PAG 10-K & 10-Q changes, risk factors and insider trading

Although we believe that the expectations, plans, intentions, and projections reflected in our forward-looking statements are reasonable, such statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The material risks, uncertainties, and other factors that our stockholders and prospective investors should consider include the following:

Macro-economic and geo-political conditions. Our performance is impacted by geo-political conditions and by general economic conditions overall and in particular by economic conditions in the markets in which we operate. These economic conditions include levels of new and used vehicle sales, availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG, the rate of inflation, personal discretionary spending levels, interest rates, and unemployment rates. When the worldwide economy faltered early in 2020, we were adversely affected, and we expect a similar relationship between general economic and industry conditions and our performance in the future. AnyPTG geo-politicaland developmentsPTS thatare adverselycurrently affectexperiencing weak market conditions in light of the economiescontinued recessionary freight environment, with PTG experiencing lower vehicle sales and PTS experiencing weak market conditions for used vehicle sales and commercial rental demand. While the diversification of our marketsbusinesses willhave alsohelped likelymitigate affectthe us.impact Moreover,of geo-politicalthese conditions, includinga internationalfurther conflict,prolonged canfreight affectmarket thedownturn vehicle supply chain as has happened with the war in Ukraine. Certain vehicle manufacturers and suppliers have experienced, and maywill continue to experience,impact difficulty sourcing certain parts which is further exacerbating the supply chain difficulties resulting from the demand for laborour and thePTS shortageoperating of microchips and other components.results.

In addition to the control afforded to manufacturers as a result of our franchise and other agreements, we also rely on our manufacturer partners for many aspects of our business and the success of our dealerships is dependent, in large part, on their success. For instance, we rely on our manufacturer partners exclusively for new vehicle inventory, and our ability to successfulsuccessfully sell new vehicles is dependent on the manufacturers' ability to design, manufacture and allocate to our dealerships a desirable mix of high-quality, competitively priced, technologically current and legally compliant vehicle inventories in quantities sufficient to meet our and our customers' demand. We also receive direct financial support and assistance from certain manufacturers and their affiliates, including captive finance companies, across various aspects of our business, including floorplan assistance and advertising assistance, and rely on manufacturers to pay us for warranty and service contract work for vehicles under manufacturer product warranties and service contracts where we directly bill the manufacturer instead of invoicing the customer directly. Our business, results of operations, and financial condition could be materially adversely affected as a result of any event that has an adverse effect on the vehicle manufacturers on which we rely for inventory, support and payment, or in the event such manufacturers fail to maintain the goodwill associated with their respective brands, which adverse consequences may be wholly outside of our control. See the risks captioned "Adverse conditions affecting one or more significant automotive manufacturers or suppliers will affect us" above and "Brand reputation" below.

Australian and New Zealand economic conditions. Our commercial vehicle distribution and other operations in Australia and New Zealand may be impacted by local and regional economic conditions and in particular, the price of commodities such as copper and iron ore, which may impact the desire of our customers to operate their mining operations and replace their vehicle fleets. Adverse pricing concerns of those, and other commodities, may have a material adverse effect on our ability to distribute, and/or retail, commercial vehicles and other products profitably. These same conditions may also negatively impact the value of the Australian and New Zealand Dollar versus the U.S. Dollar, which negatively impacts our U.S. Dollar reported financial results and the pricing of products sold by Penske Australia, which are manufactured in the U.S., U.K., and Germany.

Customers. PTS has a more concentrated customer base than we do and is subject to changes in the financial health of its customers, changes in their asset utilization rates, and increased competition for those customers. PTS is subject to credit risk associated with accounts receivable from its larger customers. If one or more of its larger customers were to become bankrupt, insolvent, or otherwise were unable to pay for the services PTS provides, PTS may incur significant write-offs of accounts receivable or incur lease or asset impairment charges that could adversely affect its operating results and financial condition.

PTS also bears the residual risk on the value of its vehicles when a customer's lease for those vehicles expires or when its holding period for rental vehicles ends. If demand for used vehicles declines, PTS may obtain lower sales proceeds upon their sale. A reduction in proceeds from sales of used vehicles in PTS’ fleet could cause themPTS to sustain a substantial loss or require themit to depreciateadjust the residual values, which could ultimately lead to depreciating those vehicles at a more accelerated rate. Any reduction in the resale values of the vehicles in its fleet could adversely affect its profitability.

Regulatory Requirements and Vehicle Mandates. Increasing efforts to control greenhouse gas emissions are likely to have an effect on PTS' (and PTG's) business and results of operations as further discussed below under "Vehicles Emissions and Other Regulation". Any of the factors noted could increase operating costs in the transportation industry, which would directly affect PTS' and PTG's customers and could reduce demand for vehicles. The new technology and legal requirements may also affect resale values of these vehicles when PTS or PTG attempts to sell them in the future.

Agency. Some of our key automotive manufacturer partners have either implemented or announced plans to exploreimplement thean agency model of selling new vehicles in the U.K. and other countries. WeUnder an agency model, we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue with no corresponding cost of sale. The long-term impact of the agency model at these dealerships as well as other agency models proposed by our manufacturer partners remains uncertain. We believe transition to an agency model in the U.S. would be difficult for the manufacturers in light of U.S. franchise laws. See Item 1. Business, "Regulations" and Item 1A. Risk Factors, "Sales outside the franchise system" and "Other Regulatory Issues."

Cash requirements for debt and lease obligations. A significant portion of the cash flow we generate must be used to service the interest and principal payments relating to our various financial commitments, including $4.0$4.1 billion of floor plan notes payable, $1.9$2.2 billion of non-vehicle long-term debt, and $5.3$5.5 billion of future lease commitments (including extension periods that are reasonably assured of being exercised and assuming constant consumer price indices). A sustained or significant decrease in our operating cash flows could lead to an inability to meet our debt service or lease requirements or to a failure to meet specified financial and operating covenants included in certain of our agreements. If this were to occur, it may lead to a default under one or more of our commitments and potentially the acceleration of amounts due, which could have a significant and adverse effect on us.

Impairment of our goodwill or other indefinite-lived intangible assets has in the past had, and in the future could have, a material adverse impact on our earnings. We evaluate goodwill and other indefinite-lived intangible assets for impairment annually and upon the occurrence of an indicator of impairment. Our process and results for impairment testing of these assets is described further under “Impairment Testing” in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates. If we determine that the amount of our goodwill or other indefinite-lived intangible assets are impaired at any point in time, we would be required to reduce the value of these assets on our balance sheet, which could also result in a material non-cash impairment charge that could also have a material adverse effect on our results of operations for the period in which the impairment occurs.

Joint ventures. We have significant investments in a variety of joint ventures, including retail automotive operations in Italythe U.S. and Spain.Italy. We have a 28.9% interest in PTS. We expect to receive annual operating distributions from PTS and the other ventures and in the case of PTS, realize significant cash savings on taxes. These benefits may not be realized if the joint ventures do not perform as expected, or if changes in tax, financial, or regulatory requirements negatively impact the results of the joint venture operations. Our ability to dispose of these investments may be limited. In addition, the relevant joint venture agreement and other contractual restrictions may limit our access to the cash flows of these joint ventures. For example, certain of PTS' debt agreements allow partner distributions only as long as it is not in default under those agreements and the amount it pays does not exceed 50% of its consolidated net income, unless its debt-to-equity ratio is less than 3.0 to 1.0, in which case its distributions may not exceed 80% of its consolidated net income.

Vehicle Emissions and Other Environmental Regulations. Federal and state governments and regulators in our markets have increasingly placed restrictions and limitations on new vehicles in an effort to combat perceived negative environmental effects. In response to concerns that emissions of nitrogen oxides (NOx), and carbon dioxide and certain other gases, referred to as "greenhouse gases" or "GHGs," may be contributing to warming of the Earth's atmosphere, climate change-related legislation and policy changes to restrict NOx and GHGs have been implemented, at state and federal levels in a manner that impacts our business. The most significant of these regulations and other requirements are described above under Item 1. Business, "Regulation" and "Vehicle Emissions Regulation".

