Sonic hits used-vehicle sales records in March
Shares fall 5% despite stronger Q1 profits
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Sonic Automotive Inc. aims to have its stores average at least 100 used-vehicle sales a month by year end.
Sonic made progress toward the goal during the first quarter, averaging sales of 90 used vehicles per store in March. It was the first time Sonic, the nation's third-largest auto dealership group based on new-vehicle retail sales, reached that threshold. The company averaged 77 used-vehicle sales per store in January and 80 in February.
Sonic sold more used vehicles overall in March than in any month in company history, company President Scott Smith said today without giving the total. With five Saturdays, March was "a monster month."
"Units, gross, all the way around -- it was a record month," Smith said after Sonic announced a 37 percent increase in net income for the first quarter.
Sonic executives said they expect to average 100 used-vehicle sales per store by year end and to sustain that level through 2013.
"And, frankly, once we get to that 100 level, I think that's a psychological number," Smith said. "There's a lot more upside to what we're doing."
Some of Sonic's dealerships are selling 300 used vehicles a month, he said.
For the first quarter, Sonic sold 26,547 used vehicles overall. It did not break out the total number for March. Total used-vehicle revenue rose 9 percent for the quarter.
Sonic also performed well in other departments, executives said. New-vehicle revenue rose 12.1 percent and parts and service revenue increased 5.1 percent for the first quarter.
While it's not outpacing March, April is shaping up to be a strong sales month, too. Said Smith: "It remains robust."
Profits rise, shares fall
Meanwhile, Sonic reported strong gains in earnings for the first quarter, but the company's shares plunged 5 percent during a down day on Wall Street. The wider S&P Index was off just under 1 percent.
First-quarter earnings from continuing operations were $19.5 million, or 33 cents per share, up 24 percent from $15.7 million, or 27 cents per share, a year earlier. This missed analysts' expectations of 34 cents per share, according to Thomson Reuters.
Revenue from new vehicle sales rose 12 percent.
First-quarter total revenue for the North Carolina-based dealer group rose 9 percent to $1.98 billion, about in line with the analysts' average estimate of $2 billion.
For the quarter, net income rose 37 percent to $20.5 million, including $1.03 million in income from discontinued operations.
Sonic confirmed its forecast of 2012 earnings from continuing operations of between $1.55 and $1.65 per share.
The company also announced a quarterly dividend of 2.5 cents per share in cash for stockholders as of June 15.
Sonic is heavily reliant on Honda, and rival Group 1 Automotive Inc. depends on Toyota. In the first quarter, Toyota's U.S. new-vehicle sales rose 12 percent, and Honda's rose only 4 percent.
Sonic's shares fell 96 cents, or 5 percent, to $16.97 in New York Stock Exchange trading.
Sonic ranks No. 3 on the Automotive News list of the top 125 dealership groups in the United States with new vehicle sales of 114,132 in 2011.
Reuters contributed to this report.
You can reach Amy Wilson at awilson@crain.com.
