SONIC AUTOMOTIVE INC

Previous wording

Unless otherwise noted, all discussion of increases or decreases are for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a reported basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a reported basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Current wording

Unless otherwise noted, all discussion of increases or decreases are for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a reported basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a reported basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Previous wording

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of September 30, 2024: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of September 30, 2024, we operated 106 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 13 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 131 new vehicle franchises (representing 25 different brands of cars and light trucks) and 16 collision repair centers in 17 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of nine franchises and four authorized retail outlets in two states.

Current wording

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of March 31, 2025: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of March 31, 2025, we operated 108 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 14 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 133 new vehicle franchises (representing 25 different brands of cars and light trucks) and 16 collision repair centers in 18 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 10 franchises and four authorized retail outlets in three states.

Previous wording

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) seasonally adjusted annual rate of unit sales volume (the “total new vehicle SAAR”) increased 1% for both the three and nine months ended September 30, 2024, to approximately 15.6 million vehicles, compared to approximately 15.5 million vehicles for both the three and nine months ended September 30, 2023, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2024 new vehicle industry volume will be between 15.5 million vehicles (flat compared to 2023) and 15.7 million vehicles (an increase of 1% compared to 2023). The effects of interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand as a result of economic conditions, natural disasters or other unforeseen circumstances could cause the actual 2024 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR increased 2% and 1% to approximately 12.9 million and 12.8 million vehicles for the three and nine months ended September 30, 2024, respectively, from approximately 12.6 million and 12.7 million vehicles for the three and nine months ended September 30, 2023, respectively.

Current wording

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) seasonally adjusted annual rate of unit sales volume (the “total new vehicle SAAR”) increased 8% for the three months ended March 31, 2025, to approximately 16.6 million vehicles, compared to approximately 15.4 million vehicles for the three months ended March 31, 2024, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2025 new vehicle industry volume will be between 15.6 million vehicles (a decrease of 3% compared to 2024) and 16.3 million vehicles (an increase of 1% compared to 2024). The effects of changes in trade policy and the imposition of tariffs, interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand as a result of economic conditions, natural disasters or other unforeseen circumstances could cause the actual 2025 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR increased 11% to approximately 14.0 million vehicles for the three months ended March 31, 2025, from approximately 12.6 million vehicles for the three months ended March 31, 2024. We believe some of the increase in new vehicle SAAR during the three months ended March 31, 2025 is attributable to advanced purchases of new vehicles ahead of changes in U.S. tariff policy announced on April 2, 2025.

Previous wording

Same store retail new vehicle revenue was flat during the three and nine months ended September 30, 2024, driven primarily by a 2% increase in retail new vehicle unit sales volume in both periods. The CDK outage also had a significant adverse impact on new vehicle unit sales volume during the three and nine months ended September 30, 2024. Retail new vehicle gross profit decreased 33% and 31% during the three and nine months ended September 30, 2024, respectively, due primarily to increased price competition as a result of higher levels of available inventory and higher inventory invoice cost, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $1,633 per unit, or 35%, to $3,049 per unit during the three months ended September 30, 2024, and decreased $1,615 per unit, or 32%, to $3,446 per unit during the nine months ended September 30, 2024. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 57 as of September 30, 2024, compared to 33 days as of September 30, 2023, as a result of increased manufacturer production levels.

Current wording

Same store retail new vehicle revenue increased 13% during the three months ended March 31, 2025, driven primarily by a 10% increase in retail new vehicle unit sales volume, coupled with a 2% increase in retail new vehicle average selling price. Retail new vehicle gross profit decreased 9% during the three months ended March 31, 2025, due primarily to increased price competition as a result of increasing levels of available inventory and higher inventory invoice cost, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $643 per unit, or 17%, to $3,089 per unit during the three months ended March 31, 2025. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 51 days as of March 31, 2025, compared to 50 days as of March 31, 2024.

Previous wording

Same store retail used vehicle revenue decreased 10% and 6% during the three and nine months ended September 30, 2024, respectively. The 10% decrease in the three months ended September 30, 2024 was driven primarily by an 8% decrease in retail used vehicle average selling prices and a 2% decrease in retail used vehicle sales volume. The 6% decrease in the nine months ended September 30, 2024 was driven primarily by an 8% decrease in retail used vehicle average selling prices, partially offset partially by a 2% increase in retail used vehicle unit sales volume. Retail used vehicle unit sales volume during the three and nine months ended September 30, 2024 was also adversely affected by the CDK outage. Retail used vehicle gross profit decreased 18% and 10% during the three and nine months ended September 30, 2024, respectively, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $283 per unit, or 17%, to $1,386 per unit during the three months ended September 30, 2024 and decreased $189 per unit, or 11%, to $1,505 per unit during the nine months ended September 30, 2024 due primarily to higher inventory acquisition costs and lower selling prices due to increased price competition as a result of ongoing consumer affordability challenges, including the effect of higher interest rates. Same store wholesale vehicle gross profit (loss) remained flat and worsened $1.8 million during the three and nine months ended September 30, 2024, respectively, on flat wholesale vehicle gross profit (loss) per unit during the three months ended September 30, 2024 and a $124 per unit worsening of wholesale vehicle gross profit (loss) per unit during the nine months ended September 30, 2024. We generally focus on maintaining Franchised Dealerships Segment used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 34 and 28 days as of September 30, 2024 and 2023, respectively.

