SONIC AUTOMOTIVE INC

Previous wording

Unless otherwise noted, all discussion of increases or decreases are for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. 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 same market 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 same store 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 discussions of increases or decreases are for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. 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 same market 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 same store 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 March 31, 2026: (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, 2026, we operated 107 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 127 new vehicle franchises (representing 24 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 41 franchises at 14 locations (11 full-service dealerships and three authorized retail outlets) in three 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 June 30, 2026: (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 June 30, 2026, we operated 107 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 20 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 127 new vehicle franchises (representing 24 different brands of cars and light trucks) and 15 collision repair centers in 17 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 46 franchises at 20 locations (16 full-service dealerships and four authorized retail outlets) in five 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”) decreased 7% for the three months ended March 31, 2026, to approximately 15.5 million vehicles, compared to approximately 16.6 million vehicles for the three months ended March 31, 2025, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.5 million vehicles (a decrease of 5% compared to 2025) and 16.0 million vehicles (a decrease of 2% compared to 2025). The effects of tariffs and trade policies, 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, geopolitical disruptions, energy prices, natural disasters or other unforeseen circumstances could cause the actual 2026 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 decreased 9% to approximately 12.8 million vehicles for the three months ended March 31, 2026, from approximately 14.0 million vehicles for the three months ended March 31, 2025.

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 2% and decreased 2% for the three and six months ended June 30, 2026, respectively, to approximately 16.3 million and 15.9 million vehicles, respectively, compared to approximately 16.0 million and 16.3 million vehicles for the three and six months ended June 30, 2025, respectively, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.5 million vehicles (a decrease of 5% compared to 2025) and 16.0 million vehicles (a decrease of 2% compared to 2025). The effects of tariffs and trade policies, 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 in response to economic conditions, geopolitical disruptions, energy prices, natural disasters or other unforeseen circumstances could cause the actual 2026 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 1% and decreased 4% to approximately 13.6 million and 13.2 million vehicles for the three and six months ended June 30, 2026, respectively, from approximately 13.4 million and 13.7 million vehicles for the three and six months ended June 30, 2025, respectively.

Previous wording

Same store retail new vehicle revenue decreased 8% during the three months ended March 31, 2026, driven primarily by a 10% decrease in retail new vehicle unit sales volume, partially offset by a 3% increase in average selling price per new retail unit for the three months ended March 31, 2026. Retail new vehicle gross profit decreased 14% during the three months ended March 31, 2026, due primarily to the effects of tariffs on inventory invoice cost and lower consumer demand as a result of pre-tariff demand in the first quarter of 2025, which combined to drive lower retail new vehicle gross profit per unit for the three months ended March 31, 2026. Retail new vehicle gross profit per unit decreased $133 per unit, or 4%, to $3,002 per unit during the three months ended March 31, 2026. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 58 days as of March 31, 2026, compared to 51 days as of March 31, 2025.

Current wording

Same store retail new vehicle revenue increased 1% during the three months ended June 30, 2026, driven by a 1% increase in average selling price per new retail unit. Same store retail new vehicle revenue decreased 4% during the six months ended June 30, 2026, primarily driven by a 5% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased 17% and 15% during the three and six months ended June 30, 2026, respectively, due primarily to increased price competition as a result of increasing levels of available inventory and higher inventory invoice costs, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $559, or 16%, to $2,872 per unit during the three months ended June 30, 2026. Retail new vehicle gross profit per unit decreased $349 per unit, or 11%, to $2,934 per unit during the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 56 days as of June 30, 2026, compared to 54 days as of June 30, 2025.

Previous wording

Same store retail used vehicle revenue increased 2% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales volume. Retail used vehicle gross profit decreased 1% during the three months ended March 31, 2026, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $59 per unit, or 4%, to $1,533 per unit during the three months ended March 31, 2026. Same store wholesale vehicle gross loss worsened by approximately $1.0 million, to a gross loss of approximately $1.7 million during the three months ended March 31, 2026, due primarily to a $239 per unit, or 168%, worsening of 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 32 days as of March 31, 2026, compared to 31 days as of March 31, 2025.

