Penske Automotive Group said it is slashing executive pay, furloughing employees, postponing $150 million in capital expenditures and taking a range of other steps to “to help mitigate the financial and operational impact of COVID-19.”
CEO Roger Penske and President Robert Kurnick will accept no salary for the duration of the coronavirus outbreak, while executives and managers across the company also are taking pay cuts, Penske spokesman Anthony Pordon said Monday. Pordon said Penske was not disclosing how many employees would be furloughed, nor how many would see reductions in compensation, or how much. The company also is freezing hiring.
In addition, the board of directors has waived its cash compensation for six months, the second-largest U.S. dealership group said in a statement.
“The COVID-19 crisis is impacting our operations requiring us to take swift and decisive action to address declining business levels,” Penske said in the statement. “I am confident the actions we are taking will help our business overcome these challenges.”
Penske also said it has successfully negotiated rent deferrals for up to 90 days at many locations
“The majority of OEMs the company represents, and their respective captive finance companies, have offered significant support during this crisis, including interest payment deferrals,” Penske said in the filing.
Penske said its U.S. dealership business over the past 10 days has seen declines in sales volume and service and parts revenues, though the company did not give specifics.
The retailer said stay-at-home orders in many states are limiting dealership operations. U.S. service departments remain open, and Penske said virtual and online sales of new and used vehicles are available in most of its locations.
Last week, Group 1 Automotive said it would furlough 3,000 employees for at least 30 days, furlough about 2,800 employees in the United Kingdom for at least 21 days and would slash executive salaries because of the coronavirus. Group 1 said U.S. sales volumes were down 50 to 70 percent from a typical March.
Globally, Penske also faces closures of dealerships in the United Kingdom, Spain and Italy. On March 24, it had to shut all dealerships in the U.K. under a government order, though limited service and parts operations remain open.
Its dealerships in Italy also are closed, with service and parts available on an emergency basis. All Penske-owned dealerships in Spain also are closed with limited service and parts operations and sales in Germany are limited to virtual and online sales only.
Penske said it has $1.3 billion in liquidity, including $850 million in cash and money available through non-floorplan credit and about $450 million in real estate it could potentially finance.
The company’s stock closed Monday at $28.43 a share, up 2.9 percent, though that’s down 39 percent from its closing price March 2.
Penske, of Bloomfield Hills, Mich., ranks No. 2 on Automotive News‘ list of the top 150 dealership groups based in the U.S., retailing 222,800 new vehicles in 2019.