So I think when you look at our contract business, remember, if we are up 13% in contract that’s for one year and typically these contracts now would go forward for three years to four years to five years. So we really have a trailing opportunity here. So I see this revenue continuing to grow, and obviously, it’s easy for us to grow the fleet. We are not limited by franchise loss or any other things you might have on the automotive side.
Michael Ward: And have you seen any easing in some of the constraints of the industry?
Roger Penske: Let me let Rich. Do you want to answer that?
Rich Shearing: Yes. So, Mike, if you look at the parts side of the business, which really is an indicator of the challenges on the supply side of the business. And at its peak, there was 250,000 nationwide back orders from the dealers and we — at any given time, as an entity Premier Truck, we have had about 10% of those nationwide back orders. To put that number in perspective, it was — less than 10,000 would have been pre-pandemic levels, less than 10,000 national back orders for all of the Daimler Truck North American dealerships. So right now, as we sit here today, it’s just below 100,000. So it’s come down significantly and the supply chain is improving on componentry but still 10x where it was, say, pre-COVID levels.
And then when you look at equipment, I just want to go back to our new unit sales. So we are up 8% on a — through nine months on a year-to-date basis. It’s down 13% for the quarter and that’s the dynamics related to the supply chain of 2022, where a lot of retail sales got pushed later in the year. So we are still up on a year-to-date basis, 8% retail sales on the truck side.
Michael Ward: Yeah. And the pricing is still strong and so that’s another good indication.
Rich Shearing: That’s correct. Yeah.
Roger Penske: Yeah.
Michael Ward: Okay. Thank you very much.
Roger Penske: All right, Mike. Thanks.
Operator: Next we go to a question from Daniel Imbro. Please go ahead.
Roger Penske: Daniel, hi.
Daniel Imbro: Yeah. Hey. Good afternoon, everybody. Roger, maybe sort of one on the new vehicle side, just thinking about GPUs have been strong and they did step down a bit more. I wanted to maybe double-click on that. EV demand has been pretty tepid maybe at best. Can you talk about the GPU degradation or parse out what ICE GPUs are doing maybe from the first half into 3Q and then what EV GPUs did? And maybe is that part of the reason for this deeper step down in profitability here we saw a little bit in the quarter?
Roger Penske: Well, we see growth is rationalizing. I think we have talked about it again before. We are not going to return to pre-pandemic for sure in the near future, I don’t believe. And when you look at our business today, 52% of our business is at MSRP. So, and again, being a premium luxury player like we are, we are not in the volume game. So we don’t have, as I said earlier, we might have 300 BMW stores and one of the Big Three has 6,000 dealers. So a lot more competition in the market. So I think that at the present time, our decline was about 450 sequentially. Again, when you look at the first quarter of 2023 versus 2019 or early or excuse me, first quarter this year, we are down 140. The key thing is the average transaction price has gone from $40,000 in the third quarter in 2019 to $5,660.
So a certain amount of benefit we are getting is because of a higher cost base and I think this gets us to a higher base margin. Well, obviously, it’s got to be inventory driven. There’s no question about it. But overall, I think, the margin will stay pretty much the same, but will start to decline slightly based on more availability. I am going to let Randall talk a little bit about what you see internationally.
Randall Seymore: Yeah. I think on the new car side, remember that the market in the U.K. is nearly 17% — 16.8% BEV, which is up slightly versus last year. We are — because of our mix, we are higher than that. We are going to be, depending on the brand, we range between 20% and 25% on an average. So interestingly as well, we are seeing the BEV margins erode a bit. We wrote some business last year with deliveries this year towards the beginning of the year with better grosses. But on the BEV side, for some of the brands, it’s a little bit weaker. Interesting on Mercedes as agency, we have a fixed commission, obviously, margin on that, and typically, the BEVs are more expensive. So our margin on those with Mercedes was bucking the trend a little bit better.
Roger Penske: And I think also when you look at BEV sales here in the U.S. we are selling at 80% or under MSRP, am I right, talk a little bit probably about inventory on BEVS here, Rich.
Rich Shearing: Yeah. So we have seen sequentially an improvement actually on inventory from the second quarter. At the end of the second quarter, we were about 15% of our overall inventory with BEV. That’s down to just over 11% through the end of the third quarter. Shelley alluded to the days supply earlier being about 14 days more than a comparable ICE inventory. And then you look at the percentage of our sales, it represents on a year-to-date basis that sale is about 6.7%. That’s up slightly 112 basis points from our percentage of sales through the second quarter. And to Roger’s point earlier, we are seeing — and on average, with the brands that we represent about $2,400 lower gross profit per unit on the BEV sales. We have got to discount them to move them and as the OEMs are putting tons of money on there to try and drive customer demand.
Roger Penske: Yeah. I think talking about we are selling them too. I think it’s interesting definition…
Rich Shearing: Yeah. So if you just look at it at an industry year-to-date 73, sorry, 37% of year-to-date BEV sales are in California, but of our sales, the PAG sales, 51% are going to California, 70% of our sales are actually through our West region, which is Texas, Arizona and California. So you have got only three states right now in the United States that are above the national average sales rate, which is 8% and that’s Texas, California and in New Jersey. And then if you look at California sales in Q3, it is 23% overall of sales were into California. So at some point, those markets are going to get saturated and it’s going to be a little more challenging in the other markets that currently have a lower adoption rate of BEVs compared to the national average.