PTG sells new and used heavy- and medium-duty commercial trucks, parts and service, and offers collision repair services. PTS, with its broad product offering including full-service truck leasing, contract maintenance, and truck rental, along with logistics services, is one of the largest purchasers of commercial trucks in North America. Should future regulations or consumer sentiment hinder our or PTS' ability to maintain, acquire, lease, sell, service, or operate trucks, we may be adversely affected. Should additional states adopt CARBCalifornia Air Resources Board regulations, PTG and PTS could experience increased compliance costs, additional operating restrictions, or changes in demand for their products and services, which could have a material adverse effect on our business, financial condition and results of operations. New regulations could be adopted that require moving to zero emission formats and/or the implementation of more stringent emissions controls. For example, original equipment manufacturers may be required to install additional engine components, additional aerodynamic features or low-rolling resistance tires to comply with fuel economy regulations, which may result in higher costs associated with more complex components and a shorter useful tread life for tires, increasing operating costs for customers, suppliers, and our businesses. Foreign, federal, state, provincial and local lawmakers also are considering a variety of other climate change proposals, including prohibiting the use of certain substances with high "global warming potential."

Governmental regulations, claims, and legal proceedings. Governmental regulations affect almost every aspect of our business, including the fair treatment of our employees, wage and hour issues, and our financing activities with customers. In California, previous judicial decisions have called into question whether long-standing methods for compensating dealership employees comply with the local wage and hour rules and may do so again. We could be susceptible to claims or related actions if we fail to operate our business in accordance with applicable laws or it is determined that our long-standing compensation methods or other practices did not comply with local laws. Many laws and regulations applicable to our business were adopted prior to the introduction of online vehicle sales, the Internet and certain digital technology, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. Claims arising out of actual or alleged violations of law which may be asserted against us or any of our dealers by individuals, through class actions, or by governmental entities in civil or criminal investigations and proceedings, may expose us to substantial monetary damages which may adversely affect us.

Privacy Regulation. We are subject to numerous laws and regulations in the U.S. and internationally designed to protect the information of clients, customers, employees, and other third parties that we collect and maintain, including the European Union General Data Protection Regulation (the "EUGDPR") and the United Kingdom General Data Protection Regulation (the "UKGDPR"). Both the EUGDPR and UKGDPR, among other things, mandate requirements regarding the handling of personal data of employees and customers, including its use, protection, and the ability of persons whose data is stored to correct or delete such data about themselves. The state of California has similar laws which includes a private right of action for certain violations of law. Multiple other U.S. states have also enacted comprehensive consumer privacy laws, and additional states may follow. Many privacy laws and regulations applicable to our business were adopted prior to the introduction of the Internet, artificial intelligence, certain digital technologies, and e-commerce, generally. As a result, we are tasked with maintaining compliance in an uncertain regulatory environment. These laws pose increasingly complex and rigorous compliance challenges, which may increase our compliance costs and related risk. If we fail to comply with these laws or other similar regulations applicable to our business, we could be subject to reputational harm and significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. For example, a failure to comply with the UKGDPR could result in fines up to the greater of £17.5 million or 4% of annual global revenues.

Changes in law. New laws and regulations at the state and federal level may be enacted which could materially adversely impact our business. For example, in DecemberOctober 2023,2025, California adopted the U.S. Federal Trade Commission announced its new"California Combating Auto Retail Scams Rule,Act", which wouldwill change the way vehicles are advertised and sold in the U.S.California. The rulerule, originallywhich was to taketakes effect in JulyOctober 2024.2026, However, asmandates a resultnew ofthree-day legalright challenges,to thereturn rulefor wascertain vacatedused invehicles, Januaryrequires 2025.that Similarads rulesand first customer written communications about a specific vehicle include a "total vehicle price", and expands record retention and customer disclosure requirements. This new law or similar state laws,laws allwill of which could be imposed on our business, couldlikely complicate the transaction process and increase our compliance costs and risk, among other effects, which could increase our customers costs and have a significant and adverse effect on us.

Accounting and disclosure rules and regulations. Significant changes to generally accepted accounting principles in the U.S. ("GAAP") could significantly affect our reported financial position, earnings, and cash flows upon adoption and effectiveness. For example, a change to lease accounting could affect PTS customers' decisions to purchase or lease trucks, which could adversely affect their business if leasing becomes a less favorable option. See the disclosure provided under "Recent Accounting Pronouncements" in Part II, Item 8, Note 1 of the Notes to our Consolidated Financial Statements for additional detail on accounting standard updates that could have an impact on us. In addition, we are subject to various reporting regimes in the U.S. and internationally. In the U.K.,U.K. and Australia, we are subject to thecertain Climate-related Financial Disclosure Regulationsregulations which require disclosure of climate risks and opportunities, among other matters. In Australia, we are subject to the mandatory climate-related financial disclosures under the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. We are also subject to California’sCalifornia's Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act which require disclosure of emissions and other matters.matters, although legal challenges may thwart these acts. Further, we are subject to the European Sustainability Reporting Standards which also require emissions and other disclosures, as well as any regulations regarding climate and sustainability disclosures eventually adopted by the U.S. Securities and Exchange Commission. We are also subject to regulations and corporate financial reporting and auditing obligations in other jurisdictions that we operate in. These multiple sets of disclosures standards are not yet clearly defined and require duplicative and sometimes conflicting disclosures across our individual and consolidated business units, and the failure to comply with these standards may result in fines, penalties and reputational harm. Compliance with these standards will subject us to additional expenses and compliance risk which may adversely affect our business.

Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests. Roger Penske, our Chair and Chief Executive Officer and a director, holds the same offices at Penske Corporation. Robert Kurnick, Jr., our President and a director, is also the Vice Chair and a director of Penske Corporation and an Advisory Board member of PTS. Bud Denker, our Executive Vice President, Human Resources, is also the President of Penske Corporation. Each of these officers is paid much of their compensation by Penske Corporation. The compensation they receive from us is based on their efforts on our behalf; however, they are not required to spend any specific amount of time on our matters. The Vice Chair of our Board of Directors, Greg Penske, is the son of our Chair and also serves as a director of Penske Corporation. Michael Eisenson, one of our directors, is also a director of Penske Corporation and an Advisory Board member of PTS. Lisa Davis, one of our directors, is also an Advisory Board member of PTS. KotaYosuke Odagiri,Kawakami, one of our directors, is also an employee of Mitsui. Roger Penske also serves as Chairman of Penske Transportation Solutions, for which he is compensated by PTS.

We have a significant number of shares of common stock eligible for future sale. Penske Corporation and Mitsui own approximately 71%73% of our common stock, and each has two demand registration rights that could result in a substantial number of shares being introduced for sale in the market. We also have a significant amount of authorized but unissued shares. Penske Corporation does not currently pledge any of its shares of our common stock, however it has pledgedagreed to pledge a substantial portion of its shares of our common stock as collateral to secure a loan facility.facility Ain the future if specified events occur under such agreement. If it were to pledge its shares, a default by Penske Corporation could result in the foreclosure on those shares by the lenders, after which the lenders could attempt to sell those shares on the open market or to a third party. The introduction of any of these shares into the market could have a material adverse effect on our stock price.

In June 2024, CDK Global, LLC ("CDK"), a third-party provider of information systems, including DMS software to support retail automotive and commercial truck dealership operations, experienced a cybersecurity incident and its systems were rendered inoperable (the "CDK Cybersecurity Incident"). Although we do not utilize CDK's DMS in our U.S. or international automotive dealership operations, our Premier Truck Group business does utilize CDK’s DMS and was impacted by the CDK Cybersecurity Incident. Events such as the CDK Cybersecurity Incident and the failure of our information systems, the failure to protect the integrity of these systems, or the interruption of these systems as discussed herein or otherwise due to natural disasters, power loss, unexpected termination of our agreements, cyber-attacks or ransomware encryptions, could significantly and adversely disrupt our business operations, impact our sales, service, inventory, customer relationship management, and accounting functions and otherwise adversely affect our results of operations. Even where business continuity responses and contingency plans, such as those noted above,plans are implemented to minimize disruptions caused by information systems failures, such mitigation efforts may result in decreased operational efficiencies and limit dealership productivity. Further, despite our efforts to assess, identify, and manage material risks from cybersecurity threats to our business and operations, including through evaluating key partners and third parties with whom we share our information as well as certain customer and employee information, we may not be able to protect our various systems from disruptions.

