Sonic Automotive Inc. posted a third-quarter operating profit that remains essentially unchanged year-on-year at $57.8 million, despite a 5-percent surge in revenues to $2.24 billion. The company did not yet publish its third-quarter net income in the report, saying that it was waiting to calculate a newly identified tax gain, related to the extinguishment of certain convertible notes.
Sonic – the third-largest dealership group in the United States -- posted a 68-percent drop in net income in the second quarter of 2013, no thanks to charges associated with retiring debt along with some issues in rolling out True Price.
The program – which sets vehicle prices within $300 of the lowest acceptable transaction price -- was rolled out to all Sonic dealerships in the first quarter of 2013. Sonic said that around 15 percent of its 105 stores were still struggling with the True Price model in the third quarter, compared to around a third in the second quarter.
Sonic also logged an increase in retail new-vehicle margin to 5.9 percent; and in used-vehicle margin to 7 percent. Jeff Dyke, Sonic’s executive vice president of retail operations, told Automotive News that the company’s new-vehicle margins surged by about $100 per car, leading to “millions and millions of dollars worth of gross,” helping Sonic’s overall performance for the quarter.
Sonic said its operations expenses were 78.1 percent of gross profit in the third quarter of 2013, compared to 77.3 percent a year ago. According to Sonic, around three-quarters of its operations costs in the quarter were used to implement new initiatives, such as the “One Sonic-One Experience” customer service plan.