Penske to buy UK used-only dealership group CarShop
Penske Automotive Group’s two-year plan to build a network of used-only dealerships is closer to reality in Europe.
Penske said Friday that it has signed an agreement to buy CarShop, a retailer in the UK known for selling used cars at fixed retail prices.
CarShop, in business since 1999, has five large-scale stores in the UK and a vehicle preparation center capable of reconditioning 45,000 vehicles a year.
The group sells “over 20,000” used vehicles a year and the deal will generate about $340 million in estimated annual revenue, Tony Pordon, Penske’s executive vice president of investor relations and corporate development, told Automotive News, a sibling publication of Automotive News Europe.
“The acquisition of CarShop furthers our diversification strategy within the transportation services industry, and is complementary to our existing core auto retail business,” Chairman Roger Penske said in a statement.
Penske will retain both CarShop’s 500 employees and the name, said Pordon.
Similar to the U.S., used-vehicle sales in the UK are “nearly three times the size of new vehicle sales on an annual basis,” said Penske.
For that reason, he is looking to expand Penske Automotive’s ownership of used-only stores.
Last month, the company said it was buying CarSense, which has five used-only stores in the Philadelphia, Pittsburgh and New Jersey markets. That deal is expected to generate about $350 million in estimated annual revenue for Penske.
Terms were not released for either the CarShop or CarSense deals. Both are expected to close in the first quarter and will strengthen “our market position in our two largest markets while providing scalable future growth opportunities,” Penske said.
Penske has said it plans to double CarSense's U.S. footprint to 10 stores from five in the next 18 to 24 months.
Pordon said it is critical to diversify so that Penske is “not just tied to one market and not just tied to new car sales.”
In the U.S., CarSense will target selling used vehicles less than 5 years old. In the UK, it will seek 2- to 6-year-old used vehicles.
Penske, of suburban Detroit, is the latest publicly owned U.S. auto retailer to plot a strategy that includes stand-alone used-only stores.
In October, AutoNation said it will open the first of a series of used-only stores, called AutoNation USA, around May in Houston.
Sonic Automotive launched its used-only EchoPark stores in 2014. Now, it is moving beyond its initial five EchoPark stores in Denver to markets elsewhere in Colorado plus Texas and the Carolinas. In September it bought Auto-Match, which has four used-only stores in Georgia and Florida. Sonic will convert those to EchoPark stores by end of 2017.
Asbury Automotive Group launched Q auto, a used-only brand, in 2014 with stores in Tampa, Florida.
Top in Europe
Penske's expansion into mainland Europe has helped the company to become Europe's biggest independent dealer group by sales revenue. Penske took the No. 1 spot from Pendragon in the 2016 Guide to Europe's Biggest Dealer Groups compiled by automotive distribution researchers ICDP for Automotive News Europe.
Penske ranks No. 2 on Automotive News’ list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 233,524 units in 2015. AutoNation ranks No. 1, with new retail sales of 339,080 in 2015; Sonic ranks No. 4, with new retail sales of 138,129 in 2015; and Asbury ranks No. 7, with 105,981.