Current wording

Same store retail used vehicle revenue increased 1% during the three months ended March 31, 2025, driven primarily by a 3% increase in retail used vehicle average selling prices, partially offset by a 2% decrease in retail used vehicle sales volume. Retail used vehicle gross profit decreased 5% during the three months ended March 31, 2025, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $45 per unit, or 3%, to $1,555 per unit during the three months ended March 31, 2025 due primarily to higher inventory acquisition costs. Same store wholesale vehicle gross loss worsened by approximately $0.8 million, to a gross loss of approximately $1.0 million during the three months ended March 31, 2025, due primarily to a $117 per unit, or 355%, increase in wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. We generally focus on maintaining Franchised Dealerships Segment used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 31 and 28 days as of March 31, 2025 and 2024, respectively.

Previous wording

Same store Fixed Operations revenue increased 7% and 4% during the three and nine months ended September 30, 2024, respectively, driven primarily by higher parts and labor costs that were passed along to consumers, despite being negatively affected by the CDK outage. Fixed Operations gross profit increased 8% and 6% during the three and nine months ended September 30, 2024, respectively, driven primarily by higher warranty revenue contribution and higher warranty gross margin. Fixed Operations gross margin increased 50 basis points, to 50.2%, during the three months ended September 30, 2024, and increased 60 basis points, to 50.2%, during the nine months ended September 30, 2024, primarily driven by an increase in warranty revenue contribution and higher warranty gross margin.

Current wording

Same store Fixed Operations revenue increased 5% during the three months ended March 31, 2025, driven primarily by increased service capacity as a result of additional technician headcount, and higher parts and labor costs that were passed along to consumers. Fixed Operations gross profit increased 7% during the three months ended March 31, 2025, driven primarily by higher warranty revenue contribution and higher warranty gross margin. Fixed Operations gross margin increased 70 basis points, to 50.8%, during the three months ended March 31, 2025, primarily driven by an increase in warranty revenue contribution and higher warranty gross margin.

Previous wording

Same market total revenues decreased 3% and increased 6% during the three and nine months ended September 30, 2024, respectively. The 3% decrease during the three months ended September 30, 2024 was primarily attributable to a 7% decrease in used retail vehicle unit prices, partially offset by a 2% increase in total retail used vehicle unit sales volume. The 6% increase during the nine months ended September 30, 2024 was primarily attributable to a 12% increase in total retail used vehicle unit sales volume. Same market total gross profit increased 21% and 54% during the three and nine months ended

Current wording

Same market total revenues increased 3% during the three months ended March 31, 2025, primarily attributable to a 7% increase in total retail used vehicle unit sales volume, partially offset by a 6% decrease in average selling price per used retail unit. Same market total gross profit increased 19% during the three months ended March 31, 2025, driven by a 7% increase in total retail used vehicle unit sales volume and a 12% increase in combined retail used vehicle and F&I gross profit per unit.

Previous wording

Reported retail used vehicle revenue decreased 15% during both the three and nine months ended September 30, 2024, driven primarily by a 9% decrease in average retail used vehicle unit selling prices during both periods. F&I revenue increased 12% and 6% during the three and nine months ended September 30, 2024, respectively, driven primarily by a 20% and 14% increase in F&I gross profit per unit, respectively, partially offset by the decrease in retail used vehicle unit sales volume. Reported combined retail used vehicle and F&I gross profit per unit increased $344 per unit, or 12%, to $3,111 per unit during the three months ended September 30, 2024, and increased $952 per unit, or 45%, to $3,047 per unit during the nine months ended September 30, 2024, due primarily to increases in F&I revenue during the three and nine months ended September 30, 2024.

