Strong Operational Performance and Strategic Positioning Drive Buy Rating for Penske Automotive GroupWe believe that years of undersupply (SAAR), aging vehicles, and near-highs in miles driven support franchised dealer operations. PAG remains one of the most diversified of the franchised dealers with a track record of commendable operational execution. While we viewed its 2Q25 results (July) as mixed, we believe the positives outweighed negatives. Retail volumes declined, largely tied to U.K. portfolio optimization, but premium mix and healthy inventory drove sequential and y/y GPU gains, with consolidated margins holding firm despite modest volume pressure. Cost discipline continues to shine, keeping gross margins above 16.5% for eight straight quarters, while G&A leverage and pre-tax margins improved. PTG sales are stabilizing (+5% YTD), and the removal of Daimler OEM allocation limits unlocks FY25/26 upside.