Cybersecurity. In the ordinary course of our business, we receive confidential information about our customers, employees, associates, and vendors. We collect, process, retain, and in some cases share this information in the normal course of our business, and such information is collected and stored primarily in our core information systems, including our DMS and CRM platforms. Our internal and third-party systems, including our DMS and CRM systems, are under a heightened level of risk from state actors, cyber criminals or other individuals with malicious intent to gain unauthorized access to our systems and exploit the information, including the confidential information of our customers and employees, that we gather. Moreover, increasingly powerful artificial intelligence technologies may increase our cybersecurity risks as we and other industry participants need to respond to these novel technologies which will likely be used to thwart our defenses or to obtain personal information. Cyber-attacks, such as the CDK Cybersecurity Incident described above, and threats to information systems and network and data security are becoming increasingly diverse and sophisticated, with attacks increasing in frequency, scope, and potential harm. In addition, some of our software applications are utilized by third parties who, in turn, subcontract or otherwise outsource various processes and administrative functions to additional third parties. Such third parties may have access to confidential information that is critical to our business operations and services. While our information security program includes enhanced controls to monitor third party providers' security programs, these third parties are subject to their own risks of data breaches, cyber-attacks, and other events or actions that could damage, disrupt, or close down their networks or systems, which in turn may adversely impact our business operations. For an overview of certain of our efforts related to cybersecurity risk management, strategy, and governance and our written Information Security Program, see Item 1C. Cybersecurity.

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in "Item 1A. Risk Factors" and "Forward-Looking Statements." We have acquiredacquired, disposed, and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Retail Automotive. We are one of the largest global automotive retailers as measured by the $26.2$27.5 billion in total retail automotive dealership revenue we generated in 2024.2025. We are diversified geographically with 56%61% of our total retail automotive dealership revenues in 20242025 generated in the U.S. and Puerto Rico and 44%39% generated outside of the U.S. We offer over 40 vehicle brands with 72%71% of our retail automotive franchised dealership revenue in 2024 generated from premium brands, such as Audi, BMW, Land Rover, Lexus, Mercedes-Benz, and Porsche.Porsche, and 23% of revenue generated from volume non-U.S. brands such as Toyota and Honda in 2025. As of December 31, 2024,2025, we operated 353365 retail automotive franchised dealerships, of which 148 are located in the U.S. and 205217 are located outside of the U.S., principally in the U.K. As of December 31, 2024,2025, we also operated 1615 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, nineeight dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 594,000583,000 vehicles in 2024.2025.

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 10 U.S. states and the Canadian provinces of Ontario and Manitoba. During 2024, we acquired three full-service dealerships and two independent repair facilities in the U.S. As of December 31, 2024,2025, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 20,94719,239 new and used trucks in 2024. This business represented 11.6% of our total revenues and 11.7% of our total gross profit in 2024.2025.

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, energy solutions, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. TheseWe businessesalso representedown 2.5%and ofoperate three Porsche dealerships in Melbourne, Australia which results are included within our totalretail revenuesautomotive andsegment 3.5%described of our total gross profit in 2024.above.

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various business lines throughbusinesses, which itarticulates the breadth of their services. PTS is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, freightsupply chain management, and dry van truckload carrier services. We recorded $198.0$192.8 million and $289.5$198.0 million in equity earnings from this investment in 20242025 and 2023,2024, respectively.

Our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles, used vehicles, finance and insurance products, and service and parts transactions. Our gross profit varies across product lines with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins. Factors such as inventory and vehicle availability, customer demand, consumer confidence, unemployment, general economic conditions, seasonality, weather, credit availability, the impact of tariffs and non-tariff trade barriers, fuel prices, and manufacturers' advertising and incentives also impact the mix of our revenues and therefore, influence our gross profit margin. The results of our commercial vehicle distribution and other business in Australia and New Zealand are principally driven by the number and types of products and vehicles ordered by our customers. Aggregate revenue and gross profit increased $927.8 million, or 3.1%, and $79.5 million, or 1.6%, respectively, during 2024 compared to 2023.

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar, our U.K. results of operations would translate into less U.S. Dollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $223.2$302.3 million and $31.1$43.1 million, respectively, in 2024.2025. Foreign currency average rate fluctuations increased earnings per share by approximately $0.06$0.04 per share in 2024.2025. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increaseddecreased 2.4%1.1% and 1.0%,0.8%, respectively, in 2024.2025.

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, service vehicle loaner expenses, vehicle delivery and preparation expenses, utilities, and other expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on sales of new and used vehicles, service and parts, and repair and maintenance services, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, tariffs and non-tariff trade barriers, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; changes in the retail model either from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitorscompetitors, or from the expansion of EVs; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber-attackscyber attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on our acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes,strikes or work stoppages by its employees, a reduction in PTS' asset utilization rates, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various government mandatesregulations concerning the electrification of its vehicle fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicles sales, including those related to the sales process, emissions standards or electrification, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate truckselectrification; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors above and "Forward-Looking Statements" below.

Critical Accounting Policies and Estimates

The following arediscussion addresses the accounting policiespolicy applied in the preparation of our financial statements that management believes areis the most dependent upon the use of estimates and assumptions. Refer to Part II, Item 8, Note 1 of our Consolidated Financial Statements for a description of our significant accounting policies.

Except for goodwill discussed below,Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its fair value to its carrying value. These indefinite-lived intangible assets relate to franchise agreements with manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations,combinations; trade names, which represents the estimated value of trade names acquired in business combinations; and distribution agreements with commercial vehicle manufacturers and other manufacturers, which represent the estimated value for distribution rights acquired in business combinations. An indicator of impairment exists if the carrying value exceeds its estimated fair value, and an impairment loss may be recognized up to that excess. The fair value is determined using an income approach, which includes assumptions about revenue growth, terminal growth rates, and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, and the selection of the weighted average cost of capital. Changes in these assumptions could have a significant effect on the fair value of these intangible assets and the amount of any impairment charge. Each of the significant assumptions to the fair value model are considered level 3 inputs within the fair value hierarchy. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life.

Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations which includes our investment in PTS and other various investments. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that were aggregated into two reporting units for the purpose of goodwill impairment testing as of October 1, 2024,2025, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts, and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The reporting units are United States Retail Automotive and International Retail Automotive. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment.

For reporting units within our Retail Automotive, Retail Commercial Truck, and Other reportable segments, we prepared a quantitative assessment of the carrying value of goodwill. We estimated the fair value of our reporting units using an income approach. The income approach measures fair value by discounting expected future cash flows at a weighted average cost of capital. We also validate the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed by the Company or in the industry. As part of that assessment, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization.capitalization as of the assessment date. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest and other significant assumptions, including revenue growth, terminal growth rates, EBITDA margin, and the weighted average cost of capital.

Based on our assessment as of October 1, 2024,2025, and in conjunction with our fourth quarter annual forecasting process for 20252026 which impacts key assumptions used in our goodwill impairment assessment, we concluded that for each of our reporting units that the fair values were more likely than not greater than their carrying values. As a result, we had no goodwill impairment charges in 2024.2025. BasedWe onalso ourhad assessment as of October 1, 2023, we recorded a non-cashno goodwill impairment chargecharges in 2023 of $40.7 million related to our former Used Vehicle Dealerships International reporting unit to reduce the carrying value to fair value.2024.

