For Immediate Release
Chicago, IL – September 15, 2026 – Today, Zacks Equity Research discusses Penske Automotive Group (PAG) and Lithia Motors (LAD).
Industry: Auto Retail & Wholesale
The Zacks Auto Retail and Wholesale industry is navigating a challenging landscape. Despite stable demand, increasing affordability and financing pressures could affect sales momentum. Tight inventory, especially in affordable vehicle segments, is enhancing dealer pricing power but may limit consumer choices.
New and used vehicle prices remain high, compounded by rising borrowing costs that could negate improvements in credit availability. Additionally, the EV market is facing uncertainties like the removal of federal incentives and constrained supply. Overall, while demand remains strong, the industry faces affordability challenges, tight inventories, and hurdles in the EV sector.
That said, retailers such as Penske Automotive Group and Lithia Motors are strategically positioned to weather the current cycle through acquisitions, digitalization, and shareholder-friendly practices.
About the Industry
The auto retail and wholesale industry is pivotal in connecting consumers to cars, trucks, and parts. Often, its performance is influenced by economic conditions; greater disposable income typically leads to increased vehicle purchases. The sector has seen structural changes, with a marked investment in digital tools and e-commerce.
Key Investing Themes
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Resilient Demand Tightening Vehicle Inventory: Vehicle demand has seen an uptick, with dealer inventory falling, especially in more affordable segments.
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High Vehicle Prices Creating Affordability Pressures: Vehicle prices are escalating, presenting challenges for budget-conscious consumers.
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Better Credit Access Faces Rising Borrowing Costs: Although credit availability is improving, rising borrowing costs may deter potential buyers.
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EV Market Reshaped by Policy and Supply Constraints: After the expiration of federal EV tax credits, sales have decreased significantly, influenced by limited product availability and policy issues.
Zacks Industry Rank Indicates Dim Prospects
The Zacks Auto Retail & Wholesale industry currently ranks #202 among nearly 245 industries, indicating weak near-term prospects for its constituents. Analysts have reduced earnings forecasts, with a notable 6.4% decline in near-term earnings estimates for 2026.
Industry Performance
Over the past year, the Zacks Auto Retail & Wholesale industry has seen only a 0.5% increase, trailing behind the S&P 500’s 16% gain. The sector itself has declined by 3.6%.
Current Valuation
The industry’s current EV/EBITDA ratio stands at 12.12X, considerably lower than the S&P 500’s 17.75X and the sector’s 25.76X.
2 Stocks Worth Considering
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Penske Automotive: Known for its dealership operations, PAG benefits from strong service and parts business, backed by a solid balance sheet. The company has maintained a consistent dividend increase, raising its payout to $1.44 per share. The current Zacks Rank is #3 (Hold), with projected sales growth of 6% for 2026.
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Lithia Motors: As a leading automotive retailer, Lithia operates on a diversified model while focusing on aftersales and financing. The Zacks Rank is #3, with expected earnings growth of 8% for 2026.
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This material is for informational purposes only and does not constitute investment advice.
