automotive franchised dealership revenue in 2022 generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche. As of December 31, 2022, we operated 338 retail automotive franchised dealerships, of which 151 are located in the U.S. and 187 are located outside of the U.S. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of December 31, 2022, we also operated 21 used vehicle dealerships, with eight dealerships in the U.S. and 13 dealerships in the U.K., which retailed used vehicles under a one price, "no-haggle" methodology under the CarShop brand. We retailed and wholesaled more than 539,000 vehicles in 2022.

Each of our franchised dealerships offers a wide selection of new and used vehicles for sale. In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Beginning in 2023, we transitioned our Mercedes-Benz U.K. dealerships to an agency model. Under an agency model, our Mercedes-Benz U.K. dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. We continue to provide new vehicle customer service at our Mercedes-Benz U.K. dealerships, and the Mercedes-Benz U.K. agency model is not expected to structurally change our used vehicle sales operations or service and parts operations, although the impact of the agency model at these dealerships as well as other agency models proposed by our manufacturer partners is uncertain. See Part I, Item 1A. Risk Factors for a discussion of agency.

Retail Commercial Truck Dealership. We operate Premier Truck Group (“PTG”), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across nine U.S. states and Ontario, Canada. During February 2022, we acquired four full-service dealerships in Ontario, Canada. As of December 31, 2022, PTG operated 39 locations selling new and used trucks, parts and service, and offering collision repair services. We retailed and wholesaled 21,002 new and used trucks in 2022. This business represented 12.7% of our total revenues and 11.5% of our total gross profit in 2022.

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 business lines through which it 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 logistic services, such as dedicated contract carriage, distribution center management, transportation management, lead logistics provider services, and dry van truckload carrier services. We recorded $490.0 million and $365.8 million in equity earnings from this investment in 2022 and 2021, respectively.

Floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that are secured by those vehicles. Other interest expense consists of interest charges on all of our interest-bearing debt, other than interest relating to floor plan financing, and includes interest relating to our retail commercial truck dealership and commercial vehicle distribution and other operations. The cost of our variable rate indebtedness is based on the prime rate, the London Interbank Offered Rate ("LIBOR"), the Sterling Overnight Index Average ("SONIA"), the Bank of England Base Rate, the Finance House Base Rate, the Euro Interbank Offered Rate, the Canadian Prime Rate, the Tokyo Interbank Offered Rate, the Australian Bank Bill Swap Rate, and the New Zealand Bank Bill Benchmark Rate.

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 new and used vehicle sales, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, personal discretionary spending levels, interest 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, the shortage of microchips or other components, the COVID-19 pandemic, the war in Ukraine, challenges in sourcing labor, or other disruptions; changes in the retail model either from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of electric vehicles; the continued effect of COVID-19 on the global economy, including our ability to react effectively to changing business conditions in light of the COVID-19 pandemic; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate and integrate 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, continued availability from truck manufacturers and suppliers of vehicles and parts for its 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 investment 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 automotive dealerships and vehicles sales, including those related to emissions standards, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors above and "Forward-Looking Statements" below.

The following are the accounting policies applied in the preparation of our financial statements that management believes are most dependent upon the use of estimates and assumptions.

Dealership Vehicle, Parts, and Service Sales. We record revenue for vehicle sales at a point in time when vehicles are delivered, which is when the transfer of title, risks and rewards of ownership, and control are considered passed to the customer. We record revenue for vehicle service and collision work over time as work is completed and when parts are delivered to our customers. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the

Dealership Finance and Insurance Sales. Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non-recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection, and extended service contracts. These commissions are recorded as revenue at a point in time when the customer enters into the contract. Payment is typically due and collected within 30 days subsequent to the execution of the contract with the customer. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $38.4 million and $33.7 million as of December 31, 2022, and December 31, 2021, respectively.

Commercial Vehicle Distribution and Other. We record revenue from the distribution of vehicles, engines, and other products at a point in time when delivered, which is when the transfer of title, risks and rewards of ownership, and control are considered passed to the customer. We record revenue for service or repair work over time as work is completed and when parts are delivered to our customers. For our long-term power generation contracts, we record revenue over time as services are provided in accordance with contract milestones.

The results for 2021 include a tax expense of $10.8 million, or $0.13 per share, related to revaluation of our U.K. deferred tax assets and liabilities due to an increase in the U.K. corporate tax rate from 19% currently to 25%, beginning on April 1, 2023. We also incurred a $17.0 million expense in connection with the redemption of our 5.50% senior subordinated notes due in 2026 during the second quarter of 2021, consisting of a $13.8 million redemption premium and the write-off of $3.2 million of unamortized debt issuance costs, resulting in an after-tax charge of $12.6 million, or $0.16 per share. In addition, we had a loss on investment for the revaluation of the Nicole Group of $9.1 million, or $0.11 per share.