Current wording

Same store retail used vehicle revenue increased 9% and 5% during the three and six months ended June 30, 2026, respectively, driven primarily by a 7% and 5% increase in retail used vehicle unit sales volume, respectively. Retail used vehicle gross profit decreased 8% and 4% during the three and six months ended June 30, 2026, respectively, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $214 per unit, or 13%, to $1,401 per unit during the three months ended June 30, 2026. Retail used vehicle gross profit per unit decreased $136 per unit, or 8%, to $1,467 per unit during the six months ended June 30, 2026. Same store wholesale vehicle gross loss worsened by approximately $2.0 million to a gross loss of approximately $2.8 million during the three months ended June 30, 2026, due primarily to a $456 per unit, or 404%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. Same store wholesale vehicle gross loss worsened by approximately $3.0 million, to a gross loss of approximately $4.5 million during the six months ended June 30, 2026, due primarily to a $352 per unit, or 277%, worsening of 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 35 days as of both June 30, 2026 and June 30, 2025.

Previous wording

Same store Fixed Operations revenue increased 5% during the three months ended March 31, 2026, 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. Same store Fixed Operations gross profit increased 5% during the three months ended March 31, 2026, driven primarily by higher customer pay revenue contribution and higher internal, sublet and other gross margin contribution. Same store Fixed Operations gross margin increased 40 basis points, to 51.1%, during the three months ended March 31, 2026.

Current wording

Same store Fixed Operations revenue increased 3% and 4% during the three and six months ended June 30, 2026, respectively, 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. Same store Fixed Operations gross profit increased 2% and 4% during the three and six months ended June 30, 2026, respectively, driven primarily by higher customer pay revenue contribution and higher warranty and internal, sublet and other gross margin contribution. Same store Fixed Operations gross margin decreased 30 basis points, to 51.0% during the three months ended June 30, 2026, and increased 10 basis points, to 51.1%, during the six months ended June 30, 2026.

Previous wording

Same market total revenues increased 4% during the three months ended March 31, 2026, attributable to a 2% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles) in the three months ended March 31, 2026, and a 1% increase in average selling price per used retail unit in the three months ended March 31, 2026. Same market total gross profit increased 6% during the three months ended March 31, 2026, primarily driven by a 2% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles), and a 3% increase in combined retail used vehicle and F&I gross profit per unit.

Current wording

Same market total revenues increased 15% and 9% during the three and six months ended June 30, 2026, respectively, attributable to a 16% and 9% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles) in the three and six months ended June 30, 2026, respectively. Same market total gross profit increased 3% and 5% during the three and six months ended June 30, 2026, respectively, primarily driven by the increase in total vehicle unit sales volume in both the three and six months ended June 30, 2026, partially offset by a 12% and 5% decrease in combined used and F&I gross profit per retail unit during the three and six months ended June 30, 2026, respectively.

Previous wording

Same market retail used vehicle revenue increased 4% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales volume, coupled with a 1% increase in average selling price per used retail unit in the three months ended March 31, 2026. F&I revenue increased 4% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales and a 1% increase in F&I gross profit per unit in the three months ended March 31, 2026. Same market combined retail used vehicle and F&I gross profit per unit increased $86 per unit, or 2.5%, to $3,518 for the three months ended March 31, 2026 due primarily to increases in retail used vehicle unit sales volume during the three months ended March 31, 2026.

Current wording

Same market retail used vehicle revenue increased 17% and 10% during the three and six months ended June 30, 2026, respectively, driven primarily by a 17% and 10% increase in retail used vehicle unit sales volume in the three and six months ended June 30, 2026, respectively. F&I revenue increased 4% during both the three and six months ended June 30, 2026, driven primarily by the increase in retail used vehicle unit sales during the three and six months ended June 30, 2026, partially offset by an 11% and 5% decrease in F&I gross profit per unit in the three and six months ended June 30, 2026, respectively. Same market combined retail used vehicle and F&I gross profit per unit decreased $466 per unit, or 12%, to $3,303 for the three months ended June 30, 2026, due primarily to decreases in both used vehicle gross profit per unit and F&I gross profit per unit. Same market combined retail used vehicle and F&I gross profit per unit decreased $181 per unit, or 5%, to $3,410 for the six months ended June 30, 2026, due primarily to decreases in both used vehicle gross profit per unit and F&I gross profit per unit.

