If you're going to run a car dealership business, you might as well sell expensive cars to wealthy people. That's essentially the bull case BofA Securities is making for Penske Automotive Group (PAG), where analyst Alexander Perry just reinstated coverage with a Buy rating and a $195 price target.

Here's why the luxury angle matters: Penske's largest business segment is premium and luxury vehicles, which make up 73% of its automotive mix. According to Perry, this isn't just about selling fancy cars. It's about serving "a more resilient demographic of higher income consumers" who keep coming back even when the economy gets rocky.

The advantages stack up in interesting ways. First, luxury buyers are less sensitive to price increases from tariffs, which reduces risk. Second, premium vehicles are increasingly complex and tech-heavy, creating more opportunities in the parts and service business. And third, wealthy customers actually prefer going to dealers for service work rather than independent mechanics, which supports margins and makes the business less cyclical.

Perry acknowledges that fourth-quarter luxury volumes might be softer, but he views these issues as "transitory" with the longer-term investment thesis remaining solid. The market diversification across passenger vehicles and trucks adds another layer of stability to the business model.

Shares of Penske Automotive Group rose 0.96% to $165.77 on Tuesday.