In his first interview in three years, Roger Penske exclusively talks to Steve Brooks about his history, the Penske brands, Detroit Diesel, the Australian market, and everything in-between
Automotive industry mogul and car racing icon Roger Penske insists he has a long-term strategy to forge a significant stake in the Australian and New Zealand truck and diesel engine markets.
In his first and only interview since taking control in 2013 of Transpacific’s commercial vehicle group comprising Western Star, MAN and Dennis Eagle brands for a reported $219 million, and soon after acquiring the MTU Detroit Diesel Australia engine business, Penske says his main goal for now is to achieve a 10 percent stake of the Australian heavy-duty truck industry.
Renaming the businesses Penske Commercial Vehicles and Penske Power Systems respectively, he concedes the past two years have been difficult, particularly for the flagship Western Star brand with fiercely competitive pricing cited as the major reason for a considerable slide in sales.
It is, however, an emphatic Penske who says: “This is a long-term investment. Not everybody wants to get into this business and for me it’s about building a team of responsible, qualified people. What we need to do is train and build the best team and if we do that, we’ll be a winner.
“I feel really good about it. I like the country, I like the people and to me it’s an extension of what we already do.
“We have a truck fleet in the US of around 230,000 vehicles, so a few more out here just adds on to that.”
Viewed by some industry executives as the man with the Midas touch, and with personal wealth estimated at several billion dollars, the 79-year-old Penske remains a dynamic businessman and automotive entrepreneur with a sharp eye for opportunity and potential.
Perhaps Penske’s greatest success came when he took control of Detroit Diesel from General Motors in the US in the late 1980s. Recognising the incredible potential of the then newly developed Series 60 engine, he took Detroit Diesel to the top of the North American heavy-duty diesel engine business before selling the entire operation to Daimler.
As the chairman of Penske Automotive Group, he controls an operation which around the time of the purchase of Transpacific’s commercial vehicle operation had almost 350 retail automotive franchises representing 39 different brands, with the group selling more than 402,000 vehicles (cars and trucks) and generating revenues of US$13.2 billion.
His commercial vehicle interests include ownership of Penske Truck Leasing which operates more than 230,000 vehicles servicing customers in North America, South America, Europe and Asia, and is one of the largest purchasers of commercial trucks in North America. Many of those vehicles are Daimler products and his ties with the German giant remain strong.
Western Star. The flagship of Penske Commercial Vehicles but sales have softened significantly in the past few years. However, it’s an emphatic Roger Penske who says, “For me, this is a long-term investment.”
In the Australian and New Zealand markets, he makes no secret of an intention to expand his current Penske Truck Rental operation and, similarly, grow the truck leasing business.
“We are totally committed to this market,” he asserts.
Despite considerable speculation, Penske denies that his ultimate goal is to take control of Freightliner in Australia.
“We are the number-one customer in the US for Freightliner and we wanted to grow the commercial vehicle side of our business, so a couple of years ago Daimler contacted me and said this business might be available,” he says.
“I had some idea of Transpacific and the (commercial vehicle) business looked like something that fitted our plans over the longer term.
“And quiet honestly, I like this marketplace, I knew a lot of the customers, so it was a perfect fit.
“Then, as part of our plan here, we had the opportunity to get Detroit Diesel,” he continues.
“Combined with the MTU engine business, it gave us a thousand people and probably a 500 to 600 million dollar business operating in marine, defence, on-highway and off-highway, power generation, and it really fits our plan, particularly in service and parts.
“When I look at our business, 30 per cent of our revenue generates 70 or 80 per cent of our gross margin and that comes from service and parts.
“So when you put it all together, I wouldn’t trade it with anybody. Not at all,” a determined Roger Penske concludes.
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