Current wording

Reported retail used vehicle revenue decreased 2% during the three months ended March 31, 2025, driven primarily by a 6% decrease in average retail used vehicle unit selling prices, partially offset by a 5% increase in retail used vehicle unit sales volume. F&I revenue increased 23% during the three months ended March 31, 2025, driven primarily by a 17% increase in F&I gross profit per unit. Reported combined retail used vehicle and F&I gross profit per unit increased $456 per unit, or 15%, to $3,411 per unit during the three months ended March 31, 2025, due primarily to increases in F&I gross profit per unit during the three months ended March 31, 2025.

Previous wording

Reported wholesale vehicle gross profit (loss) worsened approximately $0.2 million and $2.0 million during the three and nine months ended September 30, 2024, respectively, primarily due to a 143% and 155% worsening in wholesale vehicle gross profit (loss) per unit, respectively. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported EchoPark Segment used vehicle inventory days’ supply was approximately 33 and 37 days as of September 30, 2024 and 2023, respectively.

Current wording

Reported wholesale vehicle gross loss improved by approximately $0.4 million during the three months ended March 31, 2025, primarily due to a 60% improvement in wholesale vehicle gross loss per unit and a 5% increase in wholesale vehicle unit sales volume. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported EchoPark Segment used vehicle inventory days’ supply was approximately 35 and 36 days as of March 31, 2025 and 2024, respectively.

Previous wording

Reported retail new vehicle revenue remained flat during the three months ended September 30, 2024 primarily due to a 9% decrease in retail new vehicle unit sales volume, offset by a 10% increase in retail new vehicle average selling prices. Reported retail new vehicle revenue decreased 11% during the nine months ended September 30, 2024, primarily driven by a 15% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased 31% and 35% during the three and nine months ended September 30, 2024, respectively, as a result of a 23% decrease in retail new vehicle gross profit per unit and lower retail new vehicle unit sales volume in both periods. Retail new vehicle gross profit per unit decreased $964 per unit, or 23%, to $3,249 per unit for the three months ended September 30, 2024, and decreased $860 per unit, or 23%, to $2,820 per unit for the nine months ended September 30, 2024, primarily due to higher inventory costs. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 121 and 107 days as of September 30, 2024 and 2023, respectively, varying based on manufacturer production levels and consumer demand.

Current wording

Same store retail new vehicle revenue increased 8% during the three months ended March 31, 2025, primarily driven by a 4% increase in retail new vehicle unit sales volume and a 4% increase in retail new vehicle average selling price. Retail new vehicle gross profit remained flat during the three months ended March 31, 2025, as a result of the increase in retail new vehicle unit sales volume, offset by lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $84 per unit, or 3%, to $2,588, due primarily to higher inventory invoice costs. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 166 and 225 days as of March 31, 2025 and 2024, respectively, varying based on manufacturer production levels and consumer demand.

Previous wording

Reported retail used vehicle revenue increased 84% and 3% during the three and nine months ended September 30, 2024, respectively, primarily driven by a 99% and 19% increase in used unit prices, respectively. Retail used vehicle gross profit decreased 8% and 9% during the three and nine months ended September 30, 2024, respectively, as a result of lower retail used vehicle unit sales volume. Retail used vehicle gross profit per unit decreased $35 per unit, or 1%, to $2,798 per unit for the three months ended September 30, 2024, and increased $130 per unit, or 5%, to $2,537 per unit for the nine months ended September 30, 2024, primarily due to lower inventory costs. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 59 and 37 days as of September 30, 2024 and 2023, respectively.

Current wording

Same store used vehicle revenue increased 47% during thethree months ended March 31, 2025, primarily driven by a 25% increase in retail used vehicle unit sales volume, coupled with a 17% increase in retail used vehicle average selling price. Retail used vehicle gross profit remained flat during the three months ended March 31, 2025 and retail used vehicle gross profit per unit decreased $373 per unit, or 17%, to $1,780, primarily due to higher inventory costs. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 83 and 99 days as of March 31, 2025 and 2024, respectively.

Previous wording

Reported Fixed Operations revenue decreased 7% and 5% during the three and nine months ended September 30, 2024, respectively, and Fixed Operations gross profit decreased 10% and 8% during the three and nine months ended September 30, 2024, respectively, driven primarily by lower repair order volume. Fixed Operations gross margin decreased 120 basis points to 45.9% and decreased 140 basis points to 46.4% during the three and nine months ended September 30, 2024, respectively, driven primarily by a decrease in customer pay revenue contribution and lower customer pay gross margin.

Current wording

Same store Fixed Operations revenue decreased 10% and Fixed Operations gross profit decreased 3% during the three months ended March 31, 2025, driven primarily by lower repair order volume. Fixed Operations gross margin increased 300 basis points, to 50% during the three months ended March 31, 2025, driven primarily by an increase in warranty revenue contribution and warranty gross margin.

