Go Back   DealershipForum.com > Dealer Talk > Automotive Discussions

Notices

Automotive Discussions Car People talking about the Car Business – This is the place where it happens

Reply
 
Thread Tools Display Modes
Old 02-27-2008, 10:48 AM   #1
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Thumbs up Sonic Automotive Conference Call - Strong Results in a Tough Market

After listening to the AutoNation and Lithia Conference Calls earlier this month, I was prepared for a somewhat depressing review/forecast of the Retail Car Market. I was pleasantly surprised - Sonic posted impressive results.

Like their peers, the Sonic Management Team indicated that the New Car Market was soft and they were expecting a difficult start to 2008 with improvement in the second half. They also reported that Gross Margin Percentages on New and Used cars continue to decline.

Listed below are some comments from the Conference Call that I thought were interesting:
  • Revenue, Gross Profit and Earnings per Share were all up in the Fourth Quarter
  • Used Car Revenue was up 19.3% for the Quarter - that's HUGE
  • Sales of Certified Pre-Owned Vehicles were up 18% for the Quarter
    • Sales of BMW CPO Vehicles were up 80%
  • Warranty Revenue from Mercedes Benz was down 23%
  • They have the lowest SG&A Costs among their peers
  • They feel that prices are too high to acquire more dealerships
  • They have been actively repurchasing their stock
Concerning the last point, one of my favorite comments from the Conference Call concerned the decision to repurchase shares as opposed to buying more dealerships. One of the executives commented that it made more sense to repurchase their shares at a 6-7 post-tax multiple of earnings than to go out and pay 6-7 times pre-tax earnings for a new dealership.

Overall I was very impressed with the Conference Call. Given that they have dealerships in California and Florida there was very little conversation about the recession impacting their performance.
XDCX is offline   Reply With Quote
Old 02-27-2008, 11:01 AM   #2
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default Emphasis on Employee Satisfaction

I'd be remiss in reporting about the Sonic Conference Call if I didn't include a statement regarding the amount of time the Management Team spent talking about Employee Satisfaction and Training.

The Management Team indicated that their turn-over rate is at an all-time low, that 75% of their promotions were filled from within the company and that they've implemented a training and career-track program that will include every employee from the lot-porter to the CEO.

My favorite comment: They want to be the "Employer of Choice" for talented people in the Retail Car Business.
XDCX is offline   Reply With Quote
Old 02-27-2008, 04:17 PM   #3
cbubba7
New Member
 
Join Date: Jan 2008
Posts: 3
Default Sonic

How can one company (Lithia) preach doom and gloom and their competition (Sonic) be up so much? Makes you wonder, especially in regards to employee satisfaction. Maybe other companies will stand up and take notice of success.
cbubba7 is offline   Reply With Quote
Old 02-27-2008, 04:29 PM   #4
SHACOS
Super Moderator
 
Join Date: Jan 2008
Posts: 838
Default

This is the same tone Lithia took when we were making money too. We had the AMP (Accelerated Management Program) back when we could afford to invest that type of time and money into our employees. I will say Sonic has the advantage with having a majority of their Stores as high end Stores.
SHACOS is offline   Reply With Quote
Old 02-27-2008, 05:34 PM   #5
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by cbubba7 View Post
How can one company (Lithia) preach doom and gloom and their competition (Sonic) be up so much? Makes you wonder, especially in regards to employee satisfaction. Maybe other companies will stand up and take notice of success.
It's funny, it was about 10:00 last night and I hadn't listened to the Sonic Conference Call yet. I was thinking, "I'm tired and I'm really not in the mood to be depressed listening to a bunch of executives tell me how bad the car market is...."

I listened to the call anyway and I couldn't believe how positive the message was. Not only did Sonic post positive results in a tough market, they really seemed confident that they could adapt to the market and prosper.

I'll concede SHACOS point that many of their dealerships are High End, but many of those stores are also in California and Florida - markets that AutoNation told us were in a recession.
XDCX is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
State of the Automotive Finance Market - Second Quarter 2011 XDCX Automotive Discussions 2 08-31-2011 03:48 PM
Gaining Market Share in Tough Times crowe Sales 3 06-24-2009 12:45 PM
Sonic Automotive suspends dividend and hires advisor XDCX Automotive Discussions 5 03-09-2009 09:27 AM
conference call ssdd Sales 63 02-07-2009 10:07 PM
Sonic Automotive reports Mercedes Benz Warranty Work is down 23% XDCX Service 0 02-29-2008 02:45 PM


All times are GMT -7. The time now is 06:27 AM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright DealershipForum.com - 2008 - 2016