Penske Automotive Group, Inc. (Form: 8-K)

PENSKE AUTOMOTIVE REPORTS FOURTH QUARTER RESULTS
____________________________________________________________

smartWholesale Distribution and Retail Networks In Place;
Retail Deliveries Began In January ‘08
____________________________________________________________

BLOOMFIELD HILLS, MI, February 19, 2008 – Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, reported adjusted fourth quarter income from continuing operations of $31.8 million, or $0.34 per share, compared to income from continuing operations of $32.5 million, or $0.34 per share, in the fourth quarter last year. Adjusted fourth quarter net income was $33.9 million, or $0.36 per share, compared to net income of $30.3 million, or $0.32 per share in the fourth quarter last year. Adjusted earnings exclude the impact of $4.5 million of after-tax impairment losses recorded during the fourth quarter of 2007. Fourth quarter income from continuing operations was $27.4 million, or $0.29 per share, and fourth quarter net income was $29.4 million, or $0.31 per share. Revenues in the quarter increased 7.7% to $3.1 billion, including same-store retail revenue growth of 4.0%.

“Our fourth quarter results reflect the strength of the Penske Automotive business model,” said Penske Automotive Group Chairman Roger Penske. “While the new vehicle sales environment in the U.S. was challenging, the other areas of our business performed very well. In particular, we are pleased to see the continued growth of pre-owned vehicle sales and the sustained strength of our service and parts operations, which have served to partially offset the soft new vehicle sales market.” Penske continued, “We continue to see the benefits of our geographic diversification. Overall, same-store retail revenue increased 4.0%, including 10.5% growth in our international markets. As we look at 2008, we look forward to the opportunity presented by the launch of our smart distribution business, and we are confident in the ability of our business model to continue to perform in these challenging economic times.”

For the year ended December 31, 2007, revenues increased 16.5% to $13.0 billion. Income from continuing operations and related earnings per share for the year were $127.8 million and $1.35 per share, respectively. Excluding $12.3 million ($0.13 per share) of after-tax costs resulting from the March 2007 redemption of the Company’s 9.625% Senior Subordinated Notes and the impairment losses in the fourth quarter noted above, adjusted income from continuing operations for the year increased 9.3% to $144.6 million and related earnings per share increased 9.3% to $1.53 per share. Net income and related earnings per share for the twelve months were $127.7 million and $1.35 per share, respectively. Adjusted net income increased 15.9% to $144.5 million, and related earnings per share increased 15.9% to $1.53 per share.

The Company currently estimates earnings from continuing operations to be in the range of $1.63 to $1.71 per share for the year ended December 31, 2008. First quarter 2008 earnings from continuing operations are estimated to be in the range of $0.32 to $0.34 per share. Earnings per share information in 2008 is based on an estimated average of 95.0 million shares outstanding.

The Company also announced that its Board of Directors has authorized the Company to repurchase up to $150.0 million of its outstanding common stock, depending on market conditions, share price and other factors. Shares may be acquired from time to time either through open market purchases, negotiated transactions or other means. The Company currently contemplates purchasing any shares under this program using cash flow from operations and credit availability in the U.S.

“We view the opportunity to purchase our shares at recent market prices as an outstanding investment, highlighting our belief in the long-term fundamentals and value of our business,” said Bob O’Shaughnessy, Penske Automotive’s Chief Financial Officer. “Based on our current financial position, we believe we can increase shareholder value by pursuing this share repurchase program while we continue our efforts to enhance the business through sustained organic growth and selective acquisition activity.”

smart USA Distributor LLC, the Company’s wholly-owned distribution entity for the smart fortwo in the U.S., has certified 68 dealers in 31 states, including 8 Company-owned franchises, as ready for business. smart USA has shipped vehicles to its dealers, and retail deliveries began in January 2008. “I would like to commend the smart USA team for establishing a first-class distribution operation and organizing the retail network in only 18 months,” said Penske Automotive Chairman Roger Penske. “We are encouraged by the positive reaction of the U.S. consumer towards this unique and exciting product, and are confident that the smart fortwo will be a retail success.”

Penske Automotive will host a conference call discussing financial results relating to the fourth quarter of 2007 on February 19, 2008 at 2:00 p.m. EDT. To listen to the conference call, participants must dial (866) 254-5942 [International, please dial (612) 332-0636]. The call will be simultaneously broadcast over the Internet through the Penske Automotive Group website at www.penskeautomotive.com.

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 315 retail automotive franchises, representing 40 different brands, and 27 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 170 franchises in 19 states and Puerto Rico and 145 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 16,000 employees. smart and fortwo are registered trademarks of Daimler AG.

