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Altogether, the company spent $294 million on buybacks in 2021, followed by $184 million so far this year through April 26. Penske’s share price on Friday closed at $104.82, about flat from the beginning of the year.

The company expects to continue using buybacks to allocate cash, assuming market conditions hold steady and it receives approval from the board, said

Shelley Hulgrave,

Penske’s chief financial officer. U.S. car dealership acquisitions—one of the company’s preferred ways to put capital to work—have become more expensive over the past year as their profits have climbed, Ms. Hulgrave said.

“We think it is a great use of cash compared to the high valuations of acquisition opportunities,” she said, referring to share repurchases.

Last week, Penske said it had $46.3 million left to spend under its current buyback authorization. The company’s board has been supportive of buybacks, Ms. Hulgrave said.

Companies have been unveiling plans to buy back shares at a record pace this year, taking advantage of recent market volatility following Russia’s invasion of Ukraine and uncertainty on interest-rate hikes from the Federal Reserve.

Profit at Penske more than doubled during the first quarter from a year earlier, to $367.9 million. Revenue jumped 21%, to about $7 billion. Cash and equivalents on the balance sheet increased to $170.3 million, up from $100.7 million at the end of 2021.

The company, as well as other dealership chains, are benefiting from a combination of factors, including a shortage of vehicles due to chip-supply problems, steady consumer demand and high sticker prices. Other vehicle retailers, including

Lithia Motors Inc.,

AutoNation Inc.,

and

Asbury Automotive Group Inc.,

also reported stronger first-quarter earnings.

“It’s just a great time to be an auto dealer,” said

Ali Faghri,

an analyst with investment firm Guggenheim Securities. Other dealership chains are also using their additional cash for buybacks and acquisitions, he added.

At Penske, gross profit per vehicle for new cars increased 68% from a year earlier, to $6,840, while the same metric for used cars rose 26%, to $2,284.

In addition to retail car sales, Penske also sells commercial trucks and operates a vehicle distribution business. As of March 31, the company’s retail auto business, which includes services and parts, accounted for 84% of revenue, while its truck dealership division accounted for 12%, according to Ms. Hulgrave. Its distribution business made up the rest, she said. The company’s dealerships are located in the U.S., U.K., Canada, Germany, Italy and Japan.

While the company is still interested in acquisitions, it is being more selective than it has been in the past given the high valuations across the industry, Ms. Hulgrave said.

In April, Penske acquired three BMW Mini dealerships and a service center in the U.K., as well as a BMW Mini dealership and service center based in Escondido, Calif. In February, it bought Team Truck Centres, a Canadian commercial truck company.

Penske didn’t disclose a purchase price for any of the acquisitions. The deals were funded with cash flow from operations, Ms. Hulgrave said.

Write to Kristin Broughton at [email protected]