CORRECTION: An earlier version of this story misstated the new brands Sonic Automotive adds, with the proposed acquisition of RFJ Auto Partners. They are Chrysler, Dodge, Jeep, Ram and Mazda. The article also misstated some of Sonic’s first-half results. The following is a corrected version.
Sonic Automotive’s growth takes a giant step as the Charlotte, NC-based megadealer chain announces a $700 million deal to acquire RFJ Auto Partners, a privately owned dealer group based in Plano, TX, with 33 rooftops in seven states in the Pacific Northwest, Midwest and Southwest, representing $3.2 billion in annual revenues.
“This takes us into half a dozen new states, so we’re really excited about that,” Sonic CEO David Smith says in a phone interview. “It’s further diversification, and growth in our footprint.” The deal, announced Sept. 22, also adds to Sonic’s existing presence in Texas, he says.
Key members of RFJ’s executive management, including RFJ CEO Rick Ford, are expected to remain, Smith says. Several managers, including Ford, previously worked at Sonic, he adds. Ford was a former regional vice president at Sonic for about four years, from 2007 to 2010, with responsibility back then for Sonic dealerships in Texas, Colorado and Nevada.
The acquisition is expected to close in December, Sonic says. The deal adds dealerships for five new brands to Sonic’s lineup: Chrysler, Dodge, Jeep, Ram and Mazda.
At the end of the second quarter, Sonic had 84 franchised dealerships concentrated in the Southeast, plus locations in Maryland, Texas, Colorado, California and Nevada. Year-to-date through the first half, revenues for Sonic’s franchised dealership segment were $5 billion, up 33.5% vs. a year ago. Sonic says the improvement reflects a recovery in demand from the pandemic-related lows a year ago.
Sonic also has opened about 30 EchoPark used-car locations. In the first half, EchoPark added $1.1 billion in revenues, up 70.4% year-on-year. However, in July, Sonic put the EchoPark channel on review for “strategic alternatives.” Analysts have speculated for years whether Sonic would spin off EchoPark in an initial public offering. Sonic executives aren’t saying.
In the 2021 WardsAuto Megadealer 100, Sonic ranks No.6, based on total revenues in 2020 of about $9.8 billion. An additional $3.2 billion from RFJ Auto Partners would have made it No.4, immediately behind Lithia Motors. RJF was No.14, with 2020 total revenues of about $2.9 billion.
