During a conference call with analysts, Sonic provided more details about its Sonic True Price program and the One Sonic-One Experience program it supports, and announced a standalone channel for used cars. Sonic wrapped up its rollout of the True Price program, which limits price negotiation, to all stores during the first quarter. All of those initiatives will change how Sonic conducts its F&I business.
The One Sonic-One Experience program includes a shift to a single salesperson who also handles the finance transaction, instead of handing off the customer to an F&I manager.
Jeff Dyke, Sonic's executive vice president of operations, said one goal is to enable customers to buy a car in 45 minutes or less from the time they select a vehicle, down from "a hell of a lot higher" time frame today. A lot of that time savings comes in F&I, he said.
A new captive?
President Scott Smith said that, to support the group's new used-car channel, Sonic might someday consider creating a captive finance company similar to CarMax Auto Finance, which serves used-car public retailer CarMax Inc.
"I think that the opportunity for us down the road would be more similar to what you see at CarMax," Smith said. Sonic sold its previous captive finance company, Cornerstone Acceptance Corp., in 2007. Smith indicated that the business model of any future captive would differ from that of Cornerstone Acceptance, which he described as offering "sub-subprime" credit.
"We would not be looking to get back to the sub-subprime area," Smith said. "I think it's the shallow end of a pond we don't want to fish in."
For the third quarter, Sonic reported average F&I revenue per retail vehicle of $1,114, up 3.6 percent from a year ago. In the second quarter, it was $1,148. Sonic ranks No. 3 on Automotive News' list of the top 125 U.S. dealership groups as ranked by new-vehicle sales, with retail sales of 132,136 new units in 2012.
Room to improve
Asbury Automotive reported on Tuesday its average F&I revenue per vehicle retailed was $1,305 in the third quarter. That was up 4.6 percent from the year-earlier period but down $1 from its all-time record set in the second quarter this year.
Asbury ranks No. 7 on Automotive News' list of groups ranked by new-vehicle sales, with 77,712 new units sold at retail in 2012.
COO Michael Kearney said that while F&I revenue per vehicle is at a high level, there's always room to improve.
"I sound like a broken record, but there is always a bottom third of our business, and we have a very, very disciplined and dedicated program to focus on those individuals as well as our internal certification program," Kearney said. "So I think -- and we will continue to do that -- we'll continue to grow that number."
Lithia: Steady ahead
Meanwhile, Lithia Motors reported today its average F&I revenue per vehicle retailed was $1,106 in the third quarter, up 3.5 percent from the year-earlier period and slightly higher than $1,098 in the second quarter this year.
In its third-quarter report, Lithia forecast an average of $1,100 per-vehicle F&I revenue for all of 2013 and 2014.
Lithia CEO Bryan DeBoer said the flat forecast for 2014 is probably conservative. "We think there's upside to every single one of our business lines," he said in a conference call today.
Executive Chairman Sid DeBoer said the company is concentrating on improving its F&I numbers. "We're really focused on it," he said. "It's an area where Lithia can offer some guidance and some training and really see some results."
Lithia ranks No. 9 on Automotive News' list of the largest dealership groups, with retail sales of 56,960 new units in 2012.