For the discussion and analysis comparing the results of operations for 2020 to 2021, we refer you to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2021 Form 10-K filed on February 18, 2022.

(In millions, except unit and per unit amounts)

																		2022 vs. 2021																								2021 vs. 2020
New Vehicle Data						2022						2021						Change						% Change						2021						2020						Change						% Change
New retail unit sales						185,831						195,384						(9,553)						(4.9)		%				195,384						178,437						16,947						9.5		%
Same-store new retail unit sales						173,936						192,711						(18,775)						(9.7)		%				193,946						175,873						18,073						10.3		%
New retail sales revenue						$	10,050.5					$	9,843.2					$	207.3					2.1		%				$	9,843.2					$	8,080.5					$	1,762.7					21.8		%
Same-store new retail sales revenue						$	9,399.0					$	9,678.2					$	(279.2)					(2.9)		%				$	9,724.8					$	7,994.5					$	1,730.3					21.6		%
New retail sales revenue per unit						$	54,084					$	50,379					$	3,705					7.4		%				$	50,379					$	45,285					$	5,094					11.2		%
Same-store new retail sales revenue per unit						$	54,037					$	50,221					$	3,816					7.6		%				$	50,142					$	45,456					$	4,686					10.3		%
Gross profit — new						$	1,246.1					$	1,045.5					$	200.6					19.2		%				$	1,045.5					$	652.8					$	392.7					60.2		%
Same-store gross profit — new						$	1,164.2					$	1,023.2					$	141.0					13.8		%				$	1,026.4					$	648.0					$	378.4					58.4		%
Average gross profit per new vehicle retailed						$	6,705					$	5,351					$	1,354					25.3		%				$	5,351					$	3,659					$	1,692					46.2		%
Same-store average gross profit per new vehicle retailed						$	6,693					$	5,309					$	1,384					26.1		%				$	5,292					$	3,684					$	1,608					43.6		%
Gross margin % — new						12.4		%				10.6		%				1.8		%				17.0		%				10.6		%				8.1		%				2.5		%				30.9		%
Same-store gross margin % — new						12.4		%				10.6		%				1.8		%				17.0		%				10.6		%				8.1		%				2.5		%				30.9		%

																		2022 vs. 2021																								2021 vs. 2020
Used Vehicle Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Used retail unit sales						261,739						264,520						(2,781)						(1.1)		%				264,520						233,469						31,051						13.3		%
Same-store used retail unit sales						247,041						259,489						(12,448)						(4.8)		%				257,386						230,468						26,918						11.7		%
Used retail sales revenue						$	9,011.6					$	8,549.0					$	462.6					5.4		%				$	8,549.0					$	6,414.7					$	2,134.3					33.3		%
Same-store used retail sales revenue						$	8,527.8					$	8,380.4					$	147.4					1.8		%				$	8,360.6					$	6,343.0					$	2,017.6					31.8		%
Used retail sales revenue per unit						$	34,430					$	32,319					$	2,111					6.5		%				$	32,319					$	27,476					$	4,843					17.6		%
Same-store used retail sales revenue per unit						$	34,520					$	32,296					$	2,224					6.9		%				$	32,483					$	27,522					$	4,961					18.0		%
Gross profit — used						$	543.1					$	666.6					$	(123.5)					(18.5)		%				$	666.6					$	388.9					$	277.7					71.4		%
Same-store gross profit — used						$	515.5					$	652.4					$	(136.9)					(21.0)		%				$	652.5					$	386.0					$	266.5					69.0		%
Average gross profit per used vehicle retailed						$	2,075					$	2,520					$	(445)					(17.7)		%				$	2,520					$	1,666					$	854					51.3		%
Same-store average gross profit per used vehicle retailed						$	2,087					$	2,514					$	(427)					(17.0)		%				$	2,535					$	1,675					$	860					51.3		%
Gross margin % — used						6.0		%				7.8		%				(1.8)		%				(23.1)		%				7.8		%				6.1		%				1.7		%				27.9		%
Same-store gross margin % — used						6.0		%				7.8		%				(1.8)		%				(23.1)		%				7.8		%				6.1		%				1.7		%				27.9		%