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.’s future sales and earnings potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about Penske Automotive’s business, markets, conditions and other uncertainties which could affect Penske Automotive’s future performance. These risks and uncertainties are addressed in Penske Automotive’s Form 10-K for the year ended December 31, 2006, and its other filings with the Securities and Exchange Commission (“SEC”). This press release speaks only as of its date, and Penske Automotive disclaims any duty to update the information herein.

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations and related earnings per share, which exclude certain items disclosed in the release. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosure and the period-to-period comparability of the Company’s results from operations.

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Fourth Quarter
	2007			2006
Revenues:
New Vehicle	$	1,668,779		$	1,571,646
Used Vehicle		741,078			676,349
Finance and Insurance, Net		67,872			58,782
Service and Parts		351,731			323,711
Fleet and Wholesale Vehicle		251,678			230,285

Total Revenues		3,081,138			2,860,773
Cost of Sales:
New Vehicle		1,527,526			1,432,341
Used Vehicle		681,419			621,913
Service and Parts		154,269			145,700
Fleet and Wholesale Vehicle		253,966			231,660

Total Cost of Sales		2,617,180			2,431,614

Gross Profit		463,958			429,159
SG&A Expenses		380,619			345,714
Depreciation and Amortization		13,014			12,050

Operating Income		70,325			71,395
Floor Plan Interest Expense		(20,141	)		(15,446	)
Other Interest Expense		(12,014	)		(14,703	)
Equity in Earnings of Affiliates		901			2,695

Income from Continuing Operations Before Income Taxes and Minority Interests		39,071			43,941
Income Taxes		(11,244	)		(10,840	)
Minority Interests		(445	)		(636	)

Income from Continuing Operations		27,382			32,465
Income (Loss) from Discontinued Operations, Net of Tax		2,026			(2,142	)

Net Income	$	29,408		$	30,323

Income from Continuing Operations Per Diluted Share	$	0.29		$	0.34

Diluted EPS	$	0.31		$	0.32

Diluted Weighted Average Shares Outstanding		94,677			94,389

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Twelve Months
	2007			2006
Revenues:
New Vehicle	$	7,008,071		$	6,185,880
Used Vehicle		3,149,145			2,531,001
Finance and Insurance, Net		290,144			246,448
Service and Parts		1,413,986			1,228,876
Fleet and Wholesale Vehicle		1,096,393			934,514

Total Revenues		12,957,739			11,126,719
Cost of Sales:
New Vehicle		6,417,064			5,644,220
Used Vehicle		2,898,051			2,316,748
Service and Parts		623,585			550,520
Fleet and Wholesale Vehicle		1,093,830			930,967

Total Cost of Sales		11,032,530			9,442,455

Gross Profit		1,925,209			1,684,264
SG&A Expenses		1,531,628			1,337,019
Depreciation and Amortization		50,957			43,164

Operating Income		342,624			304,081
Floor Plan Interest Expense		(74,749	)		(59,806	)
Other Interest Expense		(56,245	)		(49,174	)
Equity in Earnings of Affiliates		4,084			8,201
Debt Redemption Charge		(18,634	)		—

Income from Continuing Operations Before Income Taxes and Minority Interests		197,080			203,302
Income Taxes		(67,310	)		(68,906	)
Minority Interests		(1,972	)		(2,172	)

Income from Continuing Operations		127,798			132,224
Income (Loss) from Discontinued Operations, Net of Tax		(59	)		(7,523	)

Net Income	$	127,739		$	124,701

Income from Continuing Operations Per Diluted Share	$	1.35		$	1.40

Diluted EPS	$	1.35		$	1.32

Diluted Weighted Average Shares Outstanding		94,558			94,178

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)


	12/31/07		12/31/06
Assets
Cash and Cash Equivalents	$	10,895	$	13,147
Accounts Receivable, Net		449,278		465,579
Inventories		1,688,286		1,506,237
Other Current Assets		66,312		71,398
Assets Held for Sale		86,838		193,026

Total Current Assets		2,301,609		2,249,387
Property and Equipment, Net		618,491		592,718
Intangibles		1,663,559		1,518,045
Other Assets		84,894		109,652

Total Assets	$	4,668,553	$	4,469,802

Liabilities and Stockholders’ Equity
Floor Plan Notes Payable	$	1,074,820	$	872,906
Floor Plan Notes Payable – Non-Trade		478,077		296,580
Accounts Payable		268,214		298,066
Accrued Expenses		212,601		213,957
Current Portion Long-Term Debt		14,522		13,385
Liabilities Held for Sale		47,805		56,972

Total Current Liabilities		2,096,039		1,751,866
Long-Term Debt		830,106		1,168,666
Other Long-Term Liabilities		320,949		253,617

