10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-13395

______________________________________

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

______________________________________

Delaware	56-2010790
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4401 Colwick Road		28211
Charlotte,	North Carolina
(Address of principal executive offices)		(Zip Code)

(704) 566-2400

(Registrant’s telephone number, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	SAH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 24, 2023, there were 21,857,279 shares of the registrant’s Class A Common Stock, par value $0.01 per share, and 12,029,375 shares of the registrant’s Class B Common Stock, par value $0.01 per share, outstanding.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

This report contains, and written or oral statements made from time to time by us or by our authorized officers may contain, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address our future objectives, plans and goals, as well as our intent, beliefs and current expectations regarding future operating performance, results and events, and can generally be identified by words such as “may,” “will,” “should,” “could,” “believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “foresee” and other similar words or phrases.

These forward-looking statements are based on our current estimates and assumptions and involve various risks and uncertainties. As a result, you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements. Factors which may cause actual results to differ materially from our projections include those risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 and elsewhere in this report, as well as:

•the number of new and used vehicles sold in the United States as compared to our expectations and the expectations of the market;

•our ability to generate sufficient cash flows or to obtain additional financing to fund our EchoPark expansion, capital expenditures, our share repurchase program, dividends on our common stock, acquisitions and general operating activities;

•our business and growth strategies, including, but not limited to, our EchoPark store operations;

•the reputation and financial condition of vehicle manufacturers whose brands we represent, the financial incentives vehicle manufacturers offer and their ability to design, manufacture, deliver and market their vehicles successfully;

•our relationships with vehicle manufacturers, which may affect our ability to obtain desirable new vehicle models in inventory or to complete additional acquisitions or dispositions;

•the adverse resolution of one or more significant legal proceedings against us or our subsidiaries;

•changes in laws and regulations governing the operation of automobile franchises, accounting standards, taxation requirements and environmental laws;

•changes in vehicle and parts import quotas, duties, tariffs or other restrictions, including supply shortages that could be caused by global political and economic factors or other supply chain disruptions;

•the inability of vehicle manufacturers and their suppliers to obtain, produce and deliver vehicles or parts and accessories to meet demand at our franchised dealerships for sale and use in our parts, service and collision repair operations;

•general economic conditions in the markets in which we operate, including fluctuations in interest rates, inflation, vehicle valuations, employment levels, the level of consumer spending and consumer credit availability;

•high levels of competition in the retail automotive industry, which not only create pricing pressures on the products and services we offer, but also on businesses we may seek to acquire;

•our ability to successfully integrate recent or future acquisitions;

•the significant control that our principal stockholders exercise over us and our business matters; and

•the rate and timing of overall economic expansion or contraction.

These forward-looking statements speak only as of the date of this report or when made, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances, except as required under the federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission.

SONIC AUTOMOTIVE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Operations	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	68
PART II – OTHER INFORMATION		69
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	71
Item 5.	Other Information	72
Item 6.	Exhibits	73
SIGNATURES		74

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars and shares in millions, except per share amounts)
Revenues:
Retail new vehicles	$	1,573.5	$	1,371.8	$	4,624.4	$	4,067.4
Fleet new vehicles	23.2		32.0		70.4		70.0
Total new vehicles	1,596.7		1,403.8		4,694.8		4,137.4
Used vehicles	1,340.4		1,355.8		3,991.2		4,174.4
Wholesale vehicles	79.3		114.7		256.3		404.8
Total vehicles	3,016.4		2,874.3		8,942.3		8,716.6
Parts, service and collision repair	453.4		408.2		1,327.6		1,188.6
Finance, insurance and other, net	173.7		165.6		517.7		505.3
Total revenues	3,643.5		3,448.1		10,787.6		10,410.5
Cost of sales:
Retail new vehicles	(1,442.1)		(1,209.6)		(4,213.5)		(3,569.2)
Fleet new vehicles	(22.3)		(30.7)		(67.3)		(66.9)
Total new vehicles	(1,464.4)		(1,240.3)		(4,280.8)		(3,636.1)
Used vehicles	(1,288.1)		(1,304.9)		(3,877.4)		(4,029.1)
Wholesale vehicles	(80.7)		(116.8)		(255.8)		(404.2)
Total vehicles	(2,833.2)		(2,662.0)		(8,414.0)		(8,069.4)
Parts, service and collision repair	(228.1)		(205.4)		(669.0)		(600.2)
Total cost of sales	(3,061.3)		(2,867.4)		(9,083.0)		(8,669.6)
Gross profit	582.2		580.7		1,704.6		1,740.9
Selling, general and administrative expenses	(409.6)		(399.0)		(1,214.2)		(1,188.8)
Impairment charges	—		—		(62.6)		—
Depreciation and amortization	(35.2)		(32.8)		(105.7)		(94.0)
Operating income	137.4		148.9		322.1		458.1
Other income (expense):
Interest expense, floor plan	(17.4)		(9.6)		(48.9)		(20.6)
Interest expense, other, net	(29.0)		(22.9)		(86.2)		(65.1)
Other income (expense), net	0.2		—		0.3		0.1
Total other income (expense)	(46.2)		(32.5)		(134.8)		(85.6)
Income before taxes	91.2		116.4		187.3		372.5
Provision for income taxes - benefit (expense)	(22.8)		(29.1)		(47.8)		(93.1)
Net income	$	68.4	$	87.3	$	139.5	$	279.4
Basic earnings per common share:
Earnings per common share	$	1.96	$	2.28	$	3.94	$	7.09
Weighted-average common shares outstanding	34.9		38.3		35.4		39.4
Diluted earnings per common share:
Earnings per common share	$	1.92	$	2.23	$	3.85	$	6.90
Weighted-average common shares outstanding	35.6		39.2		36.2		40.5

    

See notes to unaudited condensed consolidated financial statements.

