Roger Penske is becoming a believer of that old saying: Less is more.

With fewer used-car stores in his portfolio, the chairman and CEO of Penske Automotive Group is watching the profits from that sector grow.

Indeed, while the company’s third quarter 2024 financial results showed sales of used vehicles from Penske-owned stores plummeted 12.5% from Q3 of 2023 to 57,738 units and total revenue from those sales dropped 8.5%, the used-car operation showed a gross profit of $108.6 million, up 5.2% year-over-year.

“You see the ultimate used-car number come down,” Penske said Tuesday during the company’s Q3 earnings call, “but from a gross profit perspective, even on the chassis, we’re almost double where we were before, and we’re gaining a lot of strength on our F&I, our finance products.”

That success is a result Penske’s phaseout of its CarShop used-car brand in the U.K. during the second quarter of 2024. The company sold off three of its used-only stores and rebranded the rest as Sytner Select to align with its Sytner-branded franchise dealerships.

The rebranding wasn’t just symbolic. The nine remaining Sytner Select locations are all in close proximity to new-car stores, giving them a ready source of high-quality inventory at a lower cost than other channels — which translates to increased profits.

Penske said vehicles that come to the Sytner franchise dealerships in trades or otherwise that aren’t eligible to be certified had previously been auctioned on the Sytner auction platform. Now, he said, they’re being moved to the nearby Sytner Select locations to be retailed.

“I can tell you this made a big difference, because we’re now sourcing the biggest portion of our vehicles through this process, along with OEM,” he said. “When you look at our overall gross profit, just for the quarter, we were up $318 [per unit sold]. So, I think that is a big factor.”

In fact, that extra $318 brought Penske Automotive’s used-car gross per vehicle retailed to $1,882, up 20.3% year-over-year, and gross margin rose from 4.4% in Q3 2023 to 5.1%.

Combine that with the reduction of expenses as a result of shedding low-performing stores, and the result has Penske excited about what’s ahead.

“So, number one, it’s lower units, higher margin, less locations,” he said. “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 see Sytner in the UK as a positive.”

That also applies in the U.S., where the company has recently divested two CarShop locations whose expenses, Penske said, “from an operating standpoint, were higher than the business could afford,” and is also coming up with more efficient ways to source used inventory.

“When we look at the CarShop in the U.S., when we look at Sytner Select … the margins are significantly higher than they were before,” he said. “And we’ll continue to look at our sourcing. But I can tell you this. We want to buy on the service drive. We want to buy from the OEM, and obviously trades are a big portion of this.”