Roger Penske

Thank you, Tony. Everyone, thank you for joining us today.
In the third quarter of 2024, PAG generated $304 million in income before taxes, $226 million in net income, and earnings per share of $3.39. Overall revenues increased 2% to a third-quarter record of $7.6 billion, including a 14% increase in service and parts to a record $778 million.
61% of our revenue is derived in North America, 30% in the UK, and the remaining 9% came from our other international markets. Retail automotive brand mix is a key differentiator with 20 -- 72% of the revenue generated from premium brands, 21% generated from volume non-US brands.
Our gross margin was consistent in the quarter over quarter at 16.4%. Our SG&A expenses as a percentage of gross profit was 71.2% and remains well within the target range and is nearly 800 basis points below pre-pandemic levels. I'm pleased with the financial performance during the quarter, despite the impact from stop sale of certain vehicles and residual impact from the CDK cyber security incidents.
During the quarter, new and used automotive gross profit remained strong. Retail automotive service and parts performed at record levels. The retail commercial truck business performed well. SG&A expenses remained well controlled and equity income from Penske Transportation Solutions increased 14% sequentially, despite continued freight challenges.
Let's take a look at our retail automotive. We delivered 117,551 units during the quarter. Our new units increased 5%. Same-store new units declined 2%. We continue to take forward orders were presold activity averaging between 10% and 20% in the US. 32% of our new vehicles sold in the US read MSRP. The average new vehicles transaction price now has increased 2% to $57,880. Gross profit per new vehicle retail remained strong at $5,072 and was only down $230 sequentially, remains nearly $2,000 higher than in 2019.
Used units declined 13%. The availability of product has been impacted by the lower amount of new sales and previous years and the lack of trade-ins.
During 2024, we began transitioning the UK-based CarShop locations to Sytner Select dealerships. These dealerships sell fewer units, which contributed to a 13% decline in used vehicle retail during the quarter. Excluding these dealerships used vehicles retail would have increased 1%. On a same-store used retail, declined 13%, but only decreased 4% when excluding these dealerships. Average used vehicle transaction price increase 4.6% to $36,785. Gross profit per used vehicle retail increased $318 quarter over quarter, and it was up $60 sequentially. Variable gross profit per unit increased $8 sequentially. Approximately, one-half of our total gross profit is derived from service and parts.
As we look to continue growing this important part of our business, this added more than 7% more technicians during 2024. Our effective labor rate in the US has increased 5%. Service and parts revenue is at an all-time record of $778 million. Same-store retail automotive revenue decreased 5%. However, service and parts increased 7%, customer pay up 4%, and we're already up [20%] along with collision repair up 2%.
Let me now turn the call over to Rich sharing.

Richard Shearing

Thank you, Roger, and good afternoon, everyone.
We have one of the largest commercial truck retailers for Daimler Trucks North America. Retail truck business is one of our core pillars of our diversified model. We operate 35 full sales and service facilities and 11 stand-alone service and parts or parts only facilities.
Since acquiring the retail truck business in 2014, we have grown revenue and EBT more than 6 times through a combination of organic growth and acquisitions and will continue to pursue acquisitions as a part of PAG's capital allocation strategy. We believe Class 8 commercial truck demand will continue to be driven primarily by replacement purchases. During Q3, North American Class 8 retail sales declined 1%, year-to-date retail sales were 234,000 units or down 6%. At the end of September, the current industry backlog was 116,000 units or approximately four months of sales. This compares to a backlog of 161,300 units at the end of September last year.
Premier Truck Group sold 6,331 new and used units in Q3 which is up 14% when compared to Q3 last year. And same-store units increased 9%. Same-store SG&A to gross profit was 57.1% and fixed absorption was 126%. Premier Truck Group's solid Q3 with EBT of almost $57 million. As we look towards '25 and '26, the anticipated emissions change for '27 and recovery in the freight market should help drive retail sales.
Lastly, as you may recall, Premier Truck Group was temporarily impacted by the CDK's cyber security incident in June 2024. The system outage was restored in the third quarter and we resumed processing transactions at that time. The outage impacted the efficiency and productivity of fixed operations, leading to lower fixed absorption ratio and lower-than-expected parts and service gross profit during Q3.
Turning to Penske Transportation Solutions. I'm pleased to report a 14% increase in sequential earnings for PTS. During Q3, operating revenue increased 3% to $2.8 [billion]. Full service revenue and contract maintenance increased 11%. Logistics revenue increased 3%. Rental declined 11% as a continued freight recession impacted the number of units on rentals.
PTS earnings of $[219 million] in Q3 increased sequentially by $27 million, but were down $81 million or 27% compared to Q3 last year. Our share of the PTS earnings was $60.3 million, up from $32.5 million in the first quarter and $52.9 million in the second quarter.
When we compared the PTS EBT in Q3 to the prior year, earnings were impacted by $21 million in higher maintenance expense of [simply] due to lease extension, a $44-million increase in depreciation expense, and a $23-million increase in interest expense from higher rates related to bond, refinancing, and higher outstanding debt. And finally, a $29-million decline in gain on sale of used trucks. Used truck sales were flat at 8,849 sold units compared to Q3 2023.
I would now like to turn the call over to Randall Seymore.

