Last week, Sonic Automotive’s Chief Executive Officer, David Smith, told the Charlotte Business Journal that his company had a great first quarter but is undoubtedly being impacted by the global semiconductor chip shortage.
“It’s hard to see how you could look at the quarter…and see it as anything but a fantastic performance by our team,” Smith said regarding the $3.6 billion in sales Sonic Automotive recorded for Q1.
When asked about his expectations for how long the semiconductor chip shortage will last, Smith noted that his “educated guess” would be “somewhere in the first six months, or to the latter part of 2023.” He said Sonic Automotive is “communicating with [its] manufacturer partners, and they’re doing an amazing job of working through this stuff.”
He added that dealers and manufacturers “just need more supply” at this time and noted that many dealers might cut back on how many days-supply they keep once things normalize. He said they may keep “less than 30-day supply, but that would be plenty to serve both the new-car market and the used-car market.”
Sonic Automotive’s EchoPark franchise recently started selling cars that are five to eight years old instead of the initial cutoff of four years. Smith said the new offerings are working for customers, as they can find cars that “fit their payment” despite increasing car prices. He said EchoPark’s strong performance is about “carrying the right inventory [and] opening stores in strong markets.”
Smith declined to comment on how many EchoPark locations would be opening this year but said that the franchise’s website has now launched, and customers “can truly buy a car 100% online and have it delivered to one of [its] EchoPark locations.”
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