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

PENSKE AUTOMOTIVE REPORTS SECOND QUARTER RESULTS
____________________________________________________________

Related Earnings Per Share Increases to $0.43
___________________________________________________________

BLOOMFIELD HILLS, MI, July 30, 2008 – Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported that second quarter income from continuing operations increased 1.2% to $40.5 million. Related earnings per share increased 2.4% to $0.43 per share. Net income in the second quarter was $39.9 million, or $0.42 per share, compared with net income of $40.4 million, or $0.43 per share, in the prior year. Revenues of $3.4 billion in the second quarter were consistent with the prior year. Same-store retail revenues declined 5.9%, as unit sales of new vehicles fell 7.7% in the quarter.

“The second quarter was very challenging at the retail level,” said Penske Automotive Group Chairman Roger Penske. “With the rise in gas prices, we saw a rapid shift in consumer demand to more fuel efficient vehicles. Overall, I am very pleased with our performance as our brand mix and diversified business played an important role in achieving growth in income from continuing operations during the quarter. I am particularly pleased to see that our same-store used vehicle unit sales increased 7.3% in the U.S., and that our worldwide new vehicle margins held at 8.4%, despite the difficult market conditions.”

For the six months ended June 30, 2008, revenues increased 1.9% to $6.6 billion. Income from continuing operations for the six months was $74.4 million, which represents an 8.0% increase over adjusted income from continuing operations of $68.9 million in the prior year. Related earnings per share was $0.79 in 2008, which represents an 8.2% increase over adjusted earnings per share from continuing operations in the prior year. Net income for the six months was $73.8 million, which represents a 9.8% increase over adjusted net income of $67.2 million in the prior year. Related earnings per share was $0.78 in 2008, which represents a 9.9% increase over adjusted earnings per share in the prior year. Adjusted 2007 earnings exclude $12.3 million ($0.13 per share) of after-tax costs relating to the redemption of the Company’s 9.625% Senior Subordinated Notes in March of 2007. Reported income from continuing operations and net income for the six months ended June 30, 2007, were $56.6 million, or $0.60 per share, and $54.9 million, or $0.58 per share, respectively.

In the second quarter, smart USA Distributor, LLC (“smartUSA”) delivered 7,731 smart fortwos to its dealer network, raising the full year wholesale delivery total to 12,646 vehicles. During the quarter, the 2008 smart fortwo was awarded the highest ratings from the Insurance Institute for Highway Safety (“IIHS”) for front and side crash worthiness. Commenting on smartUSA, Penske said, “The smart distribution business continues to perform well. In particular, I am extremely pleased with the IIHS safety ratings earned by the smart fortwo. Based in part on the outstanding IIHS crash test ratings and the recent rise in gas prices, we received more than 20,000 advance reservations for the fortwo in May and June.”

During the second quarter, the Company did not effect any repurchases under its previously announced share buyback authority. The Company currently projects earnings from continuing operations for the year to be in the range of $1.54 to $1.60. Earnings per share information in 2008 is based on an estimated average of 95.0 million shares outstanding.

Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2008 on July 30, 2008, at 2:00 p.m. EDT. To listen to the conference call, participants must dial (800) 288-8960 [International, please dial (612) 234-9959]. 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 308 retail automotive franchises, representing more than 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 161 franchises in 19 states and Puerto Rico and 147 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is also the exclusive distributor of the smart fortwo through its wholly-owned subsidiary smartUSA Distributor LLC. smartUSA operates 69 smart centers across the United States. Penske Automotive is a member of the Fortune 200 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, 2007, 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)


	Second Quarter
	2008			2007
Revenues:
New Vehicle	$	1,734,440		$	1,814,171
Used Vehicle		819,184			825,171
Finance and Insurance, Net		75,995			75,144
Service and Parts		364,139			353,548
Distribution		98,421			—
Fleet and Wholesale Vehicle		270,485			297,151

Total Revenues		3,362,664			3,365,185
Cost of Sales:
New Vehicle		1,588,673			1,662,440
Used Vehicle		755,458			759,553
Service and Parts		159,834			154,670
Distribution		82,605			—
Fleet and Wholesale Vehicle		274,557			296,032