For our other indefinite-lived intangible assets, we prepared a quantitative assessment as of October 1, 2024,2025, by comparing the fair value to its carrying value. We estimated the fair value using an income approach, applying similar methodology as discussed above. As a result of this assessment, and inIn conjunction with the closuresale of certaina franchised dealershipsdealership in the U.K.U.S. during 2024,2025, we had $3.4 million of impairment charges relating to our other indefinite-lived intangible assets. We also had $1.8 million of impairment charges relating to our other indefinite-lived intangible assets. We had no impairment charges relating to our other indefinite-lived intangible assets during 2023.2024.

The Organization for Economic Co-operation and Development (“OECD”), an international association of thirty-eight countries including the United States, has proposed reform of international taxation known as Pillar Two, which imposes a global minimum corporate income tax rate of 15% on multinational companies. In December 2022, the European Union (“EU”) Member States formally adopted a directive that implements the OECD Pillar Two framework, which is expected to be enacted into the national laws of the EU member states. Certain countries in which we operate have enacted legislation to adopt the Pillar Two framework effective for the Company for the calendar year 2024. Several other countries are also considering changes to their local tax laws to implement this framework in the future. We expect the enacted Pillar Two legislation to increase tax compliance obligations; however, we do not anticipate any monetary impact from any Pillar Two legislation as all of the jurisdictions in which we operate currently have and are expected to have an effective tax rate greater than the minimum threshold of 15%. We will continue to monitor new guidance in this area including proposed and enacted legislative changes as further information becomes available.

Retail unit deliveries of new vehicles increaseddecreased from 20232024 to 20242025 due to a 12,2744,579 unit increasedecrease from net dealership acquisitions,dispositions, coupled with aan 2,974823 unit, or 1.3%,0.3%, increasedecrease in same-store new retail unit deliveries. Same-store retail units delivered increased 3.0%2.2% in the U.S. and decreased 1.0%3.9% internationally. Overall, new retail unit deliveries increased 5.3%1.4% in the U.S. and increaseddecreased 8.4%7.0% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to continued strong consumer demand forthroughout newthe vehiclesyear, increased EV sales in the U.S. due to the expiration of certain tax credits during the third quarter, and increasingan newimproved vehicleeconomic availability,environment, coupled with the pent-up demand resulting fromincluding lower vehicleinterest availability in prior years.rates. We believe the decrease in same-store retail unit salesdeliveries internationally is primarily due to a declinecomparative decrease in salesthe sale of certainpremium-branded premiumvehicles brand sales inacross the U.K. driven inby partmacroeconomic bypressures from inflation, as well as higher business and consumer-related taxes and fees, including increased emissions-based charges on higher-emission vehicles, increased market share of Chinese manufacturers which represent a declinesmall inportion retailof our overall U.K. sales, and privatelower registrations in lieuavailability of fleetcertain sales.products from select manufacturers.

New vehicle sales revenue increaseddecreased from 20232024 to 20242025 due to a $597.7$53.5 million increasedecrease from net dealership acquisitions,dispositions, coupled with a $184.9$51.7 million, or 1.7%,0.4%, increasedecrease in same-store revenues. Excluding $75.3$121.6 million of favorable foreign currency fluctuations, same-store new revenue increaseddecreased 1.0%.1.4%. Same-store revenue (excluding agency) increaseddecreased due to the decrease in same-store new retail unit sales, which decreased revenue by $398.0 million, partially offset by a $1,494$1,582 per unit increase in same-store comparative average retail selling price (including a $383$571 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $286.6 million, partially offset by the decrease in same-store new retail unit sales (excluding agency), which decreased revenue by $120.7$326.4 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to changes in the mix of higher-priced units sold and the increased costs of acquiring vehicles from the manufacturer.manufacturer due to the impact from tariffs and a change in mix of products sold, including the sale of more hybrids and electric vehicles, coupled with the transition to the agency model for MINI brand in the U.K., which increased average retail selling price.

Retail gross profit from newNew vehicle sales decreasedrevenue increased from 2023 to 2024 due to a $151.7 million, or 12.5%, decrease in same-store gross profit, partially offset by a $61.6$597.7 million increase from net dealership acquisitions.acquisitions, coupled with a $176.3 million, or 1.5%, increase in same-store revenues. Excluding $7.2$75.3 million of favorable foreign currency fluctuations, same-store grossnew profitrevenue decreasedincreased 13.1%.0.8%. Same-store gross profitrevenue (excluding agency) decreasedincreased due to ana $815$1,430 per unit decreaseincrease in same-store comparative average grossretail profitselling price (despiteincluding a $28$347 per retail unit increase attributable to favorable foreign currency fluctuations), which decreasedincreased gross profitrevenue by $156.3$302.8 million, coupledpartially withoffset by the decrease in same-store new retail unit sales (excluding agency), which decreased retail gross profitrevenue by $12.7$145.4 million. We believe the decreaseincrease in same-store comparative average retail grossselling profit per unitprice (excluding agency) is primarily due to anchanges improved supply of many of the new vehicles we sell andin the mix of sales.higher-priced Weunits believesold and the resultingincreased compressioncosts onof grossacquiring marginvehicles is due to higher gross profit realized infrom the prior year as vehicle supply was constrained, coupled with affordability challenges and a more competitive environment due to higher supply of vehicles as our days' supply increased to 49 from 39 as of December 31, 2024, and 2023, respectively.manufacturer.

Retail unit sales of used vehicles decreased from 2023 to 2024 due to ana 11,39310,957 unit, or 4.8%,4.5%, decrease in same-store used retail unit sales, partially offset by a 1,280 unit increase from net dealership acquisitions. Excluding the decrease of 11,758 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles increased by 365801 units. Our same-store units increased 1.2%1.5% in the U.S. and decreased 10.1% internationally. Overall, our used units increased 2.0%2.2% in the U.S. and decreased 8.5% internationally. Same-store unit sales are being impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships which sell fewer units as well as a lower supply of 1-4lower yearmileage, oldhigher quality used vehicles due to the fewer number of new vehicles sold in recent years and lower lease returns particularly in the U.S. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed increased 7.4% internationally and increased 4.4% overall and same-store used units decreased 1.2% internationally,internationally and including the U.K. Sytner Select dealerships, used vehicles retailed increased 4.4%0.4% and same-store used units increased 0.2%.overall.

RetailUsed grossvehicle profitretail sales revenue decreased from used vehicle sales increased from 20232024 to 20242025 due to a $21.7$140.9 million increasedecrease from net dealership acquisitions,acquisitions/dispositions, coupledpartially withoffset by a $1.0$42.0 million, or 0.2%,0.5%, increase in same-store gross profit.revenues. Excluding $4.8$138.4 million of favorable foreign currency fluctuations, same-store grossused profitretail revenue decreased 0.9%.1.1%. The increase in same-store gross profitrevenue is due to a $94$3,422 per unit increase in same-store comparative average grossselling profitprice (including a $21$633 per unit increase attributable to favorable foreign currency fluctuations), which increased gross profitrevenue by $21.1$748.4 million, partially offset by the decrease in same-store used retail unit sales, which decreased gross profitrevenue by $20.1$706.4 million. We believe the increase in same-store comparative average grossselling profit per unitprice is primarily due to the stabilization of the used car market compared to the same period last year, coupled with the transition of our former U.K. CarShop locations to Sytner Select dealershipsdealerships, coupled with lower availability of used vehicles which hascontributed improvedto ourhigher sourcingused ofvehicle more profitable vehicles.pricing.

Finance and insurance revenue decreased from 20232024 to 20242025 due to a $35.4$17.7 million decrease from net dealership dispositions, coupled with a $6.8 million, or 4.4%,0.8%, decrease in same-store revenue, partially offset by a $7.9 million increase from net dealership acquisitions.revenue. Excluding $6.9$8.0 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 5.2%.1.8%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $25.4$47.1 million, coupledpartially withoffset by a $33$90 per unit decreaseincrease in same-store comparative average finance and insurance retail revenue (despiteincluding aan $16$18 per retail unit increase attributable to favorable foreign currency fluctuations), which decreasedincreased revenue by $13.7$38.3 million. Same-store finance and insurance revenue per unit (excluding agency) decreasedincreased 0.4%1.2% in the U.S. and decreasedincreased 6.6%10.9% in the U.K. We believe the decreaseincrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to high interest rates impacting overall customer affordability, coupled with an increase in lease penetration in the U.S. and the increase in fleetaverage transactionsselling inprice theof U.K.both whichnew limitsand ourused vehicles, as well as improved finance and insurance product saleofferings opportunities.and availability internationally.

