Penske Automotive Group (NYSE: PAG) completed the acquisition of four high‑volume Toyota and Lexus dealerships—Longo Toyota and Longo Lexus in El Monte, California; Lexus of Stevens Creek in San Jose, California; and Longo Toyota of Prosper in Prosper, Texas—on November 19, 2025. The deal adds an estimated $1.5 billion in annualized revenue to PAG’s U.S. retail portfolio and brings the company into the Dallas‑Fort Worth metro area and the Los Angeles market, where it already operates several northern California locations.
The acquisition targets dealerships that have long been leaders in their regions: Longo Toyota has been the #1 volume Toyota dealer in the United States for 58 years, Longo Lexus is a top‑volume Lexus dealer in the Western U.S. for 35 years, and Lexus of Stevens Creek has held a top‑volume position in Northern California for 22 years. By adding these established, high‑margin locations, PAG strengthens its relationship with Toyota and Lexus and positions itself to capture additional premium vehicle sales, service, and parts revenue. The company plans to leverage its existing digital and AI‑driven service efficiencies to accelerate integration and improve customer experience across the new sites.
Financially, the $1.5 billion in annualized revenue represents a significant boost to PAG’s retail earnings. The new dealerships are expected to contribute higher gross margins than the company’s average, driven by strong service and parts sales typical of premium‑brand operations. PAG’s management has indicated that the acquisition will enhance operating leverage by expanding the scale of its service network and by integrating the new locations into its existing digital platform, which has already delivered cost savings in inventory management and customer engagement.
Penske’s most recent earnings report for the third quarter of 2025 showed revenue of $7.7 billion, a 1.4% increase from $7.6 billion in the same quarter of 2024. Net income attributable to common stockholders fell 6% to $213 million, and earnings per share were $3.23, missing the consensus estimate of $3.42. The miss was attributed to a weaker North American freight market and challenges in the United Kingdom’s auto retail sector, which pressured margins and reduced sales volume in those regions. The company’s guidance for the remainder of the year remained unchanged, reflecting a cautious outlook amid ongoing market volatility.
Analysts responded to the earnings miss by adjusting their coverage of PAG. Morgan Stanley raised its price target from $180.00 to $190.00 and maintained an “overweight” rating, while JPMorgan reduced its target to $175.00 and set a “neutral” rating. Citigroup increased its target to $206.00 and issued a “buy” rating, and Barclays initiated coverage with an “overweight” rating and a $195.00 target. The mixed analyst sentiment reflects the tension between the company’s strong dealership portfolio and the short‑term earnings shortfall.
Rich Shearing, North American Operations Officer at Penske Automotive Group, noted that the acquisition “strengthens our relationship with the Toyota and Lexus brands and expands the Company’s presence in southern California to the Los Angeles area.” He added that the new dealerships complement PAG’s existing operations in northern California and broaden its footprint in the Dallas market, positioning the company for long‑term growth in premium vehicle sales and service revenue.
The acquisition signals PAG’s continued focus on consolidating premium‑brand dealerships to drive higher gross margins and service profitability. While the Q3 earnings miss highlights short‑term headwinds, the addition of four high‑volume, high‑margin locations is expected to offset those pressures over time and support the company’s long‑term growth strategy in key U.S. markets.
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