Priorities are back shop, iPads, used cars

No shopping spree for Sonic this year

Priorities are back shop, iPads, used cars

Smith: Potential in used vehicles
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Acquisitions aren't on the front burner at Sonic Automotive Inc. in 2014.

Instead, the nation's third-largest dealership group is focused on three priorities, President Scott Smith told Automotive News. Here's how he described them.

1. Consolidating back-office functions.

Controllers are staying in the retailer's 105 dealerships. But most other functions, such as payroll and accounts payable and receivable, will be centralized at Sonic headquarters in Charlotte, N.C., Smith said.

2. Rolling out Sonic's customer experience initiative.

On July 1, Sonic stores will begin using iPads to handle vehicle sales from beginning to end. Smith said the rollout of what the company calls "One Sonic-One Experience" will take a year to 18 months. Company leaders are aiming for shorter transaction times, better customer satisfaction, lower employee turnover and higher sales. With the new system, Sonic executives say they expect a customer to be able to complete a vehicle purchase within 45 minutes once the vehicle is selected.

The technology is in beta testing in stores now.

3. Launching used-vehicle stores.

Sonic plans to open its first stand-alone used-vehicle store in the fourth quarter in Denver. Smith and Sonic executives are making a big bet on the used-vehicle market. The Denver store will be the first in what Sonic executives expect to be a nationwide network of used-vehicle stores to rival used-vehicle volume leader CarMax Inc.

"When you look at the pre-owned market, it's 31/2 times the size of the new-car market, and CarMax has 1 percent," Smith said. "It's the deep end of the ocean, and we're really focusing on that."

While acquisitions aren't a main focus, Sonic leaders remain open to buying dealerships if a deal makes sense. But there are no acquisition targets this year.

In 2013, Sonic entered the year focused on replacing the annual revenues it shed when it divested five stores in Oklahoma in 2012. The company bought large BMW and Mercedes stores in Denver last year.

Smith outlined the type of for-sale offerings that could catch Sonic's attention in 2014.

"Would we be interested in acquiring a platform? Yes. Would we be interested in acquiring more dealerships in the markets we serve? Yes," he said.

"Would we be interested in a one-off, maybe a great brand in a market we don't serve? Probably not."

You can reach Amy Wilson at awilson@crain.com.


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