Randall Seymore

Thanks, Rich. Good afternoon, everyone.
I will now discuss several activities taking place in our international operations. In the UK, we have been busy integrating the 16 dealerships and $1 billion in estimated annual revenue we acquired earlier this year, coupled with the re-branding and transitioning of the UK CarShop operations to Sytner Select. With this change Sytner Select, we can more closely align the used car operation with franchise dealerships to reduce our cost base.
The UK new vehicle market remains challenging. Registrations increased 1% during Q3, with retail registrations down 4%. The decline in retail registrations is a result of the UK government's zero-emission vehicle mandate, which requires at least 22% of all vehicles registered to be zero emissions in 2024. These vehicles are primarily purchased by fleet customers due to payroll tax incentives and are often at lower gross margin.
Same-store units delivered increased 7% with new units retail down 2%, and agency units, up 25%. Same-store used units declined 22% as a result of the transition of UK CarShop locations to Sytner Select, which focus on lower volume but higher quality vehicles. Excluding those dealerships, same-store used units decreased 6%. However, services and parts same-store revenue increased 8.5%.
Turning to Australia. As you may recall during the second quarter, we expanded our retail automotive operations with the acquisition of two Porsche dealerships located in Melbourne, the second largest city in Australia. During the third quarter, these dealerships retail nearly 400 new and used units, generated nearly $50 million in revenue at a 5% return on sales.
Last week, we announced an agreement to acquire our third Porsche dealership in Melbourne. We expect this dealership to add $130 million in estimated annualized revenue and closing is expected by the end of this year, subject to customary conditions.
Turning to our on-and-off highway markets within the commercial truck and power system operations. We continue to sell products and trucking, mining, power generation, defense, marine, rail, and construction sectors. And support full parts and after-sales service across the region. Service and parts represents approximately 70% of our total gross profit, so our focus on increasing units in operation is a key driver of the business.
For nine months in Australia ending September 30 of this year, we have generated record profitability through an increase in sales and a reduction in our SG&A to gross profit of nearly 500 basis points. In the on-highway market, our Western Star, MAN brands have increased share in the forecast for Q4 looks solid. In fact, MAN is expected to achieve record sales results in 2024.
Energy solutions continues to perform strongly in the data center in battery energy storage solution markets. We continue to be a market leader in these segments with 55% market share of high horsepower generation. Our current order bank for large data centers in the battery storage systems is over $500 million for 2024 and beyond. Additionally, the mining market remains strong as commodity prices generally remain high, resulting in a positive environment.
I would now like to turn the call over to Shelley Hulgrave.

