Interim Financial Statements

9 Months Ended

Sep. 30, 2026

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Unless the context otherwise requires, the use of the terms "PAG," "we," "us," and "our" in these Notes to the Consolidated Condensed Financial Statements refers to Penske Automotive Group, Inc. and its consolidated subsidiaries.

Business Overview and Concentrations

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. Additionally, we own 28.9% of Penske Transportation Solutions, a business that manages one of the largest, most comprehensive and modern trucking fleets in North America with trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Retail Automotive. As of September 30, 2026, we operated 369 retail automotive franchised dealerships, of which 146 are located in the U.S. and 223 are located outside of the U.S., principally in the U.K. As of September 30, 2026, we also operated 13 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, six dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. During the nine months ended September 30, 2026, in the U.S. we acquired two retail automotive franchises and sold four retail automotive franchises; in the U.K. we opened six retail automotive franchises, closed three retail automotive franchises, and sold two used vehicle dealerships; and in Germany we opened three retail automotive franchises.

In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Some of our dealerships in the U.K. and Europe operate under an agency model where 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.

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty truck retail 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 September 30, 2026, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services.

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. We also own and operate three Porsche dealerships in Melbourne, Australia, the 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.

Proposed Take-Private Transaction

On October 15, 2026, we entered into an Agreement and Plan of Merger (the "Merger Agreement" and the transactions contemplated thereby, including the Merger (as defined below) the "Proposed Transaction") with Motown Acquisition Corp., a Delaware corporation ("Buyer"), pursuant to which Buyer will merge with and into the Company (the "Merger"), with the Company surviving the Merger. Buyer is an entity owned by Penske Corporation, a Delaware corporation ("PC"), and Mitsui & Co., Ltd., a Japanese company ("Mitsui", and together with PC, Penske Automotive Holdings Corp., a wholly owned subsidiary of PC, and Mitsui & Co. (U.S.A.), Inc., a wholly owned subsidiary of Mitsui, the "Investor Group" and each, an "Investor Group Member"). If the Proposed Transaction is consummated, we will cease to be a publicly traded company and will become wholly owned by the Investor Group, with PC and Mitsui expected to own, directly or indirectly, approximately 64% and 36%, respectively, of the equity interests of the Company.

At the effective time of the Merger (the "Effective Time"), if consummated, each share of our common stock issued and outstanding immediately prior to the Effective Time (other than (a) shares held by the Company or any of its wholly owned subsidiaries or by Buyer, (b) shares held by one or more of the Investor Group Members (the "Excluded Shares"), and (c) shares held by stockholders who have properly perfected appraisal rights under Section 262 of the Delaware General Corporation Law (the "DGCL") (the "Appraisal Shares")) will be automatically canceled and converted into the right to receive $212.00 per share in cash, without interest (the "Merger Consideration"), subject to any withholding of taxes required by applicable law. In addition, we expect to continue paying regular quarterly cash dividends through the closing of the Merger, in each case, in an amount not to exceed $0.02 per share above the per share amount of the last quarterly dividend declared and paid in the immediately preceding quarter, as well as a pro-rated dividend for any partial quarter prior to the closing of the Merger. A special committee (the "Special Committee") of independent and disinterested directors of the Board of Directors of the Company (the "Board"), which negotiated the terms of the Merger Agreement with the assistance of its independent legal and financial advisors, has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of the Company and the Unaffiliated Company Stockholders (as defined in the Merger Agreement) and recommended, among other things, that the Board approve and declare advisable the Merger Agreement and Proposed Transaction. Acting on the unanimous recommendation of the Special Committee, the Board (with the directors affiliated with the Investor Group recusing themselves), by unanimous vote of all directors present, approved and declared advisable the Merger Agreement and the Proposed Transaction, including the Merger, determined that the Merger Agreement and the Proposed Transaction, including the Merger, are fair to, and in the best interests of, the Company’s stockholders, including the Unaffiliated Company Stockholders and resolved to recommend that the Company's stockholders adopt the Merger Agreement and approve the Proposed Transaction, including the Merger, and by unanimous vote of all directors present, directed that the Merger Agreement be submitted to the Company's stockholders for adoption at a meeting of the Company's stockholders.