Previous wording

Same market wholesale vehicle gross profit improved by approximately $0.4 million during the three months ended March 31, 2026, primarily due to a 227% increase in wholesale vehicle gross profit per unit during the three months ended March 31, 2026. 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 40 and 35 days as of March 31, 2026 and 2025, respectively.

Current wording

Same market wholesale vehicle gross profit improved by approximately $0.5 million and $1.0 million during the three and six months ended June 30, 2026, respectively, primarily due to a 75% and 109% increase in wholesale vehicle gross profit per unit during the three and six months ended June 30, 2026, 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 47 and 41 days as of June 30, 2026 and 2025, respectively. The higher days’ supply as of June 30, 2026, reflected a deliberate increase in inventory levels to support higher retail unit sales. This differed from a typical quarter, during which we generally maintain inventory within our targeted 30- to 40-day range.

Previous wording

Same store retail new vehicle revenue increased 19% during the three months ended March 31, 2026, driven by a 16% increase in retail new vehicle unit sales volume, coupled with a 2% increase in retail new vehicle average selling price during the three months ended March 31, 2026. Retail new vehicle gross profit increased 23% during the three months ended March 31, 2026, as a result of the increase in retail new vehicle unit sales volume and a 7% increase in same store retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit increased $182 per unit, or 7%, to $2,891 per unit for the three months ended March 31, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 162 and 166 days as of March 31, 2026 and 2025, respectively, varying based on manufacturer production levels and consumer demand.

Current wording

Same store retail new vehicle revenue increased 6% and 11% during the three and six months ended June 30, 2026, respectively, driven by a 3% and 8% increase in retail new vehicle unit sales volume, respectively, coupled with a 3% increase in retail new vehicle average selling price during both the three and six months ended June 30, 2026. Retail new vehicle gross profit increased 8% and 12% during the three and six months ended June 30, 2026, respectively, as a result of the increase in retail new vehicle unit sales volume and a 4% and 5% increase in same store retail new vehicle gross profit per unit, respectively. Retail new vehicle gross profit per unit increased $103 per unit, or 4%, to $2,925 per unit for the three months ended June 30, 2026. Retail new vehicle gross profit per unit increased $134 per unit, or 5%, to $2,910 per unit for the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 160 and 135 days as of June 30, 2026 and 2025, respectively, varying based on manufacturer production levels and consumer demand.

Previous wording

Same store used vehicle revenue increased 77%during thethree months ended March 31, 2026, primarily driven by a 56% increase in retail used vehicle unit sales volume and a 14% increase in average used vehicle selling price duringthe three months ended March 31, 2026. Retail used vehicle gross profit increased 60% during the three months ended March 31, 2026, driven by the increase in used vehicle unit sales volume and an 8% increase in retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit increased $141 per unit, or 8%, to $1,938 per unit for the three months ended March 31, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 96 and 83 days as of March 31, 2026 and 2025, respectively.

Current wording

Same store used vehicle revenue increased 40% and 54%during thethree and six months ended June 30, 2026, respectively, driven primarily by a 19% and 34% increase in retail used vehicle unit sales volume, respectively, and a 17% and 15% increase in average used vehicle selling price duringthe three and six months ended June 30, 2026, respectively. Retail used vehicle gross profit increased 25% and 42% during the three and six months ended June 30, 2026, respectively, driven by the increase in used vehicle unit sales volume and a 4% and 5% increase in retail used vehicle gross profit per unit, respectively. Retail used vehicle gross profit per unit increased $78 per unit, or 4%, to $2,092 per unit for the three months ended June 30, 2026. Retail used vehicle gross profit per unit increased $92 per unit, or 5%, to $2,021 per unit for the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 103 and 102 days as of June 30, 2026 and 2025, respectively.