Previous wording

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores and EchoPark stores in 2023 and 2024, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

Current wording

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores, EchoPark stores, and Powersports stores in 2024 and 2025, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

Previous wording

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three months ended March 31, 2025 and 2024:

Previous wording

Wholesale vehicle revenues are affected by retail new and used vehicle unit sales volume and the associated trade-in volume, as well as short-term, temporary and seasonal fluctuations in wholesale auction pricing. In recent years, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that wholesale vehicle pricing and volatility have begun to normalize throughout 2024, and we expect this trend will continue through the remainder of the year. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

Current wording

Wholesale vehicle revenues are influenced by several factors, including retail new and used vehicle unit sales volume, associated trade-in volume, and short-term, temporary, and seasonal fluctuations in wholesale auction pricing. In recent years, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that the current wholesale vehicle price environment is not sustainable in the long term and expect that average wholesale vehicle pricing and related gross profit (loss) will continue to return toward long-term normalized levels in the long run, but may continue to experience volatility during 2025 or beyond. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

Previous wording

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for new vehicles:

Current wording

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for new vehicles:

Previous wording

Retail used vehicle revenue increased 2%, due primarily to a 21% increase in retail used vehicle average selling prices, partially offset by a 15% decrease in retail used vehicle unit sales volume. Retail used vehicle gross profit decreased approximately $0.4 million, or 9%, as a result of lower retail used vehicle unit sales volume. Retail used vehicle gross profit per unit increased $159 per unit, or 7%, to $2,556 per unit.

Current wording

Retail new vehicle revenue increased 13%, due primarily to a 10% increase in retail new vehicle unit sales volume and a 2% increase in retail new vehicle average selling prices. Retail new vehicle gross profit decreased approximately $8.1 million, or 9%, as a result of lower retail new vehicle gross profit per unit, offset partially by higher retail new vehicle unit sales volume. Retail new vehicle gross profit per unit decreased $643 per unit, or 17%, to $3,089 per unit, due primarily to increased price competition and higher inventory invoice costs.

Previous wording

Retail used vehicle revenue decreased approximately $76.8 million, or 10%, driven primarily by an 8% decrease in retail used vehicle average selling prices, as well as a 2% decrease in retail used vehicle unit sales volume, due in part to the adverse impact of the CDK outage. Retail used vehicle gross profit decreased approximately $7.8 million, or 18%, driven primarily by a $283 per unit, or 17%, decrease in retail used vehicle gross profit per unit, as well as a 2% decrease in retail used vehicle unit sales volume during the three months ended September 30, 2024, due primarily to higher inventory acquisition costs and increased price competition as a result of ongoing consumer affordability challenges.

Current wording

Retail used vehicle revenue increased approximately $5.0 million, or 1%, driven primarily by a 3% increase in retail used vehicle average selling prices, partially offset by a 2% decrease in retail used vehicle unit sales volume. Retail used vehicle gross profit decreased approximately $2.0 million, or 5%, driven primarily by a $45 per unit, or 3%, decrease in retail used vehicle gross profit per unit, as well as a 2% decrease in retail used vehicle unit sales volume, due primarily to higher inventory acquisition costs and increased price competition as a result of ongoing consumer affordability challenges.

Previous wording

Wholesale vehicle revenue decreased approximately $8.9 million, or 17%, driven primarily by a 15% decrease in wholesale vehicle revenue per unit and a 3% decrease in wholesale vehicle unit sales volume during the three months ended September 30, 2024. Wholesale vehicle gross loss remained flat.

Current wording

Wholesale vehicle revenue increased approximately $5.8 million, or 12%, driven primarily by a 21% increase in wholesale vehicle unit sales volume, partially offset by a 7% decrease in wholesale vehicle revenue per unit during the three months ended March 31, 2025. Wholesale vehicle gross profit (loss) worsened by approximately $0.8 million.

Previous wording

Finance contract revenue for combined retail new and used vehicles decreased 3%, due primarily to a 6% decrease in gross profit per finance contract, offset partially by a 3% increase in finance contract volume. Service contract revenue for combined retail new and used vehicles decreased 1%, due primarily to a 1% decrease in service contract volume. Other aftermarket contract revenue for combined retail new and used vehicles increased 2%, due primarily to a 6% increase in gross profit per other aftermarket contract, offset partially by a 790-basis point decrease in the other aftermarket contract penetration rate.

