Sonic Delays Further Rollout of Hybrid Process
CHARLOTTE, N.C. — During a conference call on April 21, Sonic Automotive officials said they would delay the expansion of the company’s One Sonic-One Experience initiative until its pricing tool is perfected. The dealer group started piloting its hybrid sales process back in the summer of 2014, and it is currently being employed in five stores.
Jeff Dyke, Sonic’s executive vice president of operations, said that while the company’s CRM and F&I tools have made sales associates’ jobs easier, vehicle pricing is currently taking up too much of the group’s targeted one-hour transaction time.
“So the pricing tool, it creates a real-time now price that allows us to execute,” Dyke explained. “And today, for the five stores, there are too many man hours that go into pricing all the cars all the time. Our tool in the future will do that automatically.”
The executive added that Sonic intends to overcome the “Ford puzzle” — referring to the OEM’s numerous stair-step incentive and pricing programs, as well as multiple iterations of its products — in its pricing tool sometime this summer. “… And [then] we will be ready to begin talk about when we can start rolling that out to the other stores,” Dyke said, noting that companywide implementation is expected to take 36 months.
President and CSO Scott Smith added that part of the dealer group’s goal is to use less historical data in its pricing tool. Instead, the group plans to switch to 90-day data to improve its algorithms.
“This hasn’t been built before; nobody has this,” he said. “There are plenty of applications out there that tell you what cars are being advertised for, but there is none out there to tell you what they are actually selling for. And that’s where we have to get to, so that we can cut the transaction time.”
As for the dealer group’s overall business, Sonic Automotive realized increases in revenue (4.6%) and gross profit (1.8%) vs. the previous year. During 2015’s opening quarter, revenue hit $2.2 billion and gross profit was at $335 million, with all business sectors showing increases in revenue.
New retail revenue was up 7%, or $78 million, during the quarter, while used retail revenue was up 6.1% or $34 million. F&I revenue increased 7.2%, or $5 million, over last year.
The dealer group also achieved record used- and new-vehicle sales. In 2015’s first quarter, Sonic sold 31,334 new units, up 4.3% from the year-ago quarter. It sold 28,135 pre-owned units for a gross profit of $40.8 million.
“It was a great quarter for the Sonic Automotive team,” Smith said. “We experienced growth in each revenue category, achieving record results.”
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