Michelle Hulgrave

Thank you, Randall. Good afternoon, everyone. I will review our cash flow, balance sheet, and capital allocation.
Our balance sheet and cash flow provide us with opportunities to maximize capital allocation. As a result, we continue to grow our business through acquisitions and return capital to shareholders through dividends and securities repurchases.
During the first nine months, we generated $962 million in cash flow from operations, and our trailing 12-month EBITDA was $1.4 billion. On October 16, we announced an 11% increase in the cash dividend to $1.19 per share. So far in 2024, we have increased the dividend four times while increasing the cash payout from $0.79 per share at the end of last year to $1.19, a 51% increase. Using the closing price on October 28, the current yield is approximately 3.1%. The dividend payout ratio over the last 12 months is approximately 28%.
We have also repurchased approximately 511,000 shares for $77 million so far this year, including the upcoming dividend distribution and year-to-date share repurchases, the company will have returned approximately $350 million to shareholders so far this year. In addition to the return to shareholders, we have completed acquisitions, representing $2.1 billion an estimated annualized revenues to date this year, including $1.8 billion in retail automotive and $200 million in commercial truck.
Additionally, as we focus on effective capital allocation, we also divested or closed five underperforming locations so far this year, representing $500 million in estimated annual revenue.
Our strong cash flow has allowed PAG to keep its non-vehicle debt and leverage low. At the end of September, our long-term debt was $1.88 billion, up [$215] million from the end of December 2023.
22% of our long-term debt is at fixed rate. Our variable debt is approximately $4.7 billion, of which approximately 50% resides in the US. We estimate a 25-basis-point change in US rate [and tax] interest expense by approximately $6 million on an annual basis. Debt-to-total capitalization was 26.4% and leverage is 1.3 time. We have now determined that it is proper to classify our 2025 notes of current in our September 30 balance sheet.
As of September 30, we had $92 million of cash among the liquidity available to us was $1.7 billion. Our liquidity, strong cash flow, and strong balance sheet provide us many options to repay or refinance as we look ahead to the September 2025 (inaudible) of our five-year notes in the (technical difficulty) current interest rate environment.
Total inventory was $4.8 billion, up $530 million from the end of December last year. Floor plan debt was $4.2 billion. Despite the increase in new vehicle inventory, days' supply for new vehicles was 53 and 43 for used. This compares to 52 for new and 40 for use at the end of June. Days' supply of new vehicles for premium was 56 and volume foreign was 36. The day supply of new battery electric vehicles in the US has improved from 88 days at the end of June to 66 days at the end of September.
At this time, I will turn the call back to Roger for some final remark.

Roger Penske

Thank you, Shelley.
As Shelley remarked, our balance sheet remains is in great shape and provides us with a flexibility and capital allocation. In conclusion, our results continue to demonstrate the benefit from our diversification, disciplined capital allocation strategy, continued cost control, and the efforts for our whole team. I'm very confident in our model and the performance of the business.
Appreciate you being on the call today. We'll open it up for questions.

Question and Answer Session

Operator

(Operator Instructions)
John Murphy, Bank of America.

John Murphy

First question, Roger, on the stop sale because it's flowing through the business in a number of ways. I'm just curious if you can give us an idea of the impact in the quarter and what you expect near-term potentially there also on the flip side becoming benefits on parts and service and when that may hit? And maybe just more broadly because you've been in the industry for a long time, what do you actually think is going on here? Because it seems like (laughter) it's pretty pervasive and not isolated to one specific manufacturer apart.

Roger Penske

John, let me have Rich talk about the US and then Randall talk about the international.
Okay, Rich?