Service and parts revenue increased from 20232024 to 2024,2025, with an increase of 7.5%6.1% in the U.S. and an increase of 18.4%6.1% internationally. The increase in service and parts revenue is due to a $165.8$164.5 million, or 6.2%,5.3%, increase in same-store revenues, coupled with a $147.3$30.6 million increase from net dealership acquisitions. Excluding $19.3$37.1 million of favorable foreign currency fluctuations, same-store revenue increased 5.4%.4.1%. The increase in same-store revenue is due to ana $84.7$100.9 million, or 15.5%, increase in warranty revenue, a $72.7 million, or 3.7%,4.6%, increase in customer pay revenue, anda an $8.4$62.5 million, or 4.6%,9.4%, increase in warranty revenue, and a $1.1 million, or 0.5%, increase in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to vehicles remaining on the road longer due to affordability considerations and increasing vehicle complexity, as well as increases in effective labor rates, repair orders, the retail cost of parts due to inflation, and additional warranty opportunities due to manufacturer recalls.

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, along with our other periodic reports filed with the Securities and Exchange Commission, which could materially affect our business, financial condition, or future results. The following disclosure further updates the risk factors included in our 2025 Annual Report on Form 10-K:

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, andPart II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired, disposed, and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,80028,600 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs nearlyover 41,00040,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 387,500379,200 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

During the threesix months ended MarchJune 31,30, 2026, our business generated $7.9$16.4 billion in total revenue, which is comprised of approximately $7.0$14.3 billion from retail automotive dealerships, $694.6$1.6 millionbillion from retail commercial truck dealerships, and $201.9$485.8 million from commercial vehicle distribution and other operations. We generated $1.3$2.7 billion in gross profit, which is comprised of $1.1$2.3 billion from retail automotive dealerships, $128.2$271.0 million from retail commercial truck dealerships, and $46.2$103.9 million from commercial vehicle distribution and other operations.

Retail Automotive. We are one of the largest global automotive retailers as measured by the $27.5 billion in total retail automotive dealership revenue we generated in 2025. We are diversified geographically with 56%58% of our total retail automotive dealership revenues in the threesix months ended MarchJune 31,30, 2026, generated in the U.S. and Puerto Rico and 44%42% generated outside of the U.S. We offer over 40 vehicle brands with 72%71% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Lexus, Mercedes-Benz, and Porsche, and 22%23% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, we operated 368362 retail automotive franchised dealerships, of which 149146 are located in the U.S. and 219216 are located outside of the U.S., principally in the U.K. As of MarchJune 31,30, 2026, we also operated 1513 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, eightsix dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 147,000296,000 vehicles in the threesix months ended MarchJune 31,30, 2026.

During the threesix months ended MarchJune 31,30, 2026, in the U.S. we acquired two retail automotive franchises and sold onefour retail automotive franchisefranchises; in the U.S.,U.K. we opened one retail automotive franchisefranchise, closed three retail automotive franchises, and sold two used vehicle dealerships; and in theGermany U.K., andwe opened one retail automotive franchise in Germany.franchise. Retail automotive dealerships represented 88.6%87.1% of our total revenues and 86.6%85.9% of our total gross profit in the threesix months ended MarchJune 31,30, 2026.

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of MarchJune 31,30, 2026, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 3,6689,152 new and used trucks in the threesix months ended MarchJune 31,30, 2026. This business represented 8.8%9.9% of our total revenues and 9.9%10.2% of our total gross profit in the threesix months ended MarchJune 31,30, 2026.

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, energy solutions, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.6%3.0% of our total revenues and 3.5%3.9% of our total gross profit in the threesix months ended MarchJune 31,30, 2026. We also own and operate three Porsche dealerships in Melbourne, Australia, whichthe results of which are included within our retail automotive segment described above.

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various businesses, which articulates the breadth of their services. PTS is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, supply chain management, and dry van truckload carrier services. We recorded $41.1$98.5 million and $33.2$86.7 million in equity earnings from this investment for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Tariffs. During 2025 and continuing into 2026, the U.S. enacted various tariffs on automobiles, automobile parts, and medium- and heavy-duty trucks and related parts which have impacted certain of our automotive and commercial vehicle suppliers, as well as our and PTS' operations. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized under that statute, although the ruling did not disturb other previously enacted tariffs.tariffs, and many of the tariffs affected by the ruling were subsequently re-implemented under a temporary statutory authority. In July 2026, that temporary authority expired and in response, the U.S. implemented new tariffs on imports from a broad range of countries under different statutory authority, which tariffs may directly or indirectly affect certain of the vehicles, trucks, and parts we sell. Developments regarding U.S. trade policy and the applicability and impact of tariffs on the vehicles, trucks and parts we sell remain fluid, and we cannot predict the timing, scope, or outcome of future tariff-related actions or their potential effect, if any, on our results of operations. We continue to monitor thetariff potentialpolicies and their impact of tariffs on our business and results of operations.

Macroeconomic and Geopolitical Conditions. During 2026, higher fuel and energy prices, inflation, and broader geopolitical uncertaintyuncertainty, including the conflict between the United States and Iran, may result in a more challenging operating environment, weaker consumer sentiment, and cost pressures in our markets. For additional discussion, see Item 1A. Risk Factors, "Macro-economic and geo-political conditions" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Electric Vehicle ("EV") and Emissions Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles, in many cases requiring vehicle manufacturers to achieve progressively higher penetration of EVs or lower emissions of new internal combustion engine vehicle sales. TheUnder the U.K. governmentZero requiresEmission inVehicle 2026Mandate ("ZEV Mandate"), manufacturers must ensure that 33% of new cars sold shallin be2026 are electric vehicles (with limited allowances) and thatare manufacturerssubject payto significant penalties if suchthe amountrequired percentage is not achievedachieved. andBy publicly available estimates, 25% of the U.K. new car registrations through June 2026 were zero emission vehicles. The U.K. government has also confirmed a ban on the sale of new cars powered solely by internal combustion engines in new cars and new vans beginning in 2030, subject to limited exceptions for certain low-volume manufacturers, while allowing certain hybrid vehiclescars and vans with internal combustion engines to be sold until 2035 with limited exceptions. The ban does not apply to used vehicle sales. These U.K. regulations currently increase nowannually through 2035 and continue to affect the profitability and mix of vehicles sold by our U.K. dealerships. In June 2026, the U.K. government announced a review of, and public consultation regarding, its ZEV Mandate, including a potential reduction of the 2030 zero-emission vehicle sales targets, although the outcome and timing of any resulting changes remain uncertain. In the U.S. commercial vehicle market, the EPA’s 2027 heavy-duty engine emissions standards establish more stringent requirements for model year 2027 and later heavy-duty engines, and wealthough the EPA recently proposed amendments to certain compliance provisions of those standards, it has retained the underlying model year 2027 emissions start date and the stringency of the standards. We believe that the recent clarity regarding thosethese emission standards has contributed to increased order activity induring recentthe months,first half of 2026, with related sales expected to occur primarily in the second half of 2026 as discussed further below.2026. For an additional discussion of certain risks associated with our business related to the EV and emissions,emissions regulation, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Retail Automotive. During the threesix months ended MarchJune 31,30, 2026, U.S. industry new light vehicle sales decreased 6.2%,2.7%, to 3.77.9 million units, including a 7.2%4.0% decrease in retail sales, partially offset by a 5.5%4.3% increase in fleet sales, as compared to the same period last year. In the U.S., we believe our comparative new vehicle sales overall were negatively impacted by weather-related disruptions during January and February, the benefit in the prior period from tariff-related pull-forward of retail sales, and a 61.3%49.5% decrease in our new EV sales in the U.S., driven by reduced EV and emissions regulations in the U.S. and the elimination of certain tax incentives for the purchase of vehicles, including the previous $7,500 per new vehicle tax incentive on September 30, 2025. Following the expiration of those incentives, EV sales in the U.S. have remained lower than prior-year levels. For the remainder of 2026, we expect continued lower EV sales in the U.S. as compared to 2025 and lower availability of certain products from select manufacturers as compared to 2025. We expect continued strong demand for our service and parts operations driven by the increased average age of vehicles, recall campaigns, increased miles driven, and vehicle complexity. Affordability remains a consideration for consumers, given higher average vehicle prices and the resulting impact on monthly payments.

