The Playbook That Reshaped American Car Dealers

The car dealership world used to be a wild patchwork, thousands of independent lots with haggling salesmen and opaque pricing. Penske Automotive Group saw an opening: bring order to this fragmented, old-school industry by scaling up and going digital, creating a smoother ride for customers.

In other words, over 90% of car lots were mom-and-pop operations. Penske’s mission was to unify these scattered dealerships under one professional banner.

Here’s what you’ll learn: 

For decades, buying a car in America meant stepping onto a local dealership lot and bracing yourself for battle. Each dealer operated independently with their own pricing games, financing tricks, and high-pressure tactics. The industry was a patchwork of 16,000+ franchised dealers, and as of 2023, the six largest publicly traded auto groups combined owned just 8% of U.S. new car dealerships. That extreme fragmentation meant zero consistency from town to town, and zero leverage for buyers.

The numbers tell the story of a broken system: 76% of Americans don't trust dealerships to be honest about pricing, and 86% worry about hidden fees lurking in the paperwork. The experience was so universally dreaded that 87% of U.S. consumers disliked some aspect of buying from a traditional dealer, with many saying they'd rather endure a root canal or file their taxes than haggle with a car salesman.

But what looked like chaos to consumers looked like an opportunity to Roger Penske. A former racing champion who'd built his reputation on precision and operational excellence, Penske saw what others missed: this wasn't just a customer service problem, it was a structural problem. No single dealer had the scale to invest in better systems, training, or technology. The one-dealer-at-a-time model couldn't deliver the consistency modern consumers demanded. Penske's insight was simple but powerful: consolidate the fragmented dealership landscape, bring professional management and shared systems to the table, and you could fix the car-buying experience while building a more profitable business.

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Penske's first move was straightforward: buy up dealerships and bring them under professional management. Starting in the 1990s as United Auto Group and accelerating through the 2000s, Penske began acquiring franchises across the U.S. and internationally. The pace never slowed. By 2025, Penske Automotive Group operated 352 franchised dealerships spanning four continents and nine countries, representing more than 30 auto brands. In 2024 alone, the company added dealerships worth roughly $2.1 billion in annual revenue, including 15 premium-brand stores in the UK.

This wasn't just empire building. Scale delivered concrete advantages that mom-and-pop dealers couldn't touch. Centralized operations meant shared marketing, bulk purchasing power with automakers, and unified back-office systems. A single technology investment could now serve hundreds of locations. Penske had leverage to negotiate better terms and access to capital that small independents lacked. The bigger Penske got, the harder it became for smaller players to compete, driving even more consolidation But here's where scale became transformative: it gave Penske the resources to fix what customers hated most about car buying. With hundreds of dealerships generating steady cash flow, Penske could afford to invest heavily in technology that would've bankrupted a single dealer.

The company built an omnichannel system that let buyers shop their way. Want to browse online and complete the purchase at a dealership? Done. Prefer to buy entirely online with home delivery? That works too. In the U.S., Penske launched programs like Preferred Purchase for flexible buying. In the UK, customers could reserve a car with a £99 deposit and pick their collection point.

The crown jewel was CarShop, a used-car superstore network designed for digital-first buyers. CarShop eliminated haggling with upfront pricing, offered money-back guarantees, and handled full transactions online—from browsing to delivery. In 2021, Penske partnered with Cox Automotive to build Essential Commerce, an AI-powered platform that automated pricing, trade-in valuations, and paperwork across all channels. The formula was proving itself: consolidate the dealerships, use that scale to build better technology, then use that technology to win more customers and justify more acquisitions. Scale and digital weren't separate strategies, they were a flywheel.

The consolidation bet paid off first in operational efficiency. By centralizing marketing, back-office systems, and purchasing across hundreds of dealerships, Penske cut waste that independent dealers couldn't eliminate. By late 2024, selling, general, and administrative expenses dropped to 70.3% of gross profit, improving by 70 basis points year over year. That might sound incremental, but at $30.5 billion in annual revenue, every basis point matters.

The digital transformation delivered a different kind of win: revenue mix. Penske leaned into higher-margin services—parts, maintenance, repairs—that benefit from customer loyalty. By 2024, service and parts generated 42% of gross profit despite representing just 10% of total sales. Service revenue alone topped $3 billion, an all-time record. The omnichannel experience made it easier to capture that ongoing relationship with customers, not just the one-time car sale.

But the real strategic victory was positioning. By 2025, around 65% of car buyers completed part or all of their purchase online. Penske's early investment in digital infrastructure meant they were ready when the market shifted. CarShop captured online-first buyers, while traditional dealerships offered a smoother hybrid experience. A customer could research online, visit a showroom to test drive, then complete paperwork digitally—skipping the repetitive, friction-filled steps that made people dread car buying.

The numbers tell the full story: Penske's revenue hit $30.5 billion in 2024, roughly double what it earned a decade earlier. Net income reached $919 million, a 3% margin that's healthy in a notoriously low-margin industry. The company's focus on premium brands and efficient operations kept profitability strong even during market volatility.

By combining consolidation with digital reinvention, Penske turned a fragmented, old-fashioned business into a modern retail powerhouse. The playbook offers lessons that extend far beyond auto dealerships.

Here are the takeaways you can apply: 

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$30.5 Billion – Total revenue generated by Penske Automotive Group in 2024.

$3 Billion – Service & Parts revenue for Penske in 2024, an all-time record for this segment. 

42% – Approximate share of Penske’s gross profit coming from parts and service operations (versus ~10% of revenue) highlighting how maintenance, repairs, and warranties (often done at Penske’s dealerships) provide a stable, lucrative income stream that complements vehicle sales.

352 – Number of franchised dealerships Penske Automotive Group operates worldwide as of 2025

$919M – Full Year 2024 Net Income attributable to common stockholders

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