Current wording

Finance contract revenue for combined retail new and used vehicles increased 9%, due primarily to a 6% increase in gross profit per finance contract and a 3% increase in finance contract volume. Service contract revenue for combined retail new and used vehicles increased 9%, due primarily to a 2% increase in service contract volume and a 7% increase in gross profit per service contract. Other aftermarket contract revenue for combined retail new and used vehicles increased 7%, due primarily to a 2% increase in gross profit per other aftermarket contract, a 4% increase in total contracts, and a 30-basis point increase in the other aftermarket contract penetration rate.

Previous wording

On June 22, 2023, Sonic announced a plan to indefinitely suspend operations at eight EchoPark locations and 14 related delivery/buy centers. In addition, during the third quarter of 2023, we closed three Northwest Motorsport locations within the EchoPark Segment. In January 2024, we closed the remaining seven Northwest Motorsport stores. In light of these closures, we believe the following discussion of EchoPark Segment results on a same market basis provides a more meaningful year-over-year comparison.

Current wording

In January 2024, we closed the remaining seven Northwest Motorsport stores within the EchoPark Segment. In light of these closures, we believe the following discussion of EchoPark Segment results on a same market basis provides a more meaningful year-over-year comparison.

Previous wording

Retail used vehicle revenue increased approximately $51.5 million, or 4%, due primarily to a 12% increase in retail used vehicle unit sales volume, offset partially by a 7% decrease in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased approximately $58.4 million, or 57%, due primarily to a $34.3 million, or 31%, increase in F&I revenue and a 41%, or $893, increase in combined retail used vehicle and F&I gross profit per unit. The increasein combined retail used vehicle and F&I gross profit per unit was due primarily to higher F&I penetration rates, an improvement in inventory acquisition costs as a result of paying lower wholesale auction prices, sourcing a higher percentage of inventory from non-auction sources, and expanding our inventory to include older vehicles, which typically earn a higher gross profit per unit.

Current wording

Retail used vehicle revenue increased approximately $0.5 million, due primarily to a 6% decrease in retail used vehicle revenue per unit, offset partially by a 7% increase in retail used vehicle unit sales volume. Combined retail used vehicle gross profit and F&I revenue increased approximately $10.3 million, or 19%, due primarily to an $11.6 million, or 24%, increase in F&I revenue and a 12%, or $355 per unit increase in combined retail used vehicle and F&I gross profit. The increasein combined retail used vehicle and F&I gross profit per unit was due primarily to higher F&I penetration rates, an improvement in inventory acquisition costs as a result of sourcing a higher percentage of inventory from non-auction sources, and expanding our inventory to include older vehicles, which typically earn a higher gross profit per unit.

Previous wording

Same market wholesale vehicle revenue increased approximately $2.8 million, or 4%, due primarily to a 15% increase in wholesale vehicle unit sales volume, offset partially by a 10% decrease in wholesale vehicle revenue per unit. As we adjust the inventory mix of nearly new versus older model year vehicles sold at retail going forward, the levels of wholesale vehicle revenue and gross profit may vary.

Current wording

Same market wholesale vehicle revenue increased approximately $1.8 million, or 7%, due primarily to a 13% increase in wholesale vehicle unit sales volume, offset partially by a 5% decrease in wholesale vehicle revenue per unit. As we adjust the inventory mix of nearly new versus older model year vehicles sold at retail going forward, the levels of wholesale vehicle revenue and gross profit may vary.

Previous wording

As a result of acquisitions since the beginning of 2023, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. The following discussion of new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. Our Powersports Segment results are subject to seasonal variations, such that the second and third quarters are generally expected to contribute higher revenues and segment income than the first and fourth quarters.

Current wording

As a result of the acquisition and termination of certain powersports stores in 2024 and 2025, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. The following discussion of new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. Our Powersports Segment results are subject to seasonal variations, such that the second and third quarters are generally expected to contribute higher revenues and segment income than the first and fourth quarters.

Previous wording

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for retail new vehicles:

Current wording

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for retail new vehicles:

Previous wording

Retail new vehicle revenue was flat, due primarily to a 10% increase in retail new vehicle average selling prices, partially offset by a 9% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased approximately $1.8 million, or 31%, as a result of lower retail new vehicle unit sales volume and lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $964 per unit, or 23%, to $3,249 per unit, due primarily to higher inventory invoice costs and changes in brand mix.

Current wording

Retail new vehicle revenue increased 8%, due primarily to a 4% increase in retail new vehicle average selling prices, along with a 4% increase in retail new vehicle unit sales volume. Retail new vehicle gross profit was flat, as a result of lower retail new vehicle gross profit per unit, offset by higher retail new vehicle unit sales volume. Retail new vehicle gross profit per unit decreased $84 per unit, or 3%, to $2,588 per unit, due primarily to higher inventory invoice costs and changes in brand mix.