Although U.K. new vehicle registrations increased 5.9%9.2% to 0.61.1 million registrations, including a 9.9%12.6% increase in retail sales and a 2.8%6.8% increase in fleet sales, as compared to the same period last year,year. theThe sale of new premium brand vehicles across the U.K., representing a significant portion of our U.K. portfolio, remainedincreased flat4.2% over such period. We believe thispremium brand performance relative toduring the broaderfirst U.K.six marketmonths wasof driven2026 benefited in part byfrom aan difficultoverall comparisongrowth in the U.K. new vehicle market, including continued consumer demand for electric vehicles. However, premium brand performance in the U.K. continues to thebe priorimpacted year,by whichmarket benefiteddynamics, from product releases at certain premium brands and sales pulled forward into the first quarter of 2025, coupled withincluding higher business and consumer-related taxes and fees, including increased emissions-based charges on higher-emission vehicles, as well as the increased market share of Chinese manufacturers (which doubled their market sharegrew from 7.1%7.6% to 14.3%15.3% in the first quartersix months of 2026), and lowerhigher availabilityfuel ofprices, certainwhich productswe fromexpect selectmay manufacturers.continue to affect the U.K. premium vehicle market.

Our new vehicle days' supply is 4451 as of MarchJune 31,30, 2026, compared to 49 as of December 31, 2025. Our used vehicle days' supply is 3944 as of MarchJune 31,30, 2026, compared to 49 as of December 31, 2025.

Retail Commercial Truck Dealership. During the threesix months ended MarchJune 31,30, 2026, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 17.1%9.4% from the same period last year to 85,901191,418 units. The Class 6-7 medium-duty truck market decreased 11.1%3.6% from the same period last year to 34,19273,542 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 20.6%12.7% from the same period last year to 51,709117,876 units. Lower order intake related to the weak freight environment during the third and fourth quarters of 2025 negatively impacted truck deliveries during the first quartersix months of 2026. However, order activity has begunbegan increasing in recentlate months2025 as the freight environment beganhas to show signs of improvement,strengthened, driven in part by customer orders placed ahead of anticipated 2027 emissions requirements. Demand for used trucks also increased during the first half of 2026, which we believe was due to higher freight rates and capacity constraints in the freight market. In addition, service and parts operations benefited from increased demand from delayed maintenance, as well as from an aging vehicle fleet. We expect related sales from increased new truck order activity to occur primarily in the second half of 2026 and demand for new and used trucks and service and parts operations to remain strong. As of MarchJune 31,30, 2026, the Class 6-8 medium- and heavy-duty truck backlog is 231,158236,771 units according to data published by ACT Research compared to 170,568 as of December 31, 2025.

Commercial Vehicle Distribution and Other. During the threesix months ended MarchJune 31,30, 2026, the Australian heavy-duty truck market reported sales of 3,0076,466 units, representing a decrease of 11.0%9.5% from the same period last year, while the New Zealand market reported sales of 5731,137 units, representing a decrease of 5.4%0.3% from the same period last year. For 2026, weWe expect similarcontinued performancechallenging tomarket 2025conditions for our on-highway businesses, with higher fuel prices and broader operating cost pressures on transport operators may continuecontinuing to affect demand. WeHowever, we expect demand for defense and energy systems products to remain strong in the second half of 2026, in particular in providing standby power energy solutions for our data systems customers.

Penske Transportation Solutions. PTS experienced improved operating performance during the first quartersix months of 2026. As discussed above, in recent months we have seen increased order activity in the Class 8 market which, in addition to continued cost savings strategies, we expect will benefit PTS.

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Automotive and commercial truck dealerships represent 97.4%97.0% of our revenue and 85.0%81.5% of our earnings before taxes during the threesix months ended MarchJune 31,30, 2026. Income from our PTS investment represents 12.7%14.5% of our earnings before taxes during the threesix months ended MarchJune 31,30, 2026. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by vehicle manufacturers.

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollarsdollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar,dollar, our U.K. results of operations would translate into less U.S. Dollardollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $227.6$47.2 million and $34.9$8.5 million, respectively, for the three months ended MarchJune 31,30, 2026.2026, and increased revenue and gross profit by $274.8 million and $43.4 million, respectively, for the six months ended June 30, 2026, compared to the same periods in 2025. Foreign currency average rate fluctuations increased earnings per share by approximately $0.05$0.02 per share for the three months ended MarchJune 31,30, 2026.2026, and increased earnings per share by approximately $0.07 per share for the six months ended June 30, 2026, compared to the same periods in 2025. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit decreasedincreased 4.0%5.4% and decreased 4.3%,0.3%, respectively, for the three months ended MarchJune 31,30, 2026.2026, and increased 0.7% and decreased 2.3%, respectively, for the six months ended June 30, 2026, compared to the same periods in 2025.

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, customer service vehicle loaner expenses, vehicle delivery and preparation expenses, utilities,utility expenses, and various other miscellaneous expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on sales of new and used vehicles, service and parts, and repair and maintenance services, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, tariffs and non-tariff trade barriers, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; changes in the retail model from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of EVs; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on our acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes or work stoppages by its employees, a reduction in PTS' asset utilization rates, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning its vehicle fleet, changes in the values of used truckstrucks, which affectsaffect PTS' profitability on truck salessales, and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehiclesvehicle sales, including those related to the sales process, emissions standards or electrification; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; risks and uncertainties relating to an unsolicited, preliminary and non-binding take private proposal received from Penske Corporation and Mitsui & Co., Ltd. and their affiliates to acquire all of the shares of the Company not already owned by them, including the possibility that any such transaction may not be pursued, approved, or consummated on the proposed terms, within any anticipated timeframe, or at all; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Our results for the threesix months ended MarchJune 31,30, 2025,2026, include a gain of $52.3$90.9 million from the sale of one retail automotive franchisefranchises in the U.S., resulting in an after-tax gain of $38.9$67.5 million, or $0.58$1.03 per share. This gain was partially offset by impairmentsdisposals and other charges of $25.2$13.0 million (none of which was individually material), resulting in an after-tax expense of $20.9$10.9 million, or $0.31$0.17 per share. This resulted in a net after-tax gain of $18.0 million, or $0.27 per share.

Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

Retail unit deliveries of new vehicles decreasedincreased from 2025 to 2026 due to a 3,1323,043 unit, or 4.8%,4.9%, decreaseincrease in same-store new retail unit deliveries, coupled with a 31224 unit decreaseincrease from net dealership acquisitions/dispositions. Same-store retail units delivered decreasedincreased 9.5%2.8% in the U.S. and increased 1.4%8.2% internationally. Overall, new retail unit deliveries decreasedincreased 9.7%2.9% in the U.S. and increased 1.8%8.9% internationally. We believe the decreaseincrease in new retail unit salesdeliveries in the U.S. iswas primarily due to weather-relatedhigher disruptionssales duringat Januaryour volume and Februarydomestic brand dealerships and theimproved benefitnew invehicle the prior periodavailability from tariff-relatedcertain pull-forwardmanufacturers, ofpartially retailoffset sales, as well asby lower demand for electric vehicles subsequent to the elimination of certain U.S. tax incentives as of September 30, 2025. We believe the increase in retail unit deliveries internationally is primarily due to the increase of our sales from Chinese manufacturers, coupled with increases in salesdeliveries of certain premium and volume brands, partially offset by the elimination of premium vehicles from certain government incentive programs in the U.K.

