Sonic Automotive Q2 net income plunges 75%; EchoPark closure details released

Sonic Automotive Inc., which in June said it would take a significant second-quarter charge in closing eight EchoPark used-only locations, plus an unspecified number of delivery/buy centers, saw its net income for the three months plunge by 75 percent.

Sonic reported net income of $23.4 million, while revenue increased 4 percent to $3.7 billion, an all-time record, the company noted.

While Sonic last month said it would be indefinitely suspending operations at eight EchoPark locations, the auto retailer on Thursday disclosed that it also indefinitely suspended operations at 14 EchoPark delivery/buy centers and three Northwest Motorsport used-only stores in the Pacific Northwest.

Sonic said the move led to a $13.2 million quarterly loss for EchoPark, which also saw revenue fall 9.1 percent to $600.6 million.

Sonic recorded an impairment charge of $75.2 million in the quarter. The company noted $62.6 million in non-cash impairment charges, $2.2 million in severance, $400,000 of non-cash lease exit charges and $10 million of non-cash inventory valuation adjustments.

Sonic said it expects ongoing expenses tied to the closed EchoPark stores will range from $2.5 million to $3 million a quarter.

"We remain confident in the long-term potential for EchoPark and believe that the steps we have taken to improve near-term financial performance will position us to achieve our strategic goals," Sonic President Jeff Dyke said in a statement.

Among its franchised dealerships, new-vehicle retail and fleet sales jumped 13 percent, while used-vehicle sales slipped 11 percent. The average gross profit per retail new vehicle dropped 27 percent to $5,003. The average gross profit per used vehicle at its franchised dealerships rose 14 percent to $1,765.

Sonic said it sold three franchised dealerships in Alabama and North Carolina in the second quarter, noting those stores generated annual revenue of $170 million. It had a $20.9 million net gain on the dealerships' disposition. The company also sold a Maserati-Alfa Romeo store in Texas in April.

Sonic, which entered the powersports business last year and acquired several powersports stores this year, said the segment produced $45 million in revenue in the second quarter.

Shares of Sonic fell 0.5 percent to close Thursday at $50.81.

Q2 revenue: $3.7 billion, up 4 percent from a year earlier

Q2 net income: $23.4 million, down 75 percent from a year earlier

Q2 vehicle sales: Franchised dealerships sold 52,555 new and used retail vehicles, up 0.1 percent. On a same-store basis, volume of new and used retail vehicles at franchised stores also rose 0.1 to 51,581 vehicles. EchoPark stores sold 17,084 used vehicles, up 3.6 percent. EchoPark's volume soared 36 percent on a same-market basis to 13,732 vehicles.

Q2 record: quarterly revenue

Ranking: Sonic Automotive, of Charlotte, N.C., ranked No. 6 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., with sales of 101,168 new vehicles in 2022.