Richard Shearing

Yes, hey, John, good afternoon.
So I think like you mentioned it's a detriment on one side and the benefit on the other. And certainly as you look in the quarter, the amount of stop sales we saw were more pervasive than we've ever experienced, so that's disappointing. And I'll talk to some of the reasons why at least from the feedback we've received from the OEMs in a minute.
But I think I'll focus on BMW because obviously that was probably the one that have got the biggest headlines and was the most impactful from an overall volume when you look at 26% of our worldwide revenue being with BMW, and that recall impacting about 1.5 million units globally. It certainly impacted both the business here in the US and in our business internationally, as Randall will talk to.
So when the announcement came out, it was an impact of -- to about 60% of our BMW ground stock and 100% of our many ground stock. And it was two things that we did proactively very early on. The first was to acquire vehicles from BMW that were in their internal for offer sale that enabled us to source vehicles that were not part of the stop sale, so that our retail teams had some units to sell, not knowing how long this stop sale is going to occur. So that was number one.
Number two, the teams, both at the dealerships regionally and with our brand management team worked very closely with BMW's parts and service organization, understand what was needed to make the repairs, what training was needed so that we could get ahead of it. And then we prioritized that work when the parts came available because the way BMW in the US was metering the parts is they would only give you more parts if all the vehicles from the first parts they ship were updated. And so we felt it was necessary to prioritize those repairs and get as many vehicles updated as soon as possible.
So then if you look at the impact then from that the sales was about a $6-million gross impact from this sale side of it. And then about a $4-million net impact in gross when you factor in the warranty work that was necessary to get those stop sale vehicles updated, and that's on a global basis. So that's approach we took here in the US.
I'll hand over to Randall talked about the international market.

Randall Seymore

Yeah. So it was other than the UK was effectively a non-issue, Italy and Japan, we have a decent BMW footprint, but we were able to get those vehicles back on the road. In the UK, a similar story hear to the US. Parts availability and timing and they prioritized, as you would expect, customer vehicles, new vehicles, and then used vehicles, which were still in the process of addressing.
So from a new standpoint, it's probably more of a push rather than a cancellation, but used, as you can imagine, we did have some cancellations as customers if they wanted to buy used cars in early September aren't going to wait till November so that was really the effect in the UK.

Richard Shearing

And then the second part of your question, John, what do we think is going on?
So obviously, we've had discussions with each of the OEMs to understand what's going on. There's two main reasons that we would point to base -- that's been consistent from the feedback we've received.
One, the increasing vehicle complexity in the software that goes into these vehicles these days because there is a lot of the recalls, we've seen have been software related, take the Porsche Macan, for example, and then just how deeply the supply base cut their costs and workforce during the pandemic. They're just having a hard time ramping back up the demand and their production forecasts have increased, so those are the two things that we hear from the OEMs and it's being consistent to some of the underlying problems there.

John Murphy

Got it.
And then just maybe a second question that's very helpful on upfront grosses. I mean, up $8 sequentially, rate keeps [ticking grosses] in total are going to fall and then specifically, the relative strength of even new GPUs down a little bit more than $200 on their own. It just seems like this is holding up better than anybody is fearing. Or are we getting to a point in a slower on the decline? Are we getting to a point where we're get into this asymptotic limit where we might be, quote-unquote, normalizing now these much higher levels? Or is there a reason as we progress through the next 18 to 24 months, why there might be, quote-unquote, further normalization lower?

Richard Shearing

Yeah, I think we feel good about where the grosses are at right now, John. And as you pointed out, sequentially, the compression has slowed. There's no doubt the consumer is still I think challenged. The affordability remains to be a question mark as Roger alluded in his remarks up 2% in the quarter to over $57,000 now. Obviously, we think the rate cuts, if those come forward, that will help with the high penetration of leasing in the US market.
But it goes back to our teams as well. I mean I think I give a lot of credit there to them making a deal that is holding on the gross and being disciplined and what they're doing. We still have very short supply in Texas our Toyota and Lexus, and you're seeing the incentives increase and so from the OEM. So with that, it helps move the [OEM] without us having to discount at a higher rate to move the inventory.

Operator

Ronald Jewsikow, Guggenheim Securities.

Ronald Jewsikow

I was wondering if we could start on, you called off the residual impact of CDK on the business. I thought the retail truck numbers, I guess, look (technical difficulty) pretty healthy in the quarter. So just put a finer point on that and maybe beyond that. There has been some freight market softness. So just any update you can provide on the order book and tone of conversations with your customers.