Previous wording

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three months ended March 31, 2026 and 2025:

Current wording

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three and six months ended June 30, 2026 and 2025:

Previous wording

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

Current wording

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

Previous wording

Fixed Operations revenue increased approximately $21.3 million, or 5%, and Fixed Operations gross profit increased approximately $12.6 million, or 5%. Customer pay revenue increased approximately $12.3 million, or 6%, and customer pay gross profit increased approximately $6.0 million, or 5%. Warranty revenue increased approximately $4.9 million, or 6%, and warranty gross profit increased approximately $3.6 million, or 7%. Wholesale parts revenue increased approximately $1.7 million, or 4%, and wholesale parts gross profit remained flat. Internal, sublet and other revenue increased approximately $2.4 million, or 2.0%, and internal, sublet and other gross profit increased approximately $3.0 million, or 5%. Our Fixed Operations business has benefited from a higher level of vehicle recalls and warranty repairs, as well as additional technician headcount that has driven an increase in customer pay service capacity.

Current wording

Fixed Operations revenue increased approximately $34.5 million, or 4%, and Fixed Operations gross profit increased approximately $18.1 million, or 4%. Customer pay revenue increased approximately $19.5 million, or 4%, and customer pay gross profit increased approximately $7.8 million, or 3%. Warranty revenue increased approximately $6.9 million, or 4%, and warranty gross profit increased approximately $5.3 million, or 5%. Wholesale parts revenue increased approximately $3.9 million, or 4%, and wholesale parts gross profit increased approximately $0.1 million, or 1%. Internal, sublet and other revenue increased approximately $4.2 million, or 2%, and internal, sublet and other gross profit increased approximately $4.9 million, or 4%. Our Fixed Operations business has benefited from a higher level of vehicle recalls and warranty repairs, as well as additional technician headcount that has driven an increase in customer pay service capacity.

Previous wording

Finance contract revenue for combined retail new and used vehicles increased 1%, due primarily to a 280 basis point increase in penetration rate and a 2% increase in gross profit per finance contract. Service contract revenue for combined retail new and used vehicles increased 2%, due primarily to a 160 basis point increase in penetration rate and a 2% increase in gross profit per service contract, partially offset by a 1% decrease in service contract volume. Other aftermarket contract revenue for combined retail new and used vehicles decreased 6%, primarily to a 7% decrease in aftermarket contract volume and a 540 basis point decrease in penetration rate, partially offset by a 2% increase in gross profit per other aftermarket contract.

Current wording

Finance contract revenue for combined retail new and used vehicles increased 5%, due primarily to a 5% increase in finance contract volume and a 130 basis point increase in finance contract penetration rate. Service contract revenue for combined retail new and used vehicles increased 8%, due primarily to a 7% increase in gross profit per service contract and a 1% increase in service contract volume, partially offset by an 80 basis point decrease in service contract penetration rate. Aftermarket product revenue for combined retail new and used vehicles decreased 10%, due primarily to a 2,730 basis point decrease in aftermarket product penetration rate, partially offset by a 6% increase in gross profit per aftermarket product contract.

Previous wording

Retail used vehicle revenue increased approximately $18.1 million, or 4%, due primarily to a 3% increase in retail used vehicle unit sales volume, paired with a 1% increase in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased approximately $3.5 million, or 5%, due primarily to a 3% increase in retail used vehicle unit sales volume, along with a 3% 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, changes to our F&I product cost structure, 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.

Current wording

Retail used vehicle revenue increased $89.6 million, or 10%, due primarily to a 10% increase in retail used vehicle unit sales volume, along with a $96 increase in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased $5.1 million, or 4%, due primarily to the increase in retail used vehicle unit sales volume, offset partially by a 5% decrease in combined retail used vehicle and F&I gross profit per unit. The decreasein combined retail used vehicle and F&I gross profit per unit was due primarily to lower F&I penetration rates for service contracts and aftermarket product contracts and lower retail used vehicle gross profit per unit, offset partially by changes to our F&I product cost structure, improvements 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

Wholesale vehicle revenue increased approximately $0.1 million due primarily to a 1% increase in wholesale vehicle revenue per unit, offset partially by a 1% decrease in wholesale vehicle unit sales volume. 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

Wholesale vehicle revenue increased approximately $0.4 million, or 1%, due primarily to a 6% increase in wholesale vehicle unit sales volume, offset partially by a 4% 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

Retail used vehicle revenue increased 77%, due primarily to a 56% increase in retail used vehicle unit sales volume, and a 14% increase in retail used vehicle average selling prices. Retail used vehicle gross profit increased 60% as a result of higher retail used vehicle unit sales volume and higher retail used gross profit per unit. Retail used vehicle gross profit per unit increased $141 per unit, or 8%, to $1,938 per unit.

