Auto Restart: Dealership Chain Sonic Automotive Expects Sales To Recover By This Summer

Sonic Automotive Group is looking for its sales to bounce back by August, now that many states are relaxing stay-at-home restrictions aimed at containing the pandemic.

“I think we can still have a good year, without being overly optimistic,” Sonic CEO David Smith said in a phone interview May 19. “We’ve got some areas that are back above pre-COVID levels in sales already.”

In an update for investors and analysts, Sonic said it expects its monthly new-vehicle sales to recover to its original, pre-virus forecast by August. Smith wouldn’t predict a volume total for the full year.

However, analysts said that for the whole U.S. auto industry it’s highly unlikely sales for the rest of the year could entirely make up for the sharp drop in sales that began in March, considering job losses and other disruptions caused by the pandemic.

In the first quarter, Sonic’s new-vehicle unit sales fell 6% from the same quarter a year ago, to 21,724. Used-vehicle unit sales were up 4% to 40,024. Effects from the pandemic didn’t start to take hold until mid-March, the company said.

“It’s awfully hard to figure it out,” Smith said of the sales forecast. “A lot of it depends on whether we going to continue in this good trend, where city, state and national politicians in government continue to ease restrictions and open up the country.”

Sonic Automotive, based in Charlotte, N.C., has a mostly Sunbelt footprint, with a total of 86 new-car dealerships in the Southeast, Texas, Colorado, California and Nevada. In addition, Sonic has 10 used-car-only dealerships under the EchoPark brand name. The latest addition, in Tampa, Fla., opened in April 2020.

Smith said a slower economy in the aftermath of the pandemic could make it more of a buyers’ market for commercial real estate, and that could help Sonic expand EchoPark operations. 

“I think there will be plenty of opportunities for EchoPark to grow,” he said. “Due to the crisis, I think there will be real estate, properties we wouldn’t have been able to get, because they were too expensive, or because someone was not wanting to sell them.”