RFJ Auto purchase has some pre-owned perks for Sonic, too
Sonic Automotive’s $700 million deal to purchase RFJ Auto Partners, announced in September, is the Charlotte, N.C.-based retailer’s largest acquisition ever and among the retail auto industry’s most significant transactions to date.
But beyond the additional revenues and expanded geographic footprint from adding RFJ Auto — which are outlined in this previously reported story — the transaction has some perks for Sonic’s growing used-car business, chief financial officer Heath Byrd said in a late October interview.
One way in which that opportunity comes to fruition is through Northwest Motorsport, an 11-location collection of dealerships specializing in customized used vehicles (mostly trucks) and one of RFJ Auto’s most profitable business lines, Byrd said.
The Northwest Motorsport can serve as a nice complement to Sonic’s existing line of pre-owned car stores, EchoPark Automotive.
“It gives us opportunity to look at moving into different segments of used vehicles. So, it can fit into the EchoPark model as a subsection of trucks-only,” he said. “The opportunity to grow that is huge. It is extremely successful. We'll be looking at expanding that same kind of business model with trucks only.”
Northwest Motorsport’s stores are located throughout Washington, Idaho and Montana, states in which EchoPark does not yet have a presence.
As a whole, RFJ Auto has 33 stores throughout seven states and includes 16 brands in its portfolio, and the deal was said to bump Sonic’s franchise dealer store count above 100.
The purchase of RFJ Auto also adds five new brands to Sonic’s lineup: Chrysler, Jeep, Dodge, RAM and Mazda.
Those expansions present some new opportunities on the used-car side, as well
“Obviously, each of the franchises have their own used-car divisions, and to be honest, that is what we're really good at. When Jeff Dyke came to us back in 2006 or '07, he was over the used-car sector of the business and you can see we went from selling probably 30 to 40 cars a month per store to now we're well over 100 per month per store,” Byrd said, referring to the now-president of Sonic and EchoPark.
“And it was his playbooks and things that he learned from AutoNation that he brought (to Sonic), because he ran the megastores for Wayne Huizenga and AutoNation when they first opened up,” he said.
“And so, we absolutely have confidence that we can not only bring in those used divisions from those new dealerships but we can put our playbooks in and enhance the selling and increase that organically.”
And with the five new brands coming into the fold, Byrd said, “what that does, it gives us again, access to the manufacturer lane of those brands that can then feed EchoPark, as well.
“So, it will give us more higher-up-the-funnel access to inventory,” Byrd said. “There's a lot of good, really good used business that we bought with RFJ, and there's a lot of things that will add to what we have right now.”