Previous wording

Same store wholesale vehicle revenue decreased approximately $0.2 million, due to lower wholesale vehicle average selling prices. Same store wholesale vehicle gross loss remained flat.

Current wording

Same store wholesale vehicle revenue increased approximately $0.6 million, due to higher wholesale vehicle unit sales volume. Same store wholesale vehicle gross loss remained flat.

Previous wording

Same store Fixed Operations revenue decreased approximately $1.5 million, or 7%, and same store Fixed Operations gross profit decreased approximately $1.0 million, or 10%, primarily due to lower parts and accessories volume and higher inventory costs of parts and accessories. Customer pay revenue decreased approximately $1.7 million, or 38%, and customer pay gross profit decreased approximately $1.4 million, or 52%. Warranty revenue increased approximately $0.6 million, or 120%, and warranty gross profit increased approximately $0.5 million, or 167%. Wholesale parts revenue increased approximately $0.1 million, or 50%, and wholesale parts gross profit increased approximately $0.1 million, or 100%. Internal, sublet and other revenue decreased approximately $0.5 million, or 3%, and internal, sublet and other gross profit decreased approximately $0.2 million, or 3%.

Current wording

Same store Fixed Operations revenue decreased approximately $0.6 million, or 10%, and same store Fixed Operations gross profit decreased approximately $0.1 million, or 3%, primarily due to lower parts and accessories volume and higher inventory costs of parts and accessories. Customer pay revenue decreased approximately $0.6 million, or 35%, and customer pay gross profit decreased approximately $0.3 million, or 43%. Warranty revenue increased approximately $0.5 million, or 125%, and warranty gross profit increased approximately $0.4 million, or 133%. Wholesale parts revenue decreased approximately $0.1 million, or 50%, and wholesale parts gross profit decreased approximately $0.1 million, or 100%. Internal, sublet and other revenue decreased approximately $0.4 million, or 10%, and internal, sublet and other gross profit decreased approximately $0.1 million, or 6%.

Previous wording

Same store F&I revenue decreased 4%, due primarily to a decrease in total combined retail new and used vehicle unit sales volume, offset partially by an increase in F&I gross profit per retail unit. F&I gross profit per retail unit increased $61 per unit, or 6%, to $1,136 per unit, due primarily to an increase in gross profit per finance, service and other aftermarket contracts.

Current wording

Same store F&I revenue was flat. F&I gross profit per retail unit decreased $129 per unit, or 11%, to $1,037 per unit, due primarily to a decrease in gross profit per finance, service and other aftermarket contracts.

Previous wording

Same store finance contract revenue decreased 4%, due primarily to an 11% decrease in combined new and used vehicle finance contract volume and a 110-basis point decrease in the combined new and used vehicle finance contract penetration rate, offset partially by an 8% increase in gross profit per finance contract. Service contract revenue decreased 9%, due primarily to a 360-basis point decrease in the service contract penetration rate and a 23% decrease in retail new and used vehicle service contract unit sales volume, offset partially by an 18% increase in gross profit per service contract. Other aftermarket contract revenue increased 17%, due primarily to a 32% increase in gross profit per other aftermarket contract and a 91-basis point increase in the other aftermarket contract penetration rate, offset partially by an 11% decrease in other aftermarket contract volume.

Current wording

Same store finance contract revenue decreased 17%, due primarily to a 35% decrease in gross profit per finance contract, offset partially by a 27% increase in combined new and used vehicle finance contract volume. Service contract revenue decreased 4%, due primarily to a 16% decrease in gross profit per service contract, offset partially by a 14% increase in retail new and used vehicle service contract unit sales volume. Other aftermarket contract revenue increased 18%, due primarily to a 940-basis point increase in the other aftermarket contract penetration rate, and a 36% increase in other aftermarket contract volume, offset partially by a 13% decrease in gross profit per other aftermarket contract.

Previous wording

(2)For the nine months ended September 30, 2024, amount includes approximately $13.0 million of pre-tax charges related to excess compensation related to the CDK outage, approximately $5.1 million of pre-tax charges related to storm damage, approximately $2.2 million of pre-tax charges related to severance and long-term compensation expense, and approximately $1.0 million of pre-tax impairment charges related to property and equipment. For the nine months ended September 30, 2023, amount includes approximately $20.9 million of pre-tax gain related to acquisitions and dispositions and approximately $1.9 million of pre-tax charges related to storm damage.