Richard Shearing

Yeah. Ron, Good afternoon. So Rich here again on. Let me take the first one on CDK. So I think just as a reminder, I think you're aware that we use CDK in our commercial retail truck business. So unlike our peers who have CDK in the automotive business, it's a smaller portion of our business, but still impacts probably on a proportional basis. Again, I give credit to our team and their responsiveness to implement manual processes as soon as possible so that we get at least sustain a business level that was acceptable.
The biggest impact, as I said, was on our fixed operations, mostly from a productivity and efficiency standpoint, where things slowed as a result of having to generate repair orders manually, generate parts tickets manually instead of that automatically filling through our retail management system with the OEM.
We also took the decision to pay our employees on the trend price prior to the CDK disruption because obviously, it wasn't anything that they had control over. And then when we came out of that through the middle of August, we looked back on a 3-month, 12 month, and 18-month trend basis to determine what we thought the impact to our business was during that time, and we feel it's minimum $7 million that was an impact in total with some of that being in the second quarter and some in the third quarter, so that's CDK.
Then as you look at the freight environment, your second question, certainly, it's lasted longer than any other freight recession that we've had in the past and we're still in the heights of that at the moment. But I think despite that, you look at our new vehicle sales up 16%, 10% on a same-store basis, used up 5%, 4% on a same-store basis.
And I think the customers are continuing to purchase at a replacement demand versus fleet growth. And I think the decision they're making there is that the capital expenditure is better than the increased maintenance expense that they'll see if they run those trucks and keep those trucks longer and so on, our allocation is completely sold out. We have seen more smaller customer cancellations this year. I'd say it's nothing material that we haven't been able to [replace] those trucks with other customers where there is demand and the demand is still healthy and medium-duty private fleets and vocational business.
As we look to 2025, the OEM we support Freightliner and Western Star, they have a quarterly reservation system. And so we know how many trucks we're going to be allocated on a quarterly basis. And then we're working with customers now to fulfill those orders. And we feel optimistic for the first time in four years that now there'll be production capacity to where we can go out and conquest business that we haven't been able to go after in the past, simply because all the trucks we were allocated were being used to satisfy our existing customer portfolio.
So when you look at our grosses, I think both new and used sequentially are hanging right in there, so feel good overall about the performance in the quarter.

Ronald Jewsikow

Okay. That's super helpful. I appreciate all the color.
And then I was just wondering if we could talk about parts and service from here a little bit more as a follow-up to the stop sale discussion. Really strong quarter in Q3 obviously, fourth quarter will have less service space, but I assume it's largely the same year over year. So just wanted to get a sense of the potential benefit from stop sales and how closer (multiple speakers) potentially (multiple speakers)--

Roger Penske

Let me take that one.
I think a couple of things. When we look at parts and service, our technician count [is up] 7% and our effective labor rate is up five percentage, which obviously makes a big difference.
Customer pay when I look at it across, the US was up about 5%, internationally was up 2%. So overall, about 4% (inaudible) which was the strongest was up 20% across both the US and internationally. And our collision repair was up about 2.2%. So you can see it across the board. And I think the fact that the premium luxury cars are in, we looked at a number and I don't have it exactly here from a BEV concern to a ICE vehicle. And there's no question that the BEV vehicles now we're taking more time because the programming and then they are in an ICE vehicle and I can't give you exactly from an ROI perspective.
But I think overall, when you look at our stop sale impact, it was about $6 million in sales at about $4 million on the fixed side. So again, we're focusing because you remember, when you think about Randall's business about 70% is parts and service in the -- we look at Rich's business is probably what 65% and 55% in the auto side. So when you look at those margins comparison to 6% and 7% on new and used, I think the focus is right. We spent a lot of money on dynamometer in their truck business. We've got ways to adjust or look at your tires as you come in the drive-through. We have equipment now that will tell us about and be able to show the customer their alignment. So a lot of these things are for customer satisfaction and also then drives margin in our [shock], so again we're investing a lot of money in shops because we see as the BEV units come in, we're going to need to have more space because of much of the programming that has to take place.
And what when you look at the difference between today and this is probably over the last 2% of our repair orders, the difference between a ICE vehicle when you look at it from a total cost is about $700 and it's about $1,300 per repair order for a BEV. So I'm not sure when -- which is around, but the stop sales and the complexity around this software is interesting. I see it here in the car business, and I can tell you that at our race cars, we're using a lot of software and we spend more time whether it's sitting there and we do on the track many days. So this isn't just epidemic on the car side. It just so complicated. And we're expecting so many things that get done. So I would say that overall parts and services is the heart of our business.

