Sonic Automotive

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Sonic Automotive
Type Public
Traded as NYSESAH
Industry Automotive
Founder(s) Bruton Smith
Headquarters Charlotte, North Carolina, United States
Key people

Bruton Smith Chairman of the Board, Chief Executive Officer

B. Scott Smith President, Chief Strategic Officer, Director
Website [1]

Sonic Automotive, Inc. (NYSESAH) is a Fortune 500 company based in Charlotte, North Carolina, and is one of the largest automotive retailers in the United States. The company's founder and CEO is Bruton Smith, who is also the founder and CEO of Speedway Motorsports, Inc. (NYSETRK).

Sonic Automotive operates in 15 states with 119 dealerships representing 29 different brands of automobiles. These dealerships provide numerous services, including sales of new and used cars; sales of replacement parts; vehicle maintenance, warranty, paint, and collision repair services; and arrangement of extended warranty contracts, financing, and insurance for the company's customers. Sonic's annual revenue is roughly $8 billion.

According to the National Automobile Dealers Association (NADA), total annual dealership sales in the U.S. reached $512 billion in 2010, making automotive retailing the largest retail trade sector in the nation. Of this $512 billion, NADA estimates that $270.8 billion represented sales of 11.5 million new vehicles by franchised U.S. auto dealers and $169.5 billion represented sales of 18 million used vehicles by these dealers.

[edit] Controversy

Sonic Automotive Inc. has accused Mercedes-Benz USA of seeking to "extort" millions of dollars in unneeded dealership improvements from the public retailer.

Sonic, the nation's third-largest dealership group, has an agreement to buy a Mercedes store in Charlotte, N.C., Sonic's hometown. But Sonic President Scott Smith says Mercedes-Benz won't approve the purchase unless Sonic meets the automaker's demands for upgrades at four of the nine Mercedes dealerships it already owns.

The retailer is suing Mercedes-Benz in a North Carolina court, asserting that the automaker cannot legally tie the acquisition to renovations at other dealerships. Smith says Sonic is upgrading its stores adequately for far less money than Mercedes-Benz's "Autohaus" plan demands. At one dealership, Smith says, Mercedes-Benz wants Sonic nearly to double the size of the showroom to 16,000 square feet (1,500 m2).

"They are trying to extort all they can," Smith told Automotive News. "It's so unfair. Mercedes-Benz is holding the transaction hostage."

Mercedes-Benz declined to comment on the dispute.

Automakers such as Mercedes-Benz are using their power to block franchise transfers to promote dealership improvement programs, say brokers and lawyers who represent dealers. In some cases, dealers complain, the exercise of that influence has caused lucrative agreements to sell their stores to collapse.

Sonic's complaints are not limited to Mercedes-Benz. Smith says Sonic is having trouble selling four Toyota dealerships because of the automaker's building requirements under its "Image USA II" architectural plan. Smith says dealers cannot "invest where it doesn't make sense."

Toyota declined to comment.

[edit] External links

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