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Penske buys into Aussie Detroit Diesel

Changing up: American automotive tycoon Roger Penske has begun his Australian expansion with a takeover of a diesel engine distributor and V8 Supercar partnership with Dick Johnson Racing.

Truck giant Penske Automotive aims to repeat US diesel success in Australia

17 Sep 2014

AMERICAN automotive giant Penske Automotive Group has expanded its Australian presence by buying out diesel engine importer MTU Detroit Diesel Australia and signing a partnership deal with V8 Supercar team Dick Johnson Racing.

The deal to take ownership of the diesel engine and power system supplier will strengthen the network of Penske-controlled assets in Australia, increasing the range of products it can promote through its network of franchises.

MTU DDA's product range includes truck engines and transmissions, mobile power generation equipment and automation systems from a range of manufacturers including Detroit Diesel – a former Penske company now controlled by Germany’s Daimler – as well as rival manufacturers MTU, Kohler, Allison and VM Motori, which have strong holdings in the mining, freight, agriculture, construction and marine industries.

Acquiring the distribution rights is expected to deliver up to $250 million in annual revenue for the Penske Automotive Group.

Earlier this year, Penske acquired the distribution rights for truck franchises Western Star, MAN and Dennis Eagle, establishing a network of dealers and service facilities.

Earlier this month the company opened its pilot Penske-branded lease and service center.

Speaking at the official media announcement, Penske chairman Roger Penske said the initial acquisition of truck distribution rights was just the start of a larger Australian vision.

“After that we looked at how we might be able to extend our footprint and with Rolls-Royce Power Systems owning MTU and Daimler owning Detroit Diesel we felt with our experience it might be a good opportunity,” he said.

“We will be the distributor for those products and we will support the dealers.

“We have already opened up our first Penske truck leasing location at the Brisbane truck center and we would expect to bring our full truck leasing and rental service into the capital cities of Australia.” In a separate deal, the company has signed on as official partner of the Dick Johnson Racing V8 Supercar team – an agreement that is intended to elevate the Penske brand on a national platform, increasing brand recognition as the business breaks in to new territory.

In the US, Mr Penske – a former racing driver who now owns one of the world’s largest motor dealer networks – supports teams in the two largest racing series, IndyCar and NASCAR, and the involvement with Australia's most popular competition is part of a plan to duplicate the results of high-profile brand exposure.

“That's why this complete auto racing venture makes so much sense because we can use the racing series as customer entertainment, we can display the trucks that we represent throughout the country, we can partner with the dealers at the events and I think it will give us the ability to build our brand value in the country,” Mr Penske said. “It's perfect.

“We are in the service business here (the US), we have a leasing company with over 200,000 vehicles. We rent them, we service them, we lease them and we'd like to replicate that in your part of the world.” DJR Team Penske – as it will be known from the start of next year's series – will continue to compete with Ford Falcons, but is receiving no commercial support or funding from the Blue Oval.

Mr Penske said successes linked to the recruitment of two-time V8 Supercar champ Marcos Ambrose could leave negotiations open.

“We have not discussed commercial funding from Ford at this particular time,” he said. “If we can work with them from a marketing perspective, and Marcos can create some value for them I'm sure we will have a fruitful discussion,” he said.

Penske has previously denied it is preparing to launch its own network of retail dealerships, but the infrastructure required to establish the first service and lease center in Brisbane increases that possibility.

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