Current wording

(2)For the three months ended March 31, 2025, amount includes approximately $30.0 million of pre-tax benefit in cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024, approximately $0.9 million of pre-tax charges related to storm damage, and approximately $0.3 million of pre-tax charges related to disposition losses. For the three months ended March 31, 2024, amount includes approximately $2.2 million of pre-tax charges for severance and long-term compensation expense and approximately $1.0 million of pre-tax impairment charges related to property and equipment. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

(3)For the nine months ended September 30, 2024, amount includes approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $2.9 million of pre-tax charges for severance and long-term compensation expense, approximately $2.1 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations, approximately $1.4 million of pre-tax impairment charges related to property and equipment, approximately $2.9 million of pre-tax gain on acquisitions and dispositions, and approximately $0.4 million of pre-tax charges related to excess compensation related to the CDK outage. For the nine months ended September 30, 2023, amount includes approximately $62.6 million of pre-tax impairment charges related to fixed assets, lease right-of-use assets, and other contractual obligations related to abandoned property, approximately $10.0 million of pre-tax charges related to used vehicle inventory valuation adjustments, approximately $5.1 million of pre-tax charges for long-term compensation expense, approximately $4.3 million of pre-tax lease exit charges and approximately $0.3 million of pre-tax loss related to acquisitions and dispositions.

Current wording

(3)For the three months ended March 31, 2025, amount includes approximately $0.2 million of pre-tax gain on sale of EchoPark property and approximately $0.2 million of pre-tax impairment charges related to property and equipment. For the three months ended March 31, 2024, amount includes approximately $2.1 million of pre-tax charges for severance and long-term compensation expense, and approximately $2.1 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

(4)For the nine months ended September 30, 2024, amount includes approximately $1.4 million of pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment and approximately $1.0 million of pre-tax property and equipment charges for the Franchised Dealerships Segment. For the nine months ended September 30, 2023, amount includes approximately $62.6 million of pre-tax impairment charges related to fixed assets, lease right-of-use assets, and other contractual obligations related to abandoned property for the EchoPark Segment.

Current wording

(5)For the three months ended March 31, 2025, amount includes approximately $0.2 million of pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment and approximately $1.1 million of pre-tax property, equipment and right-of-use asset charges for the Powersports Segment. For the three months ended March 31, 2024, amount includes approximately $1.0 million of pre-tax property and equipment charges for the Franchised Dealerships Segment. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

Overall SG&A expenses decreased in dollar amount and increased as a percentage of gross profit, primarily due to lower other expenses and lower gross profit as a result of decreases in new vehicle gross profit per unit. Compensation expense decreased in dollar amount and increased as a percentage of gross profit, primarily due to the closure of stores in the EchoPark Segment. Advertising expense decreased in dollar amount and increased as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions, including higher inventory availability and lower new vehicle gross profit levels. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to the purchase of several properties that were previously leased and the closure of stores in the EchoPark Segment. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit, primarily due to lower information technology and maintenance expenses.

Current wording

Overall SG&A expenses decreased in dollar amount and decreased as a percentage of gross profit, primarily due to a $30.0 million benefit from cyber insurance proceeds recorded in other SG&A expenses. Compensation expense increased in dollar amount and decreased as a percentage of gross profit, based on the variable nature of our sales associate pay plans. Advertising expense increased in dollar amount and was flat as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to the sale of several properties that were previously subleased. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit, primarily due to the benefit of cyber insurance proceeds.

Previous wording

For the Franchised Dealerships Segment, SG&A expenses for the nine months ended September 30, 2024 included approximately $11.0 million of pre-tax charges related to excess compensation as a result of the CDK outage, approximately $5.1 million of pre-tax charges related to storm damage, and approximately $2.2 million of pre-tax charges related to severance and long-term compensation expense. For the Franchised Dealership Segment, SG&A expenses for the nine months ended September 30, 2023, included approximately $20.9 million of pre-tax gain related to acquisitions and dispositions and approximately $1.9 million of pre-tax charges related to storm damage. For the EchoPark Segment, SG&A expenses for the nine months ended September 30, 2024 included approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $2.9 million of pre-tax charges for severance and long-term compensation expense, approximately $2.9 million of pre-tax gain on real estate dispositions, approximately $2.1 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations, and approximately $0.4 million of pre-tax charges related to excess compensation as a result of the CDK outage. For the EchoPark Segment, SG&A expenses for the nine months ended September 30, 2023, included approximately $5.1 million of pre-tax charges for long-term compensation expense, approximately $4.3 million of pre-tax lease exit charges and approximately $0.3 million of pre-tax loss related to acquisitions and dispositions.

