US: Penske eyes Detroit three dealerships
Roger Penske, chairman of the second largest US auto dealer company, Penske Group, and a recent bidder for General Motors' Saturn unit, is considering buying GM, Chrysler and Ford dealerships but said the Detroit three and their retailers needed stronger support from finance partners.
At the Automotive News World Congress, in Detroit Penske referred to the difficulties on 2009 after lending dried up amid the financial crisis and many potential buyers were shut out of the US new vehicle market, leading to the lowest industry-wide unit sales since 1982.
"Without the ability to finance, we saw vehicle sales plummet," he said at the Automotive News World Congress on Wednesday, according to Reuters.
Penske said strong financial partners were key for the US automakers, particularly GM and Chrysler which both exited bankruptcy last year.
He said GM lost flexibility when it sold part of its GMAC financial arm.
"Ask any Cadillac dealer about the importance of strong finance partnerships," Penske said. "When leasing stopped, Cadillac sales ground to a halt and its dealers were left to fend for themselves.
"Without a strong finance partnership, it will be much harder for GM and Chrysler to establish residual values and reestablish leasing."
Penske also said foreign automakers and luxury carmakers had been more consistently successful with leasing because they had taken steps to protect the resale value of vehicles, key to the cost of a lease contract.
Historically, leasing has accounted for about 20% of vehicles sold by the US automakers, compared with more than 30% for the large-volume foreign rivals and more than 50% for the premium luxury market, Penske said.
"These brands have been more successful with leasing because they've had a plan to manage residual values and work hand-in-hand with their finance partners to make attractive leasing and retail affordable."
Residual rates for a three-year-old BMW, Mercedes or Audi car could be more than 50% of the initial purchase price, while resale values of the luxury vehicles of the U.S. automakers could be 5 to 10 percentage points lower.
Penske said he had urged new GMAC CEO, Michael Carpenter, to make his recently restructured lender "the major auto-centric lender for the future."
He added he would like to buy US dealers for GM, Chrysler and Ford despite current challenges.
"We see the expansion certainly with the Big Three as real opportunities," he said.