Current wording

Retail used vehicle revenue increased 40%, due primarily to a 19% increase in retail used vehicle unit sales volume, and a 17% increase in retail used vehicle average selling prices. Retail used vehicle gross profit increased 25% as a result of higher retail used vehicle unit sales volume and higher retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit increased $78 per unit, or 4%, to $2,092 per unit.

Previous wording

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for Fixed Operations:

Current wording

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for Fixed Operations:

Previous wording

Fixed Operations revenue increased approximately $0.8 million, or 12%, and Fixed Operations gross profit increased approximately $0.3 million, or 9%. Customer pay revenue increased approximately $0.2 million, or 14%, and customer pay gross profit increased approximately $0.2 million, or 40%. Warranty revenue remained flat, and warranty gross profit remained flat. Wholesale parts revenue increased approximately $0.1 million, or 100%, and wholesale parts gross profit remained flat. Internal, sublet and other revenue increased approximately $0.5 million, or 13%, and internal, sublet and other gross profit increased approximately $0.1 million, or 5%.

Current wording

Fixed Operations revenue increased approximately $0.5 million, or 5%, and Fixed Operations gross profit increased approximately $0.6 million, or 12%. Customer pay revenue increased approximately $0.1 million, or 5%, and customer pay gross profit increased approximately $0.2 million, or 25%. Warranty revenue decreased approximately $0.1 million, or 7%, and warranty gross profit decreased approximately $0.1 million, or 10%. Wholesale parts revenue increased approximately $0.1 million, or 100%, and wholesale parts gross profit increased approximately $0.1 million, or 100%. Internal, sublet and other revenue increased approximately $0.4 million, or 6%, and internal, sublet and other gross profit increased approximately $0.4 million, or 13%.

Previous wording

F&I revenue increased $0.4 million, or 29%, due primarily to a 30% increase in retail new and used vehicle unit sales volume, partially offset by a 5% decrease in F&I gross profit per retail unit. F&I gross profit per retail unit decreased $45 per unit to $907 per unit, primarily due to higher unit sales volume for finance contracts, service contracts and aftermarket products, higher penetration rates and gross profit per contract for finance contracts and aftermarket products, and changes to our F&I product cost structure.

Current wording

F&I revenue increased $0.4 million, or 20%, due primarily to a 12% increase in F&I gross profit per retail unit and a 9% increase in retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $105 per unit to $995 per unit, primarily due to higher penetration rates and unit sales volume for finance contracts, service contracts, and aftermarket products and changes to our F&I product cost structure.

Previous wording

Finance contract revenue increased 61%, due primarily to a 55% increase in combined new and used vehicle finance contract volume, a 880 basis point increase in penetration rate and a 3% increase in gross profit per finance contract. Service contract revenue decreased 3%, due primarily to a 23% decrease in gross profit per service contract and a 110 basis point decrease in penetration rate, partially offset by a 25% increase in retail new and used vehicle service contract unit sales volume. Other aftermarket contract revenue increased 51%, due primarily to a 38% increase in other aftermarket contract volume, a 10% increase in gross profit per other aftermarket contract, and a 260 basis point increase in penetration rate.

Current wording

Finance contract revenue increased 55%, due primarily to a 1,930 basis point increase in finance contract penetration rate and a 70% increase in combined new and used vehicle finance contract volume, offset partially by a 9% decrease in gross profit per finance contract. Service contract revenue increased 5%, due primarily to a 580 basis point increase in service contract penetration rate and a 45% increase in retail new and used vehicle service contract unit sales volume, offset partially by a 27% decrease in gross profit per service contract. Aftermarket product revenue increased 31%, due primarily to a 1,860 basis point increase in the aftermarket product penetration rate and a 76% increase in aftermarket product contract volume, offset partially by a 26% decrease in gross profit per aftermarket product contract.

