Despite a dip in new-vehicle sales in the third quarter, Sonic Automotive Inc. still reached record third-quarter revenue thanks to higher gross profits per unit on new and used vehicles and increased sales from its expanding EchoPark network of used-only stores.
The company said third-quarter net income surged 41 percent to $84.5 million. Shares in Sonic fell 1.2 percent to $49.03 in early trading.
Sonic's franchised dealerships ended the quarter with a new-vehicle inventory of 2,400 vehicles, just a 10-day supply, and a used-vehicle inventory of 8,200 vehicles, a 27-day supply. Used-vehicle inventory at its EchoPark stores was slightly higher at 9,800 vehicles, a 41-day supply, Sonic said.
Sonic's EchoPark stores generated all-time-high quarterly revenue of $663.3 million, soaring 72 percent. The used-only unit did post a pretax loss of $32.9 million, up from a loss a $14.4 million in the second quarter, which Sonic again pinned on expansion-related costs and higher wholesale used-vehicle prices. Sonic has 31 EchoPark locations overall and plans to have 140 locations nationwide by 2025.
On the franchised dealership side, Sonic had increases in its parts and service business as well as finance and insurance.
During the quarter, Sonic acquired a Colorado Audi-Volkswagen dealership in August and two other dealerships in Colorado in July. In September, Sonic revealed plans to acquire RFJ Auto Partners Holdings Inc. for $700 million. The deal for RFJ Auto is expected to add $3.2 billion in annual revenue and close in December.
In July, Sonic announced that it was "considering a full range of potential alternatives" for its rapidly growing EchoPark brand of used-vehicle-only stores, but provided no update in releasing its third-quarter results Thursday.
- Q3 revenue: $3.1 billion, up 21 percent from a year earlier
- Q3 net income: $84.5 million, up 41 percent from a year earlier
- Vehicles sales: Sonic's franchised dealerships sold 49,065 vehicles, new and used, in the third quarter, down 2.8 percent. Used-vehicle sales at Sonic's EchoPark stores rose 41 percent to 21,255 units.
- Records: Third-quarter revenue, all-time-high quarterly finance and insurance gross profit per retail unit of $2,349 and Sonic's EchoPark stores generated all-time-high quarterly revenue of $663 million, up 72 percent, among others.
