Sonic Automotive's finance and insurance sales process at its Echo-Park used-only dealerships has been so successful in lifting F&I revenue per vehicle, the company plans to expand the process to its 99 franchised stores.
It's been successful because, among other things, customers like having one person handle the sale from start to finish, including the F&I portion, and it speeds the car-buying process, said Jeff Dyke, Sonic's executive vice president of operations.
Dyke said EchoPark's average F&I revenue per vehicle is $1,150, far more than the $850 Sonic expected when it launched the used-only stores. "We'll roll that process out over the next two to three years as we roll out our One Sonic-One Experience to all of our stores," Dyke said. "There's no question that's the right way to go. We have the technology and the process to make it work, it's just how quickly can we get it into our stores and get it in appropriately, effectively and efficiently so that it'll stick."
One Sonic-One Experience offers no-haggle pricing with one sales rep using an iPad who takes the customer through the entire vehicle sales process, including financing and the F&I product presentation. In EchoPark's case, the process calls for lenders to pay dealerships a flat fee for arranging financing. The goal at both EchoPark and the One Sonic-One Experience stores is to eliminate customer pain points, enabling the purchase to be completed in fewer than 45 minutes.
Charlotte, N.C.-based Sonic opened its first EchoPark store in Denver in the fall of 2014 and soon added two satellite stores in the area. Those stores sold 941 vehicles in the first quarter of 2016. Sonic will add three more EchoPark stores in Colorado this year.
Sonic has applied the One Sonic-One Experience model at its dealerships in Charlotte.
In a March interview in Las Vegas, Dyke said Sonic learned how to better sell F&I products at its new-car stores by studying EchoPark's success. "At EchoPark, when we launched, the F&I tool worked beautifully there, and it didn't work as well" at some One Sonic-One Experience stores, Dyke said. "The reason for that, we believe, is that we hired people at EchoPark who had no automotive experience" and were not inclined to use high-pressure F&I sales tactics.
So Sonic is retraining employees of its other stores to better sell F&I products, especially service contracts because they bring customers back for service. So far, the training is working. In March, Sonic's F&I per vehicle revenue at new-vehicle stores was about $1,400, he said. In the first quarter, Sonic reported F&I gross profit per unit of $1,366, up 8.9 percent from the year-earlier period.
Dyke wants to hit $1,500 "and beyond."
One caveat: EchoPark's flat fee for arranging financing won't move to other Sonic stores anytime soon. Lenders are still adjusting, Dyke said. "But it's working at EchoPark."