Previous wording

(2)For the three months ended March 31, 2026, amount includes approximately $5.1 million of pre-tax gain related to dispositions. 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.

Current wording

(2)For the six months ended June 30, 2026, amount includes approximately $5.1 million of pre-tax gain related to dispositions. For the six months ended June 30, 2025, amount includes $40.0 million of pre-tax benefit from 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 $5.0 million of pre-tax charges related to storm damage, and approximately $2.7 million of pre-tax charges related to dispositions. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

(4)For the three months ended March 31, 2025, amount includes approximately $0.9 million of pre-tax charges related to disposition losses. Due to rounding, segment level financial data may not sum to consolidated results.

Current wording

(4)For the six months ended June 30, 2025, amount includes approximately $0.9 million of pre-tax charges related to dispositions. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

(5)For the three months ended March 31, 2026, amount includes approximately $0.4 million of non-cash pre-tax impairment charges related to construction-in-progress projects for the Franchised Dealerships Segment. 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.

Current wording

(5)For the six months ended June 30, 2026, amount includes approximately $0.4 million of non-cash pre-tax impairment charges related to construction-in-progress projects for the Franchised Dealerships Segment. For the six months ended June 30, 2025, amount includes approximately $0.2 million of non-cash pre-tax property and equipment impairment charges for real estate held for sale in the EchoPark Segment and approximately $7.2 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment, $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges for the Powersports Segment, and approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment. Due to rounding, segment level financial data may not sum to consolidated results.

Previous wording

Consolidated SG&A expenses are comprised of four major groups: compensation expense, advertising expense, rent expense and other expense. Compensation expense primarily relates to store personnel who are paid a commission or a salary plus commission and support personnel who are generally paid a fixed salary. Commissions paid to store personnel typically vary depending on gross profits realized and sales volume objectives. Due to the salary component for certain store and corporate personnel, gross profits and compensation expense do not change in direct proportion to one another. Advertising expense and other expense vary based on the level of actual or anticipated business activity and the number of dealerships in operation. Rent expense typically varies with the number of store locations owned, investments made for facility improvements and interest rates. Other expense includes various fixed and variable expenses, including gain on the disposal of franchises, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses, which may not change in proportion to gross profit levels. Typically, SG&A expenses as a percentage of gross profit are highest in the first quarter of the year, due to the seasonal nature of our business and the effects of certain payroll taxes and fringe benefits that occur early in the year.

Current wording

SG&A expenses are comprised of four major groups: compensation expense, advertising expense, rent expense and other expense. Compensation expense primarily relates to store personnel who are paid a commission or a salary plus commission and support personnel who are generally paid a fixed salary. Commissions paid to store personnel typically vary depending on gross profits realized and sales volume objectives. Due to the salary component for certain store and corporate personnel, gross profits and compensation expense do not change in direct proportion to one another. Advertising expense and other expense vary based on the level of actual or anticipated business activity and the number of dealerships in operation. Rent expense typically varies with the number of store locations owned, investments made for facility improvements and interest rates. Other expense includes various fixed and variable expenses, including gain on the disposal of franchises, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses, which may not change in proportion to gross profit levels. Typically, SG&A expenses as a percentage of gross profit are highest in the first quarter of the year, due to the seasonal nature of our business and the effects of certain payroll taxes and fringe benefits that occur early in the year.

Previous wording

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $30.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year period. Compensation expense increased in both dollar amount and as a percentage of gross profit, based on the variable nature of our sales associate pay plans. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to the termination of leases. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to the benefit of cyber insurance proceeds received in the prior year.

Current wording

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $40.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year period. Compensation expense increased in both dollar amount and as a percentage of gross profit, based on the variable nature of our sales associate pay plans. Advertising expense increased in both dollar amount and 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 increase in leased dealerships as a result of acquisitions. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to the $40 million benefit of cyber insurance proceeds received in the prior year.