The consummation of the Merger is subject to customary closing conditions, including the Company Stockholder Approval (as defined in the Merger Agreement), the absence of any law or governmental order prohibiting the Merger, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other specified regulatory approvals, the accuracy of the representations and warranties of the parties (subject to the applicable materiality standards set forth in the Merger Agreement), the performance of the covenants of the parties in all material respects, and the absence of a Material Adverse Effect (as defined in the Merger Agreement).

The Merger Agreement requires the following stockholder approvals: (i) the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote thereon, voting as a single class, and (ii) the affirmative vote of a majority of the votes cast by the "disinterested stockholders" (as defined in Section 144 of the DGCL). For purposes of this vote, the disinterested stockholders will exclude shares held, directly or indirectly, by or on behalf of (a) the Investor Group and the directors and executive officers of any Investor Group Member and their respective affiliates and family members, (b) any person that the Company has determined to be an "officer" of the Company within the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (c) members of the Board who are not members of the Special Committee.

The Merger Agreement contains certain termination rights as specified in the Merger Agreement. In addition, under the terms of the Merger Agreement, we may be required to pay Buyer a termination fee of $383.0 million if the Merger Agreement is terminated under specified circumstances, and Buyer may be required to pay us a reverse termination fee of $488.0 million if the Merger Agreement is terminated under other specified circumstances. Upon completion of the Proposed Transaction, our common stock will no longer be listed on any public market. The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 hereto.

Concurrently with the execution of the Merger Agreement, we entered into the Limited Consent and Thirteenth Amendment (the "Amendment") to our U.S. credit agreement with Mercedes-Benz Financial Services USA LLC, Toyota Motor Credit Corporation and Daimler Truck Financial Services USA LLC (as amended, the "U.S. Credit Agreement"), principally to provide for a conditional increase in the borrowing capacity under the U.S. Credit Agreement to finance a portion of the aggregate Merger Consideration and to obtain the consent of the lenders thereunder to the Merger. See Note 9 – "Long-Term Debt-U.S. Credit Agreement" for further information concerning the Amendment. See also Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q for further information.

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of PAG have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025 is unaudited but includes all adjustments which our management believes to be necessary for the fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2025, which are included as part of our Annual Report on Form 10-K.

On November 19, 2025, we acquired Penske Motor Group, LLC ("PMG") from a commonly controlled affiliate, which was accounted for as a transaction between entities under common control. Accordingly, our consolidated financial statements and related notes have been retrospectively recast for all historical comparative periods presented to include the operations of PMG as if the entities had been combined since the beginning of the earliest period presented. Furthermore, the assets and liabilities of PMG were recognized at the historical carrying amounts, and the difference between the consideration transferred and the carrying value of the net assets received was recorded to equity within retained earnings.

Historically, PMG was treated as a pass-through partnership for income tax purposes and therefore did not record income tax expense in its stand-alone financial statements. Because we have retrospectively recast prior periods to include PMG as if it had always been part of our consolidated reporting, the recast of historical periods does not reflect federal and state income taxes that would have been incurred had PMG been included in our taxable consolidated group. Beginning on the acquisition date, the results of PMG are included in our consolidated federal and state income tax filings and therefore are subject to income tax.

Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of estimates include accounts receivable, inventories, income taxes, intangible assets, leases, and certain reserves.

Fair Value of Financial Instruments

Accounting standards define fair value as the price that would be received from selling an asset, or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also

establishes the following three levels of inputs that may be used to measure fair value:


Level 1			Quoted prices in active markets for identical assets or liabilities

Level 2			Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3			Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, and forward exchange contracts used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting.

Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior subordinated unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of our fixed rate debt is as follows:


	September 30, 2026		December 31, 2025
	Carrying Value	Fair Value	Carrying Value	Fair Value
3.75% senior subordinated notes due 2029	497.9	468.8	497.3	481.9
Mortgage facilities (1)	1,024.3	1,006.3	792.5	777.1
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(1)In addition to fixed rate debt, our mortgage facilities also include a revolving mortgage facility with Toyota Motor Credit Corporation in the U.S. and other revolving mortgage facilities that bear interest at variable rates. The fair value equals the carrying value.

Income Taxes

Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit.

Recent Accounting Pronouncements

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This ASU requires public business entities to disclose in the notes to financial statements specific categories within relevant expense captions presented on the face of the income statement. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied on a prospective basis with retrospective application permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.