Sonic Automotive Inc.'s second-quarter earnings rose despite the coronavirus pandemic, aided by lower expenses, higher new-vehicle gross profit per vehicle and a recovery in used-vehicle sales late in the quarter, including at its standalone used-only EchoPark stores.
The nation's sixth-largest new-vehicle retailer saw revenue slip 19 percent to $2.1 billion, while net income jumped 16 percent to $30.8 million. Net income from continuing operations also increased 16 percent, to $31 million. The second quarter included a $3.2 million tax benefit.
"Our second quarter results reflect not only a dramatic operating improvement since the onset of COVID-19, but also an all-time record monthly profit in June," Sonic CEO David Smith said in a statement Thursday. "The record-setting momentum we saw during the month of June has continued throughout July to date."
New-vehicle sales fell 40 percent in April but were down 15 percent in June, while used-vehicle sales at franchised stores dropped 32 percent in April and rose 5 percent in June. Parts, service and collision gross profit slumped 43 percent in April but recovered and fell just 2 percent in June, Sonic said. At EchoPark, sales rose 35 percent in June after a 30 percent slump in April.
Also Thursday, Sonic announced plans to accelerate and broaden an expansion of its EchoPark stores in what it described as a "140-point nationwide distribution network and expanded e-commerce capabilities."
The company opened its 10th EchoPark store in April and has plans to add three to four more this year and another four to six in 2021. On Thursday, the company said it also plans to add three "delivery and buy centers" by the end of 2020. One opened last week in Greenville, S.C.
The retailer said Thursday it expects EchoPark to sell more than 500,000 vehicles a year and generate more than $10 billion in revenue by 2025.
Sonic also said it has partnered with Cox Automotive and Darwin Automotive to create a digital retailing platform to, in part, quicken the EchoPark expansion. The platform, also to be used by franchised dealerships, is expected to be available in the fourth quarter.
EchoPark posted net income of $2.6 million in the second quarter, up 52 percent. Revenue at the used-vehicle retailer rose 8.1 percent to $315.3 million on sales of 13,207, up 4.9 percent.
Shares of Sonic closed Thursday's trading down 6 percent to $40.40.
Records: All-time quarterly finance and insurance gross profit per vehicle retailed of $1,946.
Sales: New-vehicle sales tumbled 29 percent to 19,891. Used-vehicle sales, including results from EchoPark, fell 10 percent to 37,180.
Same-store sales: New-vehicle sales on a same-store basis dropped 25 percent to 19,884. That compares with a 33 percent decline in new light-vehicle sales across the U.S. during the second quarter, according to the Automotive News Data Center. Used-vehicle sales on a same-store basis at franchised dealerships slid 12 percent to 23,949. EchoPark used-vehicle same-store sales dipped 6.9 percent to 11,716.
Sonic, of Charlotte, N.C., ranks No. 6 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 114,131 new vehicles in 2019. It retailed 162,149 used vehicles last year, putting it at No. 6 on Automotive News' list of the top 100 retailers ranked by used-vehicle sales.