Total Cost of Sales		2,861,127			2,872,695

Gross Profit		501,537			492,490
SG&A Expenses		398,516			385,200
Depreciation and Amortization		13,594			12,864

Operating Income		89,427			94,426
Floor Plan Interest Expense		(16,589	)		(19,247	)
Other Interest Expense		(12,616	)		(12,890	)
Equity in Earnings of Affiliates		3,011			2,529

Income from Continuing Operations Before Income Taxes and Minority Interests		63,233			64,818
Income Taxes		(22,258	)		(24,059	)
Minority Interests		(428	)		(702	)

Income from Continuing Operations		40,547			40,057
Income (Loss) from Discontinued Operations, Net of Tax		(683	)		298

Net Income	$	39,864		$	40,355

Income from Continuing Operations Per Diluted Share	$	0.43		$	0.42

Diluted EPS	$	0.42		$	0.43

Diluted Weighted Average Shares Outstanding		94,895			94,532

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


	Six Months
	2008			2007
Revenues:
New Vehicle	$	3,370,042		$	3,438,949
Used Vehicle		1,622,640			1,605,516
Finance and Insurance, Net		150,596			142,976
Service and Parts		727,021			701,502
Distribution		162,191			—
Fleet and Wholesale Vehicle		533,674			556,257

Total Revenues		6,566,164			6,445,200
Cost of Sales:
New Vehicle		3,086,317			3,150,642
Used Vehicle		1,491,307			1,478,793
Service and Parts		319,344			309,468
Distribution		136,223			—
Fleet and Wholesale Vehicle		538,025			552,040

Total Cost of Sales		5,571,216			5,490,943

Gross Profit		994,948			954,257
SG&A Expenses		797,012			754,911
Depreciation and Amortization		27,068			25,204

Operating Income		170,868			174,142
Floor Plan Interest Expense		(33,901	)		(35,063	)
Other Interest Expense		(24,659	)		(31,713	)
Equity in Earnings of Affiliates		4,403			1,708
Debt Redemption Charge		—			(18,634	)

Income from Continuing Operations Before Income Taxes and Minority Interests		116,711			90,440
Income Taxes		(41,427	)		(32,855	)
Minority Interests		(863	)		(996	)

Income from Continuing Operations		74,421			56,589
Loss from Discontinued Operations, Net of Tax		(628	)		(1,652	)

Net Income	$	73,793		$	54,937

Income from Continuing Operations Per Diluted Share	$	0.79		$	0.60

Diluted EPS	$	0.78		$	0.58

Diluted Weighted Average Shares Outstanding		94,784			94,483

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


	6/30/08		12/31/07
Assets
Cash and Cash Equivalents	$	17,734	$	11,690
Accounts Receivable, Net		432,811		448,985
Inventories		1,790,464		1,682,736
Other Current Assets		91,321		65,948
Assets Held for Sale		7,911		88,165

Total Current Assets		2,340,241		2,297,524
Property and Equipment, Net		692,817		617,874
Intangibles		1,713,503		1,668,261
Other Assets		309,531		84,894

Total Assets	$	5,056,092	$	4,668,553

Liabilities and Stockholders’ Equity
Floor Plan Notes Payable	$	1,098,103	$	1,070,882
Floor Plan Notes Payable – Non-Trade		549,150		476,854
Accounts Payable		256,062		266,726
Accrued Expenses		260,444		212,310
Current Portion Long-Term Debt		14,255		14,522
Liabilities Held for Sale		10,762		54,745

Total Current Liabilities		2,188,776		2,096,039
Long-Term Debt		1,054,555		830,106
Other Long-Term Liabilities		324,562		320,949

Total Liabilities		3,567,893		3,247,094
Stockholders’ Equity		1,488,199		1,421,459

Total Liabilities and Stockholders’ Equity	$	5,056,092	$	4,668,553


	Second Quarter						Six Months
	2008			2007			2008			2007
Total Retail Units
New Retail		50,299			51,175			95,849			96,280
Used Retail		28,173			26,853			55,084			52,403

