Sonic Automotive Accelerated Revenue Growth as Unit Economics Weakened
Gross profit reached a quarterly record of $616.2 million despite slower year-over-year growth.
Sonic Automotive Inc. (SAH), the automotive retailer, accelerated second-quarter revenue growth to 8% as stronger vehicle volume offset weaker per-unit economics across its dealership businesses.
Revenue rose to $3.934 billion from a year earlier, improving from 1% growth in the first quarter and a 1% decline in the fourth quarter of 2024. The pace remained below the 14% increase recorded in the third quarter of 2024.
Reported net income rose 226% to $57.4 million, while adjusted net income fell 23% to $58.3 million. Adjusted earnings had increased 7% in the first quarter, marking a reversal in the underlying profit trajectory.
Franchised Dealerships same-store revenue rose 2%, though gross profit fell 3%. New-vehicle volume was flat and gross profit per unit declined 16% to $2,872, while used-unit volume increased 7% and gross profit per unit fell 13% to $1,401. Fixed-operations gross profit rose 2%, while its margin narrowed 30 basis points to 51.0%.
Finance-and-insurance results showed similar pressure. Same-store F&I gross profit declined 1% and gross profit per retail unit fell 4% to $2,619 even as combined new- and used-vehicle retail volume increased 3%.
EchoPark retail used-unit sales rose 17% to 19,601 and revenue increased 15% to $582.9 million, accelerating from respective first-quarter growth of 3% and 4%. Total used-vehicle and F&I gross profit per unit declined 12%, limiting gross-profit growth to 4%, while adjusted EBITDA fell 15% from a year earlier and dropped sequentially to $13.9 million from a record $18.6 million.
Higher expenses added to the margin pressure. Reported selling, general and administrative costs rose 8% to $444.6 million and reached 72.2% of gross profit, up 370 basis points from a year earlier. Powersports provided the strongest growth, with revenue rising 53% to a record $73.5 million and adjusted EBITDA increasing 145% to $4.9 million. The April acquisition of five Harley-Davidson dealerships is expected to contribute about $100 million in annualized revenue.