Sonic exits Mich., looks elsewhere
After divesting the last of its four stores in Michigan last month, Sonic Automotive Inc. plans to use the proceeds of the sales to buy more dealerships in other markets.
In late July, the Suburban Collection, a dealership group in suburban Detroit, said it had acquired BMW of Ann Arbor and Mercedes-Benz of Ann Arbor from Sonic. That deal followed Suburban's purchase earlier in the summer of Sonic's two Cadillac stores in Michigan. Neither Sonic nor Suburban disclosed selling prices for the stores.
"Michigan is a market that was out of our footprint," Jeff Dyke, Sonic's executive vice president of operations, wrote in an e-mail. It "made sense to divest."
Sonic will "redeploy the capital in assets under consideration now," Dyke said. He told Automotive News that the retailer, the nation's fourth-largest dealership group, is in discussion on "several" possible deals to buy new-car dealerships. He wouldn't comment on whether the potential deals are in markets where Sonic already operates.
The Michigan sales leave Sonic with 101 dealerships, primarily in the Sun Belt.
Since 2008, Sonic has acquired just two stores while divesting 22. In 2012, it sold its five stores in Oklahoma and exited that state, saying the stores had never performed well.
In 2013, aiming to replace the lost Oklahoma revenues, Sonic purchased large BMW and Mercedes-Benz stores in Denver.
Company leaders came into 2014 with their main focus on rolling out a new customer experience initiative and launching stand-alone used-vehicle stores. But they said they were open to buying dealerships if a deal made sense.
At that time, Sonic President Scott Smith described the type of dealerships that would catch Sonic's attention.
"Would we be interested in acquiring a platform? Yes. Would we be interested in acquiring more dealerships in the markets we serve? Yes," Smith said. "Would we be interested in a one-off, maybe a great brand in a market we don't serve? Probably not."
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