CHARLOTTE, N.C. — Sonic Automotive Inc. reported that second quarter net income was $26,000, compared to $9.2 million in the year-ago period. Total revenue was $1.3 million, down from $1.8 million in the same period last year.
Despite these declines and Sonic’s debt restructuring and non-cash impairment charges in May related to the General Motors' bankruptcy, the company reported sequential profits for the second quarter due to rising used-vehicle volume, parts and service margin growth and ongoing cost reductions.
"Our results this quarter continue to demonstrate the effectiveness of the operational strategies we have been steadily implementing. Although industry new vehicle sales volume was at approximately the same level as first quarter, our sequential profits, after eliminating the restructuring items, were up substantially," said B. Scott Smith, Sonic’s president.
Overall used-vehicle unit volume for the second quarter was up 13 percent, compared to the second quarter of 2008. Sequentially, used-vehicle unit volume was up 20 percent. "Our dealerships continue to set used vehicle volume records. We saw similar results in the first quarter compared to the industry," said Jeff Dyke, executive vice president of operations.
New-vehicle sales dropped 31.5 percent from the second quarter 2008.
Sonic's same-store parts and service revenue for the second quarter was down approximately 3.3 percent from the same period last year, reflecting continued pressure from consumer spending pullbacks. Despite that the gross margin in Sonic's parts and service business was up 50 basis points, compared to the second quarter 2008, and up 110 basis points compared to the first quarter 2009.