Total Liabilities		3,247,094		3,174,149
Stockholders’ Equity		1,421,459		1,295,653

Total Liabilities and Stockholders’ Equity	$	4,668,553	$	4,469,802


	Fourth Quarter						Twelve Months
	2007			2006			2007			2006
Total Retail Units
New Retail		45,377			43,232			195,160			181,544
Used Retail		23,804			22,350			102,214			88,262

Total Retail		69,181			65,582			297,374			269,806

Same-Store Retail Units
New Same-Store Retail		42,583			42,908			174,759			174,188
Used Same-Store Retail		23,008			21,304			87,262			80,810

Total Same-Store Retail		65,591			64,212			262,021			254,998

Same-Store Retail Revenue
New Vehicles	$	1,573,362		$	1,557,992		$	6,205,014		$	5,882,310
Used Vehicles		711,687			646,849			2,597,746			2,268,920
Finance and Insurance, Net		65,185			58,786			258,320			236,721
Service and Parts		336,302			318,765			1,242,260			1,157,014

Total Same-Store Retail	$	2,686,536		$	2,582,392		$	10,303,340		$	9,544,965

Same-Store Retail Revenue Growth
New Vehicles		1.0	%		6.3	%		5.5	%		2.3	%
Used Vehicles		10.0	%		14.3	%		14.5	%		8.9	%
Finance and Insurance, Net		10.9	%		(9.3	%)		9.1	%		0.4	%
Service and Parts		5.5	%		6.8	%		7.4	%		7.2	%
Revenue Mix
New Vehicles		54.2	%		54.9	%		54.1	%		55.6	%
Used Vehicles		24.1	%		23.6	%		24.3	%		22.8	%
Finance and Insurance, Net		2.2	%		2.1	%		2.3	%		2.2	%
Service and Parts		11.4	%		11.3	%		10.9	%		11.0	%
Fleet and Wholesale		8.1	%		8.1	%		8.4	%		8.4	%
Average Retail Selling Price
New Vehicles	$	36,776		$	36,354		$	35,909		$	34,074
Used Vehicles		31,132			30,262			30,809			28,676
Gross Margin		15.1	%		15.0	%		14.9	%		15.1	%
Retail Gross Margin – by Product
New Vehicles		8.5	%		8.9	%		8.4	%		8.8	%
Used Vehicles		8.1	%		8.0	%		8.0	%		8.5	%
Service and Parts		56.1	%		55.0	%		55.9	%		55.2	%
Gross Profit per Retail Transaction
New Vehicles	$	3,113		$	3,222		$	3,028		$	2,984
Used Vehicles		2,506			2,436			2,457			2,427
Finance and Insurance		981			896			976			913


	Fourth Quarter						Twelve Months
	2007			2006			2007			2006
Brand Mix:
BMW		22	%		21	%		22	%		18	%
Toyota / Lexus		20	%		20	%		20	%		21	%
Honda / Acura		14	%		14	%		15	%		16	%
Mercedes Benz		11	%		11	%		11	%		10	%
Audi		8	%		7	%		8	%		7	%
Land Rover		5	%		5	%		5	%		5	%
Ferrari / Maserati		4	%		3	%		3	%		3	%
Porsche		3	%		4	%		4	%		4	%
General Motors		3	%		3	%		3	%		3	%
Other		10	%		12	%		9	%		13	%

		100	%		100	%		100	%		100	%
Premium		65	%		67	%		65	%		62	%
Foreign		29	%		28	%		29	%		32	%
Domestic Big 3		6	%		5	%		6	%		6	%

		100	%		100	%		100	%		100	%
Revenue Mix:
U.S.		64	%		65	%		62	%		68	%
International		36	%		35	%		38	%		32	%

		100	%		100	%		100	%		100	%
Debt to Total Capital Ratio		37	%		48	%		37	%		48	%
Rent Expense	$	39,764		$	34,890		$	152,267		$	132,569


Delaware	1-12297	22-3086739
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

2555 Telegraph Road, Bloomfield Hills, Michigan		48302
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Penske Automotive Group, Inc.

February 19, 2008	By:	Shane M. Spradlin

		Name: Shane M. Spradlin
		Title: Senior Vice President, General Counsel and Secretary


Exhibit No.		Description

99.1		Press Release


Date of Report (Date of Earliest Event Reported):		February 19, 2008


Registrant’s telephone number, including area code:		248-648-2500


Contact:	Bob O’Shaughnessy Chief Financial Officer 248-648-2800 boshaughnessy@penskeautomotive.com	Tony Pordon Senior Vice President 248-648-2540 tpordon@penskeautomotive.com