Previous wording

The Franchised Dealerships Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $30.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year. Compensation expense increased in both dollar amount and as a percentage of gross profit due to acquisitions in the Franchised Dealerships Segment, an increase in bonus expenses and absentee wages, and an increase in fixed operations sales compensation related to the increase in fixed operations sales. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in dollar amount and as a percentage of gross profit, primarily due to the increase in leased dealerships as a result of acquisitions during 2025. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to the benefit of cyber insurance proceeds received in the prior year.

Current wording

The Franchised Dealerships Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $40.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year. Compensation expense increased in both dollar amount and as a percentage of gross profit due to acquisitions in the Franchised Dealerships Segment, an increase in bonus expenses and absentee wages, and an increase in fixed operations sales compensation related to the increase in fixed operations sales. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in dollar amount and as a percentage of gross profit, primarily due to the increase in leased dealerships as a result of acquisitions. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to the benefit of cyber insurance proceeds received in the prior year.

Previous wording

For the Franchised Dealerships Segment, SG&A expenses for 2026 include approximately $5.1 million of pre-tax gain related to dispositions. For the Franchised Dealerships Segment, SG&A expenses for 2025 included approximately $30.0 million of pre-tax benefit from cyber insurance proceeds related to the CDK outage, 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.

Current wording

For the Franchised Dealerships Segment, SG&A expenses for the six months ended June 30, 2026 includes approximately $1.2 million of pre-tax charges related to storm damage, approximately $5.1 million of pre-tax benefit related to dispositions. For the six months ended June 30, 2025, amount includes $40.0 million of pre-tax benefit from 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 $5.0 million of pre-tax charges related to storm damage, and approximately $2.7 million of pre-tax charges related to dispositions.

Previous wording

The following table provides a reconciliation of EchoPark Segment reported basis, same market basis, and closed store basis for retail used vehicles:

Current wording

EchoPark Segment Reported SG&A Expenses

Previous wording

(3)For the three months ended March 31, 2026, amount includes approximately $3.6 million of pre-tax gain related to the termination of leases. For the three months ended March 31, 2025, amount includes approximately $0.2 million of pre-tax gain on sale of EchoPark property.

Current wording

For the EchoPark Segment, SG&A expenses for the six months ended June 30, 2026, amount includes approximately $3.6 million of pre-tax gain related to lease terminations. For the six months ended June 30, 2025, amount includes approximately $1.0 million of pre-tax gain on sale of real estate.

Previous wording

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

Current wording

Powersports Segment Reported SG&A Expenses

Previous wording

The EchoPark Segment’s total SG&A expenses decreased in both dollar amount and as a percentage of gross profit, primarily due to lower rent expenses. Compensation expense increased in dollar amount due primarily to an increase in bonus expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in F&I. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to a gain on lease terminations. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit as a result of higher overall gross profit levels and a decrease in outside contractor expenses.

Current wording

The Powersports Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher levels of gross profit that better leverage fixed expenses. Compensation expense increased in dollar amount due primarily to an increase in overall retail activity and an increase in bonus expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in Fixed Operations and F&I. Advertising expense increased in both dollar amount and 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 a decrease in rental income. Other SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher overall gross profit.

Previous wording

The Powersports Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher levels of gross profit that better leverage fixed expenses. Compensation expense increased in dollar amount due primarily an increase in overall retail activity and an increase in bonus expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in Fixed Operations and F&I. Advertising expense increased in both dollar amount and 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 a decrease in rental income. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit, primarily due to losses related to dispositions during the first quarter of 2025.

Current wording

The Powersports Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher levels of gross profit that better leverage fixed expenses. Compensation expense increased in dollar amount due primarily to an increase in overall retail activity and an increase in bonus expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in Fixed Operations and F&I. Advertising expense increased in both dollar amount and 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 a decrease in rental income. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit, primarily due to losses related to dispositions during the first quarter of 2025.

Previous wording

Impairment charges were $0.4 million for the three months ended March 31, 2026, primarily related to the write-off of construction-in-progress assets within our Franchised Dealerships Segment. Impairment charges were approximately $1.4 million for the three months ended March 31, 2025, primarily related to franchise assets and lease right-of-use assets as a result of the termination of a franchise in the Powersports Segment and the sale of real estate in the EchoPark Segment.