New vehicle sales revenue decreasedincreased from 2025 to 2026 due to a $184.1$155.5 million, or 5.7%,5.0%, decreaseincrease in same-store revenues, partiallycoupled offset bywith a $16.8$31.8 million increase from net dealership acquisitions/dispositions. Excluding $67.7$7.3 million of favorable foreign currency fluctuations, same-store new revenue decreasedincreased 7.9%.4.7%. Same-store revenue (excluding agency) decreasedincreased due to the decreaseincrease in same-store new retail unit sales, which decreasedincreased revenue by $317.7$116.6 million, partiallycoupled offset bywith a $2,582$690 per unit increase in same-store comparative average retail selling price (including a $1,334$131 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $126.8$35.8 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to the increased costs of acquiring vehicles from the manufacturer.manufacturer, coupled with a shift in sales mix toward higher-priced hybrid vehicles.

Retail gross profit from new vehicle sales decreased from 2025 to 2026 due to a $35.9$20.8 million, or 12.0%,6.9%, decrease in same-store gross profit, partially offset by a $3.7$4.5 million increase from net dealership acquisitions/dispositions. Excluding $6.9$0.6 million of favorable foreign currency fluctuations, same-store gross profit decreased 14.3%.7.1%. Same-store gross profit (excluding agency) decreased due to the decrease in same-store new retail sales, which decreased retail gross profit by $27.5 million, coupled with a $311$632 per unit decrease in same-store comparative average gross profit (despite a $100 per retail unit increase attributable to favorable foreign currency fluctuations),profit, which decreased gross profit by $15.3$32.8 million, partially offset by the increase in same-store new retail sales, which increased retail gross profit by $9.1 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a highly competitive selling environment, the benefit in the prior period from tariff-related pull-forward of retail sales, the mix of vehicles sold, and vehicle affordability considerations.

Retail unit sales of used vehicles decreasedincreased from 2025 to 2026 due to a 7752,768 unit, or 5.0%, increase in same-store used retail unit sales, partially offset by a 500 unit decrease from net dealership acquisitions/dispositions, partially offset by a 414 unit, or 0.7%, increase in same-store used retail unit sales.dispositions. Our same-store units decreasedincreased 2.9%3.0% in the U.S. and increased 4.4%7.4% internationally. Overall, our used units decreasedincreased 3.8%3.3% in the U.S. and increased 2.7%4.7% internationally. We believe the decrease in same-store retail sales of used units in the U.S. is primarily due to weather-related disruptions during January and February, as well as the limited availability of lower mileage, used vehicles from lower lease returns. We believe the increase in same-store retail sales of used units internationally is primarily due to increased consumer demand due to overall affordability concernsconsiderations, incoupled ourwith internationalincreased markets.operational enhancements internationally focused on growing used vehicle sales.

Used vehicle retail sales revenue increased from 2025 to 2026 due to a $182.4$218.3 million, or 8.2%,9.9%, increase in same-store revenues, partially offset by a $17.1$5.8 million decrease from net dealership acquisitions/dispositions. Excluding $91.7$9.7 million of favorable foreign currency fluctuations, same-store used retail revenue increased 4.1%.9.5%. The increase in same-store revenue is due to the increase in same-store used retail unit sales which increased revenue by $116.0 million, coupled with a $2,802$1,858 per unit increase in same-store comparative average selling price (including a $1,540$167 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $165.7 million, coupled with the increase in same-store used retail unit sales discussed above, which increased revenue by $16.7$102.3 million. We believe the increase in same-store comparative average selling price is primarily due to the increased costs to acquire vehicles.

Retail gross profit from used vehicle sales decreased from 2025 to 2026 due to a $3.3$6.8 million, or 2.6%,5.3%, decrease in same-store gross profit. Excluding $4.8$0.6 million of favorable foreign currency fluctuations, same-store gross profit decreased 6.4%.5.9%. The decrease in same-store gross profit is due to a $71$229 per unit decrease in same-store comparative average gross profit (despite a $80 per unit increase attributable to favorable foreign currency fluctuations),profit, which decreased gross profit by $4.2$12.6 million, partially offset by the increase in same-store used retail unit sales, which increased gross profit by $0.9$5.8 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to higher acquisition costs of vehicles, coupled with theimproved competitivenew sellingvehicle environment particularly in the U.S. and U.K. markets.availability.

Finance and insurance revenue decreasedincreased from 2025 to 2026 due to a $1.7$3.2 million, or 0.8%,1.6%, decreaseincrease in same-store revenue, coupledpartially withoffset by a $1.4$0.4 million decrease from net dealership acquisitions/dispositions. Excluding $5.0$0.5 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreasedincreased 3.3%.1.3%. Same-store revenue (excluding agency) decreasedincreased due to the decreaseincrease in combined same-store new and used retail unit sales, which decreasedincreased revenue by $8.8$8.5 million, partially offset by a $57$72 per unit increasedecrease in same-store comparative average finance and insurance retail revenue (including a $44 per retail unit increase attributable to favorable foreign currency fluctuations),revenue, which increaseddecreased revenue by $6.2$7.7 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 0.6%5.1% in the U.S. and increaseddecreased 9.7%5.9% in the U.K. We believe the increasedecrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to thelower increase in average selling pricepenetration of both new and used vehicles, as well as improvedvarious finance and insurance penetrationproducts internationally.and overall affordability considerations.

Service and parts revenue increased from 2025 to 2026, with an increase of 2.9%2.4% in the U.S. and an increase of 7.5%0.3% internationally. The increase in service and parts revenue is due to a $37.7$16.4 million, or 4.6%,2.0%, increase in same-store revenues, coupledpartially withoffset by a $0.6$2.7 million increasedecrease from net dealership acquisitions/dispositions. Excluding $22.9$3.0 million of favorable foreign currency fluctuations, same-store revenue increased 1.8%.1.6%. The increase in same-store revenue, which was partially offset by weather-related disruptions during January and February,revenue is due to a $33.6$21.1 million, or 5.9%,3.6%, increase in customer pay revenue and a $4.2 million, or 2.2%, increase in warranty revenue, partially offset by a $0.1$4.3 million, or 0.2%,2.3%, decrease in warranty revenue and a $0.4 million, or 0.7%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to increased customer-pay revenue, implementation of technology in our service operations, increasing vehicle complexity, increases in effective labor rates, and increases in the retail cost of parts due to inflation and tariffs, and continuing vehicle recalls.parts.

Service and parts gross profit increased from 2025 to 2026 due to a $27.1$16.5 million, or 5.7%,3.4%, increase in same-store gross profit, coupledpartially withoffset by a $0.2$0.9 million increasedecrease from net dealership acquisitions/dispositions. Excluding $12.3$1.5 million of favorable foreign currency fluctuations, same-store gross profit increased 3.1%. The increase in same-store gross profit, which was partially offset by weather-related disruptions during January and February,profit is due to the increase in same-store revenues, which increased gross profit by $22.2$9.8 million, coupled with a 0.6%0.8% increase in same-store gross margin from 58.4%58.7% to 59.0%,59.5%, which increased gross profit by $4.9$6.7 million. The increase in same-store gross profit is due to ana $18.4$12.9 million, or 6.7%,4.6%, increase in customer pay gross profit, a $5.0$3.1 million, or 4.9%, increase in warranty gross profit, and a $3.7 million, or 3.7%,2.9%, increase in vehicle preparation and body shop gross profit, and a $0.5 million, or 0.5%, increase in warranty gross profit. We believe the increase in same-store gross margin is primarily due to a change in the mix of warranty andto more favorable customer pay,pay in the U.K., coupled with an increase in the effective labor rate.

Retail unit sales of new trucks decreased from 2025 to 2026 due to a 953362 unit, or 25.5%,7.8%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to reduced ordersorder activity during the third and fourth quarters of 2025 related to the prolonged recessionary freight rate environmentenvironment, tariffs, and the implementation of tariffs, coupled with market uncertainty prior to the recent clarity regarding the2027 2027EPA emission standards for Class 8 heavy-duty emissions standards.trucks.