Total Retail		78,472			78,028			150,933			148,683

smart Wholesale Units		7,731			—			12,646			—

Same-Store Retail Units
New Same-Store Retail		45,153			48,895			86,431			93,158
Used Same-Store Retail		26,673			25,499			52,407			50,022

Total Same-Store Retail		71,826			74,394			138,838			143,180

Same-Store Retail Revenue
New Vehicles	$	1,596,431		$	1,748,722		$	3,098,768		$	3,339,872
Used Vehicles		767,438			789,465			1,533,256			1,539,760
Finance and Insurance, Net		70,776			73,315			141,145			140,594
Service and Parts		343,943			341,618			687,382			682,174

Total Same-Store Retail	$	2,778,588		$	2,953,120		$	5,460,551		$	5,702,400

Same-Store Retail Revenue Growth
New Vehicles		(8.7	%)		7.0	%		(7.2	%)		7.2	%
Used Vehicles		(2.8	%)		15.9	%		(0.4	%)		17.9	%
Finance and Insurance, Net		(3.5	%)		7.9	%		0.4	%		8.0	%
Service and Parts		0.7	%		7.3	%		0.8	%		8.9	%
Revenue Mix
New Vehicles		51.6	%		53.9	%		51.3	%		53.4	%
Used Vehicles		24.4	%		24.5	%		24.7	%		24.9	%
Finance and Insurance, Net		2.3	%		2.2	%		2.3	%		2.2	%
Service and Parts		10.8	%		10.5	%		11.1	%		10.9	%
Distribution		2.9	%		—	%		2.5	%		—	%
Fleet and Wholesale		8.0	%		8.9	%		8.1	%		8.6	%
Average Retail Selling Price
New Vehicles	$	34,483		$	35,450		$	35,160		$	35,718
Used Vehicles		29,077			30,729			29,458			30,638
Gross Margin		14.9	%		14.6	%		15.2	%		14.8	%
Retail Gross Margin – by Product
New Vehicles		8.4	%		8.4	%		8.4	%		8.4	%
Used Vehicles		7.8	%		8.0	%		8.1	%		7.9	%
Service and Parts		56.1	%		56.3	%		56.1	%		55.9	%


	Second Quarter						Six Months
	2008			2007			2008			2007
Gross Profit per Retail Transaction
New Vehicles	$	2,898		$	2,965		$	2,960		$	2,994
Used Vehicles		2,262			2,444			2,384			2,418
Finance and Insurance		968			963			998			962
Brand Mix:
BMW		21	%		22	%		21	%		22	%
Toyota / Lexus		20	%		20	%		20	%		20	%
Honda / Acura		15	%		15	%		15	%		14	%
Mercedes Benz		10	%		10	%		10	%		11	%
Audi		9	%		7	%		8	%		7	%
Land Rover		4	%		5	%		5	%		5	%
Ferrari / Maserati		4	%		3	%		4	%		2	%
Porsche		3	%		4	%		3	%		4	%
Other		14	%		14	%		14	%		15	%

		100	%		100	%		100	%		100	%
Premium		63	%		62	%		64	%		65	%
Foreign		32	%		30	%		31	%		29	%
Domestic Big 3		5	%		8	%		5	%		6	%

		100	%		100	%		100	%		100	%
Revenue Mix:
U.S.		63	%		63	%		62	%		62	%
International		37	%		37	%		38	%		38	%

		100	%		100	%		100	%		100	%
Debt to Total Capital Ratio		42	%		39	%		42	%		39	%
Rent Expense	$	40,148		$	37,351		$	80,294		$	73,586


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.

July 30, 2008	By:	Shane M. Spradlin

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


Exhibit No.		Description

99.1		Press Release


Contacts:		Bob O’Shaughnessy Chief Financial Officer 248-648-2800 boshaughnessy@penskeautomotive.com

		or
		Tony Pordon Senior Vice President 248-648-2540 tpordon@penskeautomotive.com


Date of Report (Date of Earliest Event Reported):		July 30, 2008


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