Sonic says 'playbook' strategy helped Q4 new-vehicle unit sales rise 15%
In 2012, Sonic Automotive Inc., the No. 3 U.S. auto dealership group, will finish rolling out a new-vehicle sales strategy that it credits with fourth-quarter sales growth 50 percent higher than the industry's.
Sonic's new-vehicle unit sales rose 15 percent in the fourth quarter vs. a 10 percent increase for the industry, Sonic President Scott Smith said. He attributed that to Sonic's introduction of its "operating playbook" strategy in its new-vehicle sales departments.
About one-third of Sonic’s stores are using the new-car playbook strategy, which sets up consistent operating processes to be followed in the store.
“There are still more than 50 percent of our stores who are not using it yet, so there’s tremendous upside in that area,” Smith told Automotive News Tuesday after announcing higher fourth-quarter and 2011 earnings.
How it works
The aim of the playbook strategy is to set up practices focused on meeting customer needs and to execute them consistently from store to store, Smith said.
For instance, Sonic’s vehicle inventory -- new or used -- is pooled electronically throughout the entire company, and sales representatives can sell any vehicle regardless of location. So if a BMW customer loyal to one of Sonic’s BMW stores and with an established relationship with a sales staffer wants to add a Ford F-150 to his garage, the sales rep at the BMW store can find that pickup in the Sonic system for him.
Sonic is more likely to keep the sale within the family and minimize the risk that the customer will go find his truck elsewhere, Smith said.
“Once a customer comes in, we don’t want them to leave until they buy a car from us,” Smith said.
Sonic has an operating playbook strategy for each department. Since it began using the playbook strategy for used vehicles, Sonic has posted 11 straight quarters of double-digit volume growth in that department.
“What these playbooks do is allow us to become predictable, repeatable and sustainable,” Smith said. “It’s everybody executing the same play the same way at every location.”
Used car growth
Jeff Dyke, Sonic's executive vice president of operations, said that Sonic's focus on used-car processes has led to a 15 percent compound annual growth rate over the past four years.
During the fourth quarter of 2011, Sonic's net income, when adjusted for one-time gains and losses, was $25.9 million compared with $16.5 million during the same quarter last year, the company said in a statement.
Revenue rose 12 percent from last year to $2.07 billion, just above the $2.06 billion analysts had expected.
Excluding one-time items, Sonic earned 43 cents a share, topping what analysts polled by Thomson Reuters I/B/E/S had expected by 5 cents.
For the full year, Sonic said it reported adjusted net income of $80.8 million compared with earnings of $51.5 million in 2010. It recorded total revenue of $7.9 billion in 2011 vs. $6.9 billion in 2010.
The company also offered an outlook for its 2012 earnings that, at the midpoint, topped what Wall Street is expecting. For 2012, Sonic expects U.S. new-vehicle industry sales of about 13.5 million units.
As a result, Sonic expects its 2012 earnings from continuing operations to be in the range of $1.55 to $1.65 a share. The midpoint of that range at $1.60 is above the $1.57 analysts were expecting.
Sonic ranks No. 3 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 99,565 new vehicles in 2010.
Reuters and Philip Nussel contributed to this report.Contact Automotive News