In launching its One Sonic-One Experience initiative, Sonic Automotive Inc. had the technology, the store and the full attention of its top management committed to making it work.
What it didn’t have, in the finance and insurance office, were enough document specialists.
And that meant lost profits.
That was one of the key early lessons from the dealership group’s new customer initiative.
One Sonic-One Experience features no-haggle pricing with one employee working with a customer throughout the process, including sales and F&I, for each transaction.
A major goal is to speed the average transaction to one hour or less. By providing what it thinks will be a superior customer experience, Sonic, the nation’s fourth-largest dealership group, also expects to improve its market share, customer retention and customer satisfaction.
Sonic launched the initiative, which radically changes the role of the former F&I managers, on Aug. 1 at a dealership in its hometown of Charlotte, N.C.: Town and Country Toyota.
At first, the dealership’s F&I department was “overwhelmed,” Jeff Dyke, executive vice president of operations, said in a conference call on Tuesday after the company released its third-quarter results.
That was partly because there weren’t enough trained document specialists to handle each customer’s paperwork, he said. In addition, some experienced F&I managers had quit.
The result: Dealership employees were spread thin. Customers were “whipping through” the sped-up process, but the dealership’s F&I revenue per vehicle retailed dropped, he said. “We did lose some F&I,” Dyke said.
F&I sales rebounded after employees got used to the new process, and after more document specialists were trained and ready, he said. Today’s F&I numbers at the pilot dealerships are “more than acceptable,” he said.
To avoid the “doc specialist” problem in the future, Dyke said the dealership group has hired and has begun training document specialists for its half dozen other dealerships in the Charlotte area.
“Doc specialists were always part of the plan and we have not increased the number over our original plan,” Dyke wrote in an email. “We just hired them earlier for the other stores for training.”
The plan is to roll out One Sonic-One Experience to the rest of the Charlotte market by year end, the company said, followed by a nationwide rollout. The national rollout is now expected to take all of 2015 and 2016, Dyke said. Sonic previously had planned to finish the rollout by early to mid-2016.
Sonic ranks No. 4 on the Automotive News list of the top 125 dealership groups based in the U.S., with retail sales of 132,363 new vehicles in 2013.
On Tuesday, Sonic reported third-quarter net income of $24.7 million, up 6 percent from a year earlier, as revenue rose 5 percent to $2.36 billion. The profit rise included a gain on the sale of dealerships, partially offset by charges for severe storm damages and higher legal expenses.
On a same-store basis, Sonic reported average F&I revenue per retail vehicle of $1,213 for the third quarter, up 8 percent from $1,118 a year earlier.
Also on Tuesday, Asbury Automotive Group Inc., of Duluth, Ga., reported third-quarter net profits surged 43 percent from the year-earlier quarter, to $32.5 million, on an 8 percent rise in revenues, to $1.51 billion. Asbury COO Michael Kearney attributed the big profit gain largely to strong parts-and-service results and continued cost controls. Parts and service represented 60 percent of the incremental gross profit for the quarter, he said.
Asbury said it recorded average F&I revenue per vehicle retailed of $1,337 on a same-store basis, up 2 percent from $1,315 a year earlier, also on a same-store basis.
Asbury ranks No. 7 on the Automotive News list of the top 125 dealership groups based in the U.S., with retail sales of 86,685 new vehicles in 2013.