Ronald Jewsikow

So hey, Rich, could you clarify or I know you talked about the benefit from stop sales parts and service and the revenue that we would have received in the quarter. Can you go through those numbers one more time?

Richard Shearing

Yeah. So as we're talking specifically BMW, BMW -- so on BMW, just to clarify then we saw about a $6-million impact to gross profit and sales. And then when you factor in the warranty repairs to correct those vehicles to prepare them for sale, the net impact was about $4 million. So you had let's say about $2 million in fixed operations that was a gain as a result of correcting the deficiency on those units.
So Ron, that gives you the big picture piece there, okay.

Ronald Jewsikow

Yeah. That's super helpful as we move forward and appreciate all the color on the increasing complexity as we are looking more and more like computer on wheels like us. Appreciate it.

Operator

Rajat Gupta, JPMorgan.

Rajat Gupta

I had a question on the used car business, obviously a bit more than expected abrupt [correction] in the unit because of consolidation of CarShop. I was just curious looking forward from here is the third quarter level a good baseline to look at the business, both in terms of units and GPUs. Or were there some one-time impacts that (technical difficulty) the business more than we would expect because of the consolidation? So just curious if you could give us some guidance on that?
I have a follow-up.

Roger Penske

I think in our press release, we talked about even though we showed our used car business down, if we took out 9,000 units, that would have put us at up 1% on an overall basis. But as we transitioned from CarShop to Sytner Select, we've taken away real estate and locations that we sold to third parties, which now has given us a base run rate between [2,000 and 2,500 versus 5,000].
Now that was done, and I would say this so you'll see the ultimate used car number come down but I think for gross profit perspective, even on the chassis we're almost double than where we were before and we're gaining a lot of strength on our F&I, our finance products, and to me the access to those vehicles now, these are vehicles that come from Sytner OEM business that can't be retailed or certified where they were being put on our Sytner net are exclusive or actions block.
We now take those vehicles and they're moved over to Sytner Select. And I can tell you this made a big difference because we're now sourcing a biggest portion of our vehicles through this process along with OEM. And I think that when you look at our overall gross profit, just for the quarter, we were up $318. So I think some of that has a big factor and overall we're up 5%.
So number one, it's lower units, higher margin, less locations. But I think when we look at the product now where we had a loss in it last year, we're looking as we go forward and do our business plans for 2025, we should see Sytner in the UK with [positive].
We also want -- took two down here in the US, one in New Jersey and one in Phoenix. And those costs were, I think from an operating standpoint, were higher than the business could afford. And those have been divested during the year. So when we look at the CarShop US and we look at Sytner Select, I think that we're going to have a business got to run somewhere between 2,500 in the UK and 1,100 to 1,200 in the US so you can say between 3,500 and 4,000 would be a run rate, and I think the margins are significantly higher than they were before.
And we'll continue to look at our sourcing but I can tell you that we want to buy down -- on the service drive, we want to buy from the OEM and obviously trades are a big portion of this.

Rajat Gupta

Got it. That's very clear.
And just a follow-up on capital allocation. You've done several acquisitions this year, added modest leverage to the business, and so [1.2] times. Curious how we should think about optionality around (technical difficulty) increasing leverage, being more aggressive on buyback or even more M&A. Just curious what's the latest thoughts off around go-forward capital allocation?

Roger Penske

I will let Shelley answer that for you. Okay, Shelley?