New commercial truck retail sales revenue decreased from 2025 to 2026 due to a $126.0$61.3 million, or 23.9%,9.4%, decrease in same-store revenues. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $134.4$51.2 million, partiallycoupled offset bywith a $3,031$2,366 per unit increasedecrease in same-store comparative average selling price, which increaseddecreased revenue by $8.4$10.1 million. We believe the increasedecrease in same-store comparative average selling price is primarily due to standarda pricechange increases fromin the manufacturer,mix coupledof withunits increases due to tariffs.sold.

New commercial truck retail gross profit decreased from 2025 to 2026 due to a $10.3$6.3 million, or 30.7%,17.2%, decrease in same-store gross profit. The decrease in same-store gross profit is due to thean decrease in same-store new retail unit sales, which decreased gross profit by $8.5 million, coupled with a $646$806 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $1.8$3.4 million, coupled with the decrease in same-store new retail unit sales, which decreased gross profit by $2.9 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shiftchange in the sales mix towardof largerunits fleets.sold.

Retail unit sales of used trucks decreasedincreased from 2025 to 2026 due to a 178454 unit, or 18.3%,64.8%, decreaseincrease in same-store retail unit sales. We believe the decreaseincrease in same-store unit sales is primarily due to lowerimproving freight rates from the reduction in overall market capacity which has increased demand for used trucks due to market uncertainty and the prolonged recessionary freight rate environment.trucks.

Used commercial truck retail sales revenue decreasedincreased from 2025 to 2026 due to ana $11.6$33.9 million, or 18.2%,64.3%, decreaseincrease in same-store revenues. The decreaseincrease in same-store revenue is primarily due to the decreaseincrease in same-store used retail unit sales, which increased revenue by $34.1 million, partially offset by a $232 per unit decrease in same-store comparative average selling price, which decreased revenue by $11.7$0.2 million.

Used commercial truck retail gross profit decreasedincreased from 2025 to 2026 primarily due to a $1.8$5.4 million, or 24.7%,110.2%, decreaseincrease in same-store gross profit. The decreaseincrease in same-store gross profit is due to the decreaseincrease in same-store used retail unit sales, which decreasedincreased gross profit by $1.3$4.1 million, coupled with a $562$1,886 per unit decreaseincrease in same-store comparative average gross profit, which decreasedincreased gross profit by $0.5$1.3 million. We believe the decreaseincrease in same-store comparative average gross profit per unit is primarily due to aimproving changefreight rates from the reduction in theoverall mixmarket ofcapacity unitswhich sold,has coupledincreased withdemand thefor prolongedused recessionary freight rate environment.trucks.

Service and parts revenue increased from 2025 to 2026 primarily due to a $9.0$9.5 million, or 4.1%,4.2%, increase in same-store revenues, coupled with a $1.2 million increase from net dealership acquisitions/dispositions.revenues. Customer pay work represented 78.8%,79.2%, warranty represented 18.1%,17.5%, and collision repair represented 3.1%3.3% of PTG's service and parts revenue. The increase in same-store revenue is due to aan $9.1$8.8 million, or 5.3%,4.9%, increase in customer pay revenue and a $0.4$0.7 million, or 1.0%,1.7%, increase in warranty revenue, partially offset by a $0.5 million, or 7.5%, decrease in body shop revenue. We believe the increase in same-store service and parts revenue is primarily due to the improving freight environment, resulting in increased demand for repairsparts, repairs, and maintenance services driven by aging vehicle fleet and increased demand from delayed maintenance.

Service and parts gross profit increaseddecreased from 2025 to 2026 primarily due to a $0.8 million increase from net dealership acquisitions/dispositions, partially offset by a $0.1$1.1 million, or 0.1%,1.2%, decrease in same-store gross profit. The decrease in same-store gross profit is due to a 1.6%2.1% decrease in same-store gross margin, which decreased gross profit by $3.7$4.9 million, partially offset by the increase in same-store revenues, which increased gross profit by $3.6$3.8 million. Same-storeThe decrease in same-store gross profit increasedis $0.9due to a $0.8 million, or 1.5%,1.1%, decrease in customer pay gross profit,profit offset byand a $0.7$0.4 million, or 9.7%,5.4%, decrease in body shop gross profitprofit, andpartially offset by a $0.3$0.1 million, or 1.3%,0.4%, decreaseincrease in warranty gross profit.

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $201.9$283.9 million of revenue during the three months ended MarchJune 31,30, 2026, compared to $211.5$201.2 million of revenue in the prior year period, aan decreaseincrease of 4.5%.41.1%. This business also generated $46.2$57.7 million of gross profit during the three months ended MarchJune 31,30, 2026, compared to $44.2 million of gross profit in the prior year period, an increase of 4.5%.30.5%. Excluding $19.7$26.3 million of favorable foreign currency fluctuations, revenue decreasedincreased 13.9%,28.0%, and excluding $4.4$5.4 million of favorable foreign currency fluctuations, gross profit decreasedincreased 5.2%.18.1%. These decreasesincreases are primarily due to increased demand for energy systems products, including standby power energy solutions for our data systems customers, partially offset by a decrease in units sold related to the decline in the Australian and New Zealand heavy-duty truck market, coupled with the timing of orders on power system units.market.

Selling, general, and administrative expenses ("SG&A") increased from 2025 to 2026 due to a $13.9$29.9 million, or 1.5%,3.2%, increase in same-store SG&A, coupled with a $0.3 million increase from net dealership acquisitions/dispositions. Excluding $27.0$5.4 million of unfavorable foreign currency fluctuations, same-store SG&A decreasedincreased 1.4%.2.7%. SG&A expenses as a percentage of gross profit was 74.3%,71.8%, an increase of 230200 basis points compared to 72.0%69.8% in the prior year. SG&A expenses as a percentage of total revenue were 12.3%11.4% and 12.0%11.7% in the three months ended MarchJune 31,30, 2026 and 2025, respectively. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expensesexpenses, including employee benefits, information technology expenses, rent and rent related expenses, and relatedvehicle maintenance expenses.

Depreciation increased from 2025 to 2026 due to a $3.9$2.8 million, or 9.6%,6.7%, increase in same-store depreciation due to capital expenditures, coupledpartially withoffset by a $0.3$0.5 million increasedecrease from net dealership acquisitions/dispositions.

Floor plan interest expense decreased from 2025 to 2026 due to a $3.5$4.8 million, or 8.4%,11.2%, decrease in same-store floor plan interest expense, coupled with a $0.4$0.5 million decrease from net dealership acquisitions/dispositions. The overall decrease is due to decreases in applicable rates, coupledpartially withoffset decreasesby increases in average amounts outstanding under floor plan arrangements due to decreasingincreasing levels of inventory.

Other interest expense increased from 2025 to 2026 due to increases in average revolver borrowing amounts outstanding under our credit agreements,agreements due to dealership acquisitions, partially offset by decreases in applicable rates throughout the year.

Equity in earnings of affiliates increased from 2025 to 2026 due to a $7.9$3.9 million, or 23.8%,7.3%, increase in earnings from our investment in PTS, partially offset by the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in our joint venture in Spain during the second quarter of 2025. We believe the increase in our PTS equity earnings was driven by improved operating performance during the firstsecond quarter of 2026, including growth in full-service leasing revenue, improved fleet utilization, and lower operating and interest expenses, including maintenance and depreciation expense, resulting from continued fleet reductions. These benefits were partially offset by continued challenging conditions in the rental market, which pressured commercial and consumer rental demand, as well as a lower gain on sale of used trucks.

Income taxes decreasedincreased $6.6 million from 2025 to 20262026, primarilydespite duegenerally to a $26.8 million decrease in ourflat pre-tax income compared to the prior year.income. Our effective tax rate was 27.4%26.2% during the three months ended MarchJune 31,30, 2026, compared to 26.3%24.3% during the three months ended MarchJune 31,30, 2025, primarily due to our acquisition of PMG whose earnings only became subject to corporate income taxes after our November 2025 acquisition, coupled with the fluctuations in our geographic pre-tax income mix.