Penske Automotive Group is benefiting from a surge in lease returns, driven by the popularity of leasing and a rising number of vehicles coming off lease. Prior to the pandemic, the company’s luxury and import brand lease customers would typically return their vehicles every three years and lease another one.
Rich Shearing, COO of North American Operations for Penske Automotive Group, noted in the company’s second-quarter earnings conference call that lease returns are increasing.
This trend is significant for Penske Automotive, which generates 71% of its retail automotive revenue from premium brands, where leasing is particularly popular, and an additional 24% from volume import brands, such as Toyota and Honda.
According to Shearing, Penske Automotive expects 5,600 Toyota-brand lease maturities next year, up from 4,200 this year, and 3,100 Lexus lease maturities in 2027, up from 2,500 last year. The company also anticipates 10,700 BMW lease returns next year, up from 9,500.
If the customer doesn’t purchase the vehicle, the originating dealer gets first dibs on buying the lease return for resale. Shearing noted that these vehicles have a higher chance of being brought back into the company’s dealerships and either converted into another sale or leased again.
Penske Automotive reported second-quarter revenue of $7.1 billion, up 6% compared to the same period in 2025. However, new-vehicle average gross profit per unit in the second quarter was $4,782, down 10.4%, while used-vehicle gross profit was $2,095 per unit, down 8.8%.
Across the automotive retail industry, new leases declined sharply between 2020 and 2023 due to a shortage of new vehicles and reduced lease incentives. As a result, fewer off-lease units were available for resale, making them scarce at wholesale auctions.
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Before the pandemic, OEMs and their captive finance companies had set residual values, which are the agreed-in-advance prices that customers can buy the vehicle for at the end of the lease. However, due to the new-car shortage, these residual values became an unintended bargain.
Now, with new-car supply catching up with demand, lease incentives and lease penetration are making a comeback. Cox Automotive reported in June that it expects a total of 3 million lease maturities in 2026, a 9.9% increase compared to 2025, and 4.3 million lease maturities in 2027, up 13.6% from 2026.
Penske Automotive’s new retail auto lease penetration was 32% in the second quarter, higher than the industry average of around 22%, according to Cox Automotive. However, for its premium brands, the company has a historical average lease penetration in the mid-40% range.
Shearing noted that the company still has upside with lease penetration, particularly in its premium brands.
Penske Automotive’s focus on premium brands, where leasing is particularly popular, positions the company to capitalize on the growing number of lease returns. With its strong track record in this segment, the company is likely to continue benefiting from this trend in the future, similar to how Group 1 Automotive has rebranded with a new strategy.
They are poised to take advantage of the increasing number of lease returns.
