Penske Automotive     Print Page | Close Window

SEC Filings

10-Q
PENSKE AUTOMOTIVE GROUP, INC. filed this Form 10-Q on 10/26/2017
Entire Document
 

similar right to require PTL to begin an initial public offering of equity securities, subject to certain limitations, as soon as reasonably practicable. The term of the partnership agreement was amended as part of the transaction to be indefinite.

 

We have also entered into other joint ventures with certain related parties as more fully discussed below.

 

Joint Venture Relationships

 

We are party to a number of joint ventures pursuant to which we own and operate automotive dealerships together with other investors. We may provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of September 30, 2017, our retail automotive joint venture relationships included:

 

 

 

 

 

 

 

 

 

 

 

 

Location

    

Dealerships

    

Ownership Interest

Fairfield, Connecticut

 

Audi, Mercedes-Benz, Sprinter, Porsche, smart

 

80.00

% (A) (B)

Greenwich, Connecticut

 

Mercedes-Benz

 

80.00

% (A) (B)

Northern Italy

 

BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Nissan

 

84.00

% (B)

Aachen, Germany

 

Audi, Maserati, SEAT, Skoda, Volkswagen

 

68.00

% (B)

Frankfurt, Germany

 

Lexus, Toyota, Volkswagen

 

50.00

% (C)

Barcelona, Spain

 

BMW, MINI

 

50.00

% (C)

Tokyo, Japan

 

BMW, MINI, Rolls-Royce, Ferrari, ALPINA

 

49.00

% (C)


 

(A)

An entity controlled by one of our directors, Lucio A. Noto, owns a 20% interest in this joint venture.

 

(B)

Entity is consolidated in our financial results.

(C)

Entity is accounted for using the equity method of accounting.

 

Additionally, we are party to non-automotive joint ventures including our investments in Penske Commercial Leasing Australia (28%), Penske Vehicle Services (31%), and PTL (28.9%), that are accounted for under the equity method.

 

Cyclicality

 

Unit sales of motor vehicles, particularly new vehicles, have been cyclical historically, fluctuating with general economic cycles. During economic downturns, the automotive and truck retailing industry tends to experience periods of decline and recession similar to those experienced by the general economy. We believe that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, fuel prices, interest rates, and credit availability.

 

Seasonality

 

Dealership. Our business is modestly seasonal overall. Our U.S. operations generally experience higher volumes of vehicle sales in the second and third quarters of each year due in part to consumer buying trends and the introduction of new vehicle models. Also, vehicle demand, and to a lesser extent demand for service and parts, is generally lower during the winter months than in other seasons, particularly in regions of the U.S. where dealerships may be subject to severe winters. Our U.K. operations generally experience higher volumes of vehicle sales in the first and third quarters of each year, due primarily to vehicle registration practices in the U.K.

 

Commercial Vehicle Distribution. Our commercial vehicle distribution business generally experiences higher sales volumes during the second quarter of the year, which is primarily attributable to commercial vehicle customers completing annual capital expenditures before their fiscal year-end, which is typically June 30 in Australia.

 

59