Current wording

There were no impairment charges for the three months ended June 30, 2026. Impairment charges were approximately $0.4 million for the six months ended June 30, 2026. These charges primarily related to the write-off of construction-in-progress assets within our Franchised Dealerships Segment. Impairment charges were approximately $172.4 million and $173.8 million for the three and six months ended June 30, 2025, respectively. These charges primarily reflect the results of our annual franchise asset impairment test as of April 30, 2025, which required an impairment charge of $172.4 million.

Previous wording

Depreciation and amortization expense decreased approximately $1.0 million, or 3%, during the three months ended March 31, 2026, due primarily to changes in estimates related to the useful lives of certain buildings and improvements, resulting in lower depreciation expense.

Current wording

Depreciation and amortization expense decreased approximately $0.5 million, or 1%, and $1.8 million, or 2.2%, during the three and six months ended June 30, 2026, respectively, due primarily to changes in estimates related to the useful lives of certain buildings and improvements, resulting in lower depreciation expense.

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 used floor plan interest rate, effectively reducing net used vehicle floor plan interest expense. The floor plan deposit balance was $375.0 million and $365.0 million as of March 31, 2026 and March 31, 2025, respectively, and was $300.0 million and $340.0 million as of December 31, 2025 and December 31, 2024, 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 applicable agreements.

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 $275.0 million and $100.0 million as of June 30, 2026 and June 30, 2025, respectively, and was $300.0 million and $340.0 million as of December 31, 2025 and December 31, 2024, 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 applicable agreements.

Previous wording

Interest expense, floor plan for used vehicles increased $0.5 million, including the effect of interest income earned on the floor plan deposit balance, driving $1.0 million of the increase. Excluding the effect of the floor plan deposit balance, interest expense, floor plan for used vehicles decreased $0.5 million. The average interest rate applied to the used vehicle floor plan decreased in the three months ended March 31, 2026, driving $1.0 million of that decrease. The average used vehicle floor plan notes payable balance increased $28.0 million, offsetting $0.5 million of that decrease.

Current wording

Interest expense, floor plan for used vehicles increased $1.9 million, including the effect of interest income earned on the floor plan deposit balance, driving $1.5 million of the increase. Excluding the effect of the floor plan deposit balance, interest expense, floor plan for used vehicles increased $0.4 million. The average interest rate applied to the used vehicle floor plan decreased in the three months ended June 30, 2026, offsetting $1.2 million of that increase. The average used vehicle floor plan notes payable balance increased $96.3 million, driving $1.6 million of that increase.

Previous wording

Interest expense, floor plan for new vehicles decreased $1.1 million. The average interest rate applied to the new vehicle floor plan decreased in the three months ended March 31, 2026, driving $2.2 million of the overall decrease. The average new vehicle floor plan notes payable balance increased $77.4 million, offsetting $1.0 million of the overall decrease.

Current wording

Interest expense, floor plan for new vehicles decreased $0.5 million. The average interest rate applied to the new vehicle floor plan decreased in the six months ended June 30, 2026, driving $4.6 million of the overall decrease. The average new vehicle floor plan notes payable balance increased $153.3 million, offsetting $4.1 million of the overall decrease.

Previous wording

The overall effective income tax rate was 28.5% and 27.5% for the three months ended March 31, 2026 and 2025, respectively. Sonic’s effective income tax rate generally varies from year to year based on the level of taxable income, the distribution of taxable income between states in which the Company operates and other tax adjustments.

Current wording

The overall effective income tax rate was 28.5% for both the three and six months ended June 30, 2026, compared to 34.0% and 11.6% for the three and six months ended June 30, 2025, respectively. Sonic’s effective income tax rate generally varies from year to year based on the level of taxable income, the distribution of taxable income between states in which the Company operates and other tax adjustments. We generally expect our overall effective tax rate to range from 27% to 30%. The prior year effective income tax rates, which are outside this range, are impacted by the effect of the $172.4 million impairment charge recorded in the three and six month periods ended June 30, 2025.