Current wording

For the Franchised Dealerships Segment, SG&A expenses for the three months ended March 31, 2025 included approximately $0.9 million of pre-tax charges related to storm damage, approximately $0.3 million of pre-tax charges related to disposition losses, and a $30.0 million pre-tax benefit related to cyber insurance proceeds from the CDK outage. For the EchoPark Segment, SG&A expenses for the three months ended March 31, 2025 included approximately $0.2 million of pre-tax gain on sale of property. For the Powersports Segment, SG&A expenses for the three months ended March 31, 2025 included approximately $0.9 million of pre-tax charges related to disposition losses. For the Franchised Dealerships Segment, SG&A expenses for the three months ended March 31, 2024 included approximately $2.2 million of pre-tax charges for severance and long-term compensation expense. For the EchoPark Segment, SG&A expenses for the three months ended March 31, 2024 also included approximately $2.1 million of pre-tax charges for severance and long-term compensation expense and approximately $2.1 million of pre-tax charges related to closed store accrued expenses in connection with the indefinite suspension of operations at certain EchoPark locations.

Previous wording

Depreciation and amortization expense increased approximately $2.7 million, or 8%, and approximately $5.4 million, or 5%, during the three and nine months ended September 30, 2024, respectively, due primarily to completed construction projects and purchases of fixed assets for use in our franchised dealerships and EchoPark and powersports stores.

Current wording

Depreciation and amortization expense increased approximately $3.4 million, or 9%, during the three months ended March 31, 2025, due primarily to completed construction projects and purchases of fixed assets for use in our franchised dealerships.

Previous wording

We typically maintain a floor plan deposit balance (as shown in the table below under the heading “Liquidity and Capital Resources”) that earns interest income based on the floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense. The below discussion of interest expense, floor plan includes the effect of interest income earned on the floor plan deposit balance, unless otherwise noted. Our interest expense, floor plan fluctuates with changes in our outstanding borrowing and associated interest rates, which are variable based on SOFR or the U.S. prime rate, plus a credit spread.

Current wording

We typically maintain a floor plan deposit balance (as shown in the table below under the heading “Liquidity and Capital Resources”) that earns interest income based on the used floor plan interest rate, effectively reducing net used vehicle floor plan interest expense. The floor plan deposit balance was $365.0 million and $320.0 million as of March 31, 2025 and March 31, 2024, respectively, as well as $340.0 million and $345.0 million as of December 31, 2024 and December 31, 2023, respectively. Our interest expense, floor plan fluctuates with changes in our outstanding borrowings and associated interest rates, which are variable based on one-month Term SOFR or the U.S. prime rate, plus credit spreads specified in the related agreements.

Previous wording

Interest expense, floor plan for new vehicles increased approximately $23.2 million. The average interest rate applied to the new vehicle floor plan increased in the nine months ended September 30, 2024, resulting in $21.2 million of the overall increase. The average new vehicle floor plan notes payable balance increased approximately $49.3 million, which resulted in $2.0 million of the overall increase.

Current wording

Interest expense, floor plan for new vehicles increased $0.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The average interest rate applied to the new vehicle floor plan decreased, offsetting $3.4 million of the net increase. The average new vehicle floor plan notes payable balance increased by $251.8 million, contributing $4.0 million to the net increase.

Previous wording

Interest expense, floor plan for used vehicles decreased approximately $6.6 million, including the effect of interest income earned on the floor plan deposit balance, which contributed to approximately $3.8 million of this decrease. Excluding the effect of interest income earned on the floor plan deposit balance, interest expense, floor plan for used vehicles decreased approximately $2.8 million. Excluding the effect of interest income earned on the floor plan deposit balance, the average interest rate applied to the used vehicle floor plan decreased in the nine months ended September 30, 2024, resulting in $2.9 million of the overall decrease. The average used vehicle floor plan notes payable balance increased approximately $4.3 million, which offset the overall decrease in used vehicle floor plan interest expense by approximately $0.1 million.

Current wording

Interest expense, floor plan for used vehicles decreased $0.9 million. This includes the effect of interest income earned on the floor plan deposit balance, which contributed $0.2 million to the decrease. Excluding that effect, interest expense, floor plan for used vehicles decreased $0.7 million. The average interest rate applied to the used vehicle floor plan decreased, contributing $1.0 million to the net decrease. The average used vehicle floor plan notes payable balance increased $17.6 million, offsetting $0.3 million of the net decrease.

Previous wording

Interest expense, other, net increased approximately $0.8 million, or 3%, during the three months ended September 30, 2024 and increased approximately $1.9 million, or 2%, during the nine months ended September 30, 2024. These increases were primarily related to higher interest on finance lease liabilities as a result of a rising interest rate environment.

Current wording

Interest expense, other, net decreased approximately $1.4 million, or 5%, during the three months ended March 31, 2025. This decrease was primarily related to reduced interest on finance lease liabilities in the current year as a result of a comparatively lower interest rate environment.