Michelle Hulgrave

Hey, Rajat. Thanks for the question.
When we look at this quarter and we start all these capital allocation discussions with the word opportunistic, and I think we exemplified at this quarter and this year. So if you look at page 6 of our slide deck, acquiring $2 billion in annualized revenue year to date, I think chunk of that came from Bill Brown Ford, which we acquired in July, certainly not as cheap date.
But then, we also wanted to take care of our shareholders, and so with the most recent dividend announcement, we will have returned over $350 million to our shareholders to date, and continue to grow the business through CapEx. Roger talked about expanded service opportunities, and we've opened a number of new stores and purchased about $37 million on land for future growth.
So I would say, we certainly like the buyback. It's not something that we've turned away from it. It just happened to be the opportunities that were presented to us in this quarter.

Operator

David Whiston, Morningstar.

David Whiston

Sticking on the M&A and capital allocation question, I'm just curious if you're seeing seller asking prices and for M&A coming down, as people are resetting their expectation given trailing 12-month profits have been coming down? Or do you still think because what would you still consider them [elevated]?

Roger Penske

Well, let me say this. We've been at the highest levels over the last, say, 24 months but when you look at the premium brand, the BMW, the Toyota, the Lexus and these brands, we still see these things -- at high levels. Obviously, when we look at the truck operations -- probably (inaudible) in some cases, 50% less from a multiple basis. And your volume foreign is somewhere in the middle.
I think we look at it. That's so much what's the multiple. We look at what's the future opportunity from the standpoint of profitability and do we have synergies in the market where we are and that means, do we have other stores? Can we consolidate into a central office? And that's really been our focus.
And on top of that, then we're looking at stores which are not going to produce what we expect going forward, so I would say if we look -- year to date, Shelley, it's about $200 million of our $2 billion-ish truck.

Michelle Hulgrave

Yeah.

Roger Penske

The balance and all of the divestitures are primarily on the auto side and some of that I would say is CarShop in the UK. So to me, we're certainly going to continue to buy. Look at the three Porsche stores, I think in Australia will generate probably what $220 million on a -- $260 million on an annualized basis.
There, we have the market. We have the capability because we have our headquarters for our Penske Australia power system business there and our truck business. So we get the benefit of the legal, we get benefit of the HR, and certainly the finance. So these are things which I think are a really key.
And I think the diversification that we have gives us the opportunity to pick what bucket we want to be in as we go forward. And certainly from a capital allocation standpoint, we look at where we are and we look at the dividend increases that we've done since November 2020, we've made 17 straight dividend increases to $1.19 and when you think about it, it's 28% payout for about a 3% return. So hopefully, we attract a shareholder with those types of metrics.

David Whiston

Thanks for that.
And then on the agency system in Europe that's been going on for some time now. I'm just curious, are you hearing from other OEMs that they want to do that, or is it just sticking to the brands that are already doing it?

Randall Seymore

Yes, it's a mix. So obviously, Mercedes, we've had many launch in various markets this year. BMW is still on schedule to launch in 2026. You have brands like JLR that have said they are not going to go agency. So and then Mercedes is delayed and some of the other markets.
But I would say from the largest agency portion, we have obviously as the Mercedes in UK and I would say, as we discussed on last call, it continues to be beneficial for us. I think with the current market conditions within interest rates elevated not having to hold inventory, having that fixed price, we're seeing some growth on the after sales there. So that's the status in the UK with Mercedes. We think it's been a good year.

Roger Penske

I would add to that. The great thing is our PMA being the size of it is in the UK, all of the inquiries that come in either through the factory sites come to us and about 90% of the sales that we have, right, Randall, are really in our PMA, which is exactly what agency is trying to do a better connection with the customers. So I'd have to say, even though we were somewhat negative on it, we've worked very hard with Mercedes to make it work in the UK.
I'm not sure they've got a great taste of it right now and what they're going to do worldwide, but they have some issues in Australia (inaudible) other things. But at the moment, I think we were up 25% on agency, which would have been basically and the quarter would have been Mercedez Benz.

Operator

And I'll be turning the conference back to Mr. Penske for final closing comments.

Roger Penske

I just want to thank, everybody, for joining us today. I think we had a great quarter based on all the headwinds we're facing but thanks for your support. We'll see you next quarter.
Thank you.

Operator

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.