Retail unit sales of used vehicles decreased from 2021 to 2022 due to a 12,448 unit, or 4.8%, decrease in same-store used retail unit sales, partially offset by a 9,667 unit increase from net dealership acquisitions. Our same-store units decreased 10.2% in the U.S. and increased 0.5% internationally. Same-store retail units for our U.S. and U.K. CarShop used vehicle dealerships decreased 23.9% and increased 17.2%, respectively. Overall, our used units decreased 7.4% in the U.S. and increased 5.1% internationally. We believe the decrease in same-store unit sales in the U.S. is primarily due to higher used unit prices attributable to the prolonged low overall vehicle inventory availability for sale caused by supply chain issues discussed above, coupled with higher interest rates and inflation, impacting the overall affordability of used vehicles for customers. We believe the increase in same-store unit sales in the U.K. is primarily due to the absence of lockdown restrictions that were primarily in place during the first half of 2021 due to COVID-19.

Used vehicle retail sales revenue increased from 2021 to 2022 due to a $315.2 million increase from net dealership acquisitions, coupled with a $147.4 million, or 1.8%, increase in same-store revenues. Excluding $501.5 million of unfavorable foreign currency fluctuations, same-store used retail revenue increased 7.7%. The increase in same-store revenue is due to a $2,224 per unit increase in same-store comparative average selling price (notwithstanding a $2,030 per unit decrease attributable to unfavorable foreign currency fluctuations), which increased revenue by $549.4 million, partially offset by the decrease in same-store used retail unit sales, which decreased revenue by $402.0 million. The average sales price per unit for our CarShop used vehicle dealerships increased 3.0% to $20,136. We believe the increase in same-store comparative average selling price is primarily due to higher used unit prices attributable to the prolonged low

(In millions, except unit and per unit amounts)

																		2022 vs. 2021																								2021 vs. 2020
Finance and Insurance Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Total retail unit sales						447,570						459,904						(12,334)						(2.7)		%				459,904						411,906						47,998						11.7		%
Total same-store retail unit sales						420,977						452,200						(31,223)						(6.9)		%				451,332						406,341						44,991						11.1		%
Finance and insurance revenue						$	848.1					$	780.5					$	67.6					8.7		%				$	780.5					$	576.3					$	204.2					35.4		%
Same-store finance and insurance revenue						$	811.0					$	770.1					$	40.9					5.3		%				$	768.5					$	570.1					$	198.4					34.8		%
Finance and insurance revenue per unit						$	1,895					$	1,697					$	198					11.7		%				$	1,697					$	1,399					$	298					21.3		%
Same-store finance and insurance revenue per unit						$	1,926					$	1,703					$	223					13.1		%				$	1,703					$	1,403					$	300					21.4		%

Finance and insurance revenue increased from 2021 to 2022 due to a $40.9 million, or 5.3%, increase in same-store revenues, coupled with a $26.7 million increase from net dealership acquisitions. Excluding $33.5 million of unfavorable foreign currency fluctuations, same-store finance and insurance revenue increased 9.7%. The increase in same-store revenue is due to a $223 per unit increase in same-store comparative average finance and insurance revenue (notwithstanding an $80 per unit decrease attributable to unfavorable foreign currency fluctuations), which increased revenue by $93.9 million, partially offset by the decrease in same-store retail unit sales, which decreased revenue by $53.0 million. Finance and insurance revenue per unit increased 20.5% in the U.S. and increased 1.2% in the U.K. We believe the increase in same-store finance and insurance revenue per unit is primarily due to higher average selling prices of new and used vehicles and changes in the sales mix of new vehicles, with an increased percentage of purchases and decreased percentage of leasing. The higher mix of purchases have also driven increased product penetration rates, coupled with our efforts to increase finance and insurance penetration, which include implementing interactive digital customer sales platforms, additional training, and targeting underperforming locations, in addition to the increase in average selling price per unit of new and used vehicles.

																		2022 vs. 2021																								2021 vs. 2020
Service and Parts Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Service and parts revenue						$	2,426.7					$	2,165.6					$	261.1					12.1		%				$	2,165.6					$	1,883.7					$	281.9					15.0		%
Same-store service and parts revenue						$	2,272.7					$	2,130.3					$	142.4					6.7		%				$	2,141.0					$	1,857.2					$	283.8					15.3		%
Gross profit — service and parts						$	1,439.4					$	1,307.3					$	132.1					10.1		%				$	1,307.3					$	1,127.4					$	179.9					16.0		%
Same-store service and parts gross profit						$	1,355.9					$	1,285.6					$	70.3					5.5		%				$	1,291.7					$	1,113.0					$	178.7					16.1		%
Gross margin % — service and parts						59.3		%				60.4		%				(1.1)		%				(1.8)		%				60.4		%				59.9		%				0.5		%				0.8		%
Same-store service and parts gross margin %						59.7		%				60.3		%				(0.6)		%				(1.0)		%				60.3		%				59.9		%				0.4		%				0.7		%

