CHARLOTTE, N.C. — Record F&I profit along with record fixed-operations gross profit paved the way for a record $345.2 million in gross profit for Sonic Automotive in the first quarter. The performance of the two segments also helped to offset underperforming new and used vehicle sales.
The group’s average F&I profit per retail unit climbed 7.9% from a year ago to $1,359, while total F&I gross profit increased 9.7% from the prior-year period to $80.9 million.
"We are pleased with our operating results during the quarter. Strong performances in the fixed operations and the F&I areas drove the overall increase in gross profit to record levels,” said Jeff Dyke, Sonic’s executive vice president of operations. “We continued to see gross profit compression in new vehicles and expect this to continue until inventory supply corrects to more normalized levels. The used-vehicle market continues to demonstrate its resiliency despite the compression related to new vehicles.”
Along with the high inventory levels, sonic officials also credited a hypercompetitive market for poor new-vehicle retail results in the first quarter. Retail volume was down 2.8% from the same time last year, with sales totaling 30,156 units. Gross per new unit decreased 4.1% from a year ago to $1,935, while new-vehicle gross profit fell 6.8% from the prior-year period to $58.3 million.
Used-vehicle sales fared better in terms of volume, with sales increasing 4.3% from a year ago to 29,333 units sold. However, a 4.8% drop in gross profit per unit offset those volume gains, with overall total used-vehicle gross profit falling 0.8% from a year ago to $40.5 million.
The automotive retailer’s largest improvements, however, were reserved for its one-touch EchoPark dealerships. The three Denver EchoPark dealerships sold 941 retail units, a 42.6% increase from the same time last year. F&I PRU experienced even bigger growth, growing 54.1% from a year ago to $1,369.
“Our EchoPark stores continue to grow and mature. The expansion in Denver is on schedule and we anticipate opening two additional stores in the second quarter of 2016 and another by the end of the year,” Dyke said. “We are also happy to announce we will be introducing the EchoPark brand to the Texas and Carolinas markets in 2017, where we have been actively accumulating property."
Fixed operations gross profit during the fourth quarter was $166 million, a 7.9% year-over-year increase, with service related to customer pay, warranty and other segments all showed increases. The group’s wholesale parts segment, however, showed a 0.6% drop in gross profit from the year-ago period.