																		2022 vs. 2021																								2021 vs. 2020
New Commercial Truck Data						2022						2021						Change						% Change						2021						2020						Change						% Change
New retail unit sales						17,932						13,000						4,932						37.9		%				13,000						11,324						1,676						14.8		%
Same-store new retail unit sales						14,078						10,983						3,095						28.2		%				10,983						11,324						(341)						(3.0)		%
New retail sales revenue						$	2,308.7					$	1,540.1					$	768.6					49.9		%				$	1,540.1					$	1,315.9					$	224.2					17.0		%
Same-store new retail sales revenue						$	1,813.6					$	1,322.3					$	491.3					37.2		%				$	1,322.3					$	1,315.9					$	6.4					0.5		%
New retail sales revenue per unit						$	128,750					$	118,467					$	10,283					8.7		%				$	118,467					$	116,201					$	2,266					2.0		%
Same-store new retail sales revenue per unit						$	128,828					$	120,399					$	8,429					7.0		%				$	120,399					$	116,201					$	4,198					3.6		%
Gross profit — new						$	126.4					$	80.2					$	46.2					57.6		%				$	80.2					$	50.4					$	29.8					59.1		%
Same-store gross profit — new						$	101.7					$	72.8					$	28.9					39.7		%				$	72.8					$	50.4					$	22.4					44.4		%
Average gross profit per new truck retailed						$	7,048					$	6,166					$	882					14.3		%				$	6,166					$	4,451					$	1,715					38.5		%
Same-store average gross profit per new truck retailed						$	7,225					$	6,628					$	597					9.0		%				$	6,628					$	4,451					$	2,177					48.9		%
Gross margin % — new						5.5		%				5.2		%				0.3		%				5.8		%				5.2		%				3.8		%				1.4		%				36.8		%
Same-store gross margin % — new						5.6		%				5.5		%				0.1		%				1.8		%				5.5		%				3.8		%				1.7		%				44.7		%

																		2022 vs. 2021																								2021 vs. 2020
Used Commercial Truck Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Used retail unit sales						2,669						3,431						(762)						(22.2)		%				3,431						3,826						(395)						(10.3)		%
Same-store used retail unit sales						2,115						3,191						(1,076)						(33.7)		%				3,191						3,826						(635)						(16.6)		%
Used retail sales revenue						$	301.3					$	270.6					$	30.7					11.3		%				$	270.6					$	194.2					$	76.4					39.3		%
Same-store used retail sales revenue						$	239.1					$	251.3					$	(12.2)					(4.9)		%				$	251.3					$	194.2					$	57.1					29.4		%
Used retail sales revenue per unit						$	112,900					$	78,874					$	34,026					43.1		%				$	78,874					$	50,747					$	28,127					55.4		%
Same-store used retail sales revenue per unit						$	113,072					$	78,766					$	34,306					43.6		%				$	78,766					$	50,747					$	28,019					55.2		%
Gross profit — used						$	22.0					$	48.1					$	(26.1)					(54.3)		%				$	48.1					$	0.4					$	47.7					11,925.0		%
Same-store gross profit — used						$	17.1					$	44.3					$	(27.2)					(61.4)		%				$	44.3					$	0.4					$	43.9					10,975.0		%
Average gross profit per used truck retailed						$	8,247					$	14,015					$	(5,768)					(41.2)		%				$	14,015					$	97					$	13,918					14,348.5		%
Same-store average gross profit per used truck retailed						$	8,064					$	13,872					$	(5,808)					(41.9)		%				$	13,872					$	97					$	13,775					14,201.0		%
Gross margin % — used						7.3		%				17.8		%				(10.5)		%				(59.0)		%				17.8		%				0.2		%				17.6		%				8,800.0		%
Same-store gross margin % — used						7.2		%				17.6		%				(10.4)		%				(59.1)		%				17.6		%				0.2		%				17.4		%				8,700.0		%

Used commercial truck retail sales revenue increased from 2021 to 2022 due to a $42.9 million increase from net dealership acquisitions, partially offset by a $12.2 million, or 4.9%, decrease in same-store revenues. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales, which decreased revenue by $84.8 million, partially offset by a $34,306 per unit increase in same-store comparative average selling price, which increased revenue by $72.6 million. We believe the increase in same-store comparative average selling price is primarily due to the supply constraints and lack of availability of new trucks in the market which drove higher demand for used trucks.

																		2022 vs. 2021																								2021 vs. 2020
Service and Parts Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Service and parts revenue						$	852.2					$	609.0					$	243.2					39.9		%				$	609.0					$	478.1					$	130.9					27.4		%
Same-store service and parts revenue						$	653.7					$	537.6					$	116.1					21.6		%				$	537.6					$	478.1					$	59.5					12.4		%
Gross profit — service and parts						$	360.5					$	257.0					$	103.5					40.3		%				$	257.0					$	207.3					$	49.7					24.0		%
Same-store service and parts gross profit						$	277.8					$	228.3					$	49.5					21.7		%				$	228.3					$	207.3					$	21.0					10.1		%
Gross margin % — service and parts						42.3%						42.2%						0.1		%				0.2		%				42.2%						43.4%						(1.2)		%				(2.8)		%
Same-store service and parts gross margin %						42.5%						42.5%						—		%				—		%				42.5%						43.4%						(0.9)		%				(2.1)		%

																		2022 vs. 2021																								2021 vs. 2020
Penske Australia Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Commercial vehicle units (wholesale and retail)						1,229						1,628						(399)						(24.5)		%				1,628						966						662						68.5		%
Power systems units						1,430						1,123						307						27.3		%				1,123						1,058						65						6.1		%
Sales revenue						$	578.8					$	575.7					$	3.1					0.5		%				$	575.7					$	454.2					$	121.5					26.8		%
Gross profit						$	157.3					$	153.7					$	3.6					2.3		%				$	153.7					$	122.3					$	31.4					25.7		%

																		2022 vs. 2021																								2021 vs. 2020
Selling, General, and Administrative Data						2022						2021						Change						% Change						2021						2020						Change						% Change
Personnel expense						$	2,013.3					$	1,848.9					$	164.4					8.9		%				$	1,848.9					$	1,402.4					$	446.5					31.8		%
Advertising expense						$	122.0					$	119.2					$	2.8					2.3		%				$	119.2					$	81.1					$	38.1					47.0		%
Rent & related expense						$	370.7					$	342.7					$	28.0					8.2		%				$	342.7					$	316.6					$	26.1					8.2		%
Other expense						$	717.7					$	652.1					$	65.6					10.1		%				$	652.1					$	564.4					$	87.7					15.5		%
Total SG&A expenses						$	3,223.7					$	2,962.9					$	260.8					8.8		%				$	2,962.9					$	2,364.5					$	598.4					25.3		%
Same-store SG&A expenses						$	2,988.0					$	2,900.4					$	87.6					3.0		%				$	2,893.3					$	2,334.3					$	559.0					23.9		%
Personnel expense as % of gross profit						41.6		%				41.6		%				—		%				—		%				41.6		%				44.0		%				(2.4)		%				(5.5)		%
Advertising expense as % of gross profit						2.5		%				2.7		%				(0.2)		%				(7.4)		%				2.7		%				2.5		%				0.2		%				8.0		%
Rent & related expense as % of gross profit						7.7		%				7.7		%				—		%				—		%				7.7		%				9.9		%				(2.2)		%				(22.2)		%
Other expense as % of gross profit						14.8		%				14.7		%				0.1		%				0.7		%				14.7		%				17.9		%				(3.2)		%				(17.9)		%
Total SG&A expenses as % of gross profit						66.6		%				66.7		%				(0.1)		%				(0.1)		%				66.7		%				74.3		%				(7.6)		%				(10.2)		%
Same-store SG&A expenses as % of same-store gross profit						66.6		%				67.0		%				(0.4)		%				(0.6)		%				66.7		%				74.0		%				(7.3)		%				(9.9)		%

																		2022 vs. 2021																								2022 vs. 2021
						2022						2021						Change						% Change						2021						2020						Change						% Change
Depreciation						$	127.3					$	121.5					$	5.8					4.8		%				$	121.5					$	115.5					$	6.0					5.2		%

																		2022 vs. 2021																								2021 vs. 2020
						2022						2021						Change						% Change						2021						2020						Change						% Change
Floor plan interest expense						$	52.4					$	26.2					$	26.2					100.0		%				$	26.2					$	46.3					$	(20.1)					(43.4)		%

																		2022 vs. 2021																								2021 vs. 2020
						2022						2021						Change						% Change						2021						2020						Change						% Change
Other interest expense						$	70.4					$	68.6					$	1.8					2.6		%				$	68.6					$	111.0					$	(42.4)					(38.2)		%