1

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Net income	$	68.4	$	87.3	$	139.5	$	279.4
Other comprehensive income (loss) before taxes:
Change in fair value and amortization of interest rate cap agreements	0.3		—		1.5		0.7
Total other comprehensive income (loss) before taxes	0.3		—		1.5		0.7
Provision for income tax benefit (expense) related to components of other comprehensive income (loss)	(0.1)		—		(0.4)		(0.2)
Other comprehensive income (loss)	0.2		—		1.1		0.5
Comprehensive income	$	68.6	$	87.3	$	140.6	$	279.9

See notes to unaudited condensed consolidated financial statements.

2

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2023		December 31, 2022
	(Dollars in millions, except per share amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	34.6	$	229.2
Receivables, net	431.5		462.4
Inventories	1,433.9		1,216.8
Other current assets	341.5		297.9
Total current assets	2,241.5		2,206.3
Property and Equipment, net	1,599.2		1,561.7
Goodwill	243.6		231.0
Other Intangible Assets, net	417.4		396.7
Operating Right-of-Use Lease Assets	189.2		260.7
Finance Right-of-Use Lease Assets	258.4		224.1
Other Assets	101.0		97.8
Total Assets	$	5,050.3	$	4,978.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable - floor plan - trade	$	121.2	$	114.9
Notes payable - floor plan - non-trade	1,266.2		1,112.7
Trade accounts payable	143.0		138.4
Operating short-term lease liabilities	31.7		36.4
Finance short-term lease liabilities	10.4		11.1
Other accrued liabilities	376.3		352.4
Current maturities of long-term debt	60.4		79.5
Total current liabilities	2,009.2		1,845.4
Long-Term Debt	1,623.1		1,672.2
Other Long-Term Liabilities	108.2		105.5
Operating Long-Term Lease Liabilities	176.1		231.4
Finance Long-Term Lease Liabilities	276.2		228.6
Commitments and Contingencies
Stockholders’ Equity:
Class A Convertible Preferred Stock, none issued	—		—
Class A Common Stock, $0.01 par value; 100,000,000 shares authorized; 68,541,841 shares issued and 21,857,279 shares outstanding at September 30, 2023; 67,574,922 shares issued and 24,204,324 shares outstanding at December 31, 2022	0.7		0.7
Class B Common Stock, $0.01 par value; 30,000,000 shares authorized; 12,029,375 shares issued and outstanding at September 30, 2023 and December 31, 2022	0.1		0.1
Paid-in capital	848.3		819.4
Retained earnings	1,210.1		1,100.3
Accumulated other comprehensive income (loss)	2.7		1.6
Treasury stock, at cost; 46,684,562 Class A Common Stock shares held at September 30, 2023 and 43,370,598 Class A Common Stock shares held at December 31, 2022	(1,204.4)		(1,026.9)
Total Stockholders’ Equity	857.5		895.2
Total Liabilities and Stockholders’ Equity	$	5,050.3	$	4,978.3

See notes to unaudited condensed consolidated financial statements.

3

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at June 30, 2022	67.1	$	0.7	(39.9)	$	(858.1)	12.0	$	0.1	$	804.6	$	1,223.5	$	(0.8)	$	1,170.0
Shares awarded under stock compensation plans	0.5	—		—	—		—	—		7.2		—		—		7.2
Purchases of treasury stock	—	—		(3.1)	(152.1)		—	—		—		—		—		(152.1)
Stock compensation expense	—	—		—	—		—	—		3.8		—		—		3.8
Net income	—	—		—	—		—	—		—		87.3		—		87.3
Class A dividends declared ($0.25 per share)	—	—		—	—		—	—		—		(6.3)		—		(6.3)
Class B dividends declared ($0.25 per share)	—	—		—	—		—	—		—		(3.0)		—		(3.0)
Balance at September 30, 2022	67.6	$	0.7	(43.0)	$	(1,010.2)	12.0	$	0.1	$	815.6	$	1,301.5	$	(0.8)	$	1,106.9

	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at June 30, 2023	68.4	$	0.7	(45.0)	$	(1,117.6)	12.0	$	0.1	$	839.8	$	1,151.2	$	2.5	$	876.7
Shares awarded under stock compensation plans	0.1	—		—	—		—	—		1.8		—		—		1.8
Purchases of treasury stock	—	—		(1.7)	(86.8)		—	—		—		—		—		(86.8)
Effect of cash flow hedge instruments, net of tax expense of $0.1	—	—		—	—		—	—		—		—		0.2		0.2
Stock compensation expense	—	—		—	—		—	—		6.7		—		—		6.7
Net income	—	—		—	—		—	—		—		68.4		—		68.4
Class A dividends declared ($0.29 per share)	—	—		—	—		—	—		—		(6.0)		—		(6.0)
Class B dividends declared ($0.29 per share)	—	—		—	—		—	—		—		(3.5)		—		(3.5)
Balance at September 30, 2023	68.5	$	0.7	(46.7)	$	(1,204.4)	12.0	$	0.1	$	848.3	$	1,210.1	$	2.7	$	857.5

See notes to unaudited condensed consolidated financial statements.

4

	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at December 31, 2021	66.5	$	0.7	(37.8)	$	(765.0)	12.0	$	0.1	$	790.2	$	1,051.7	$	(1.3)	$	1,076.4
Shares awarded under stock compensation plans	1.1	—		—	—		—	—		8.5		—		—		8.5
Purchases of treasury stock	—	—		(5.2)	(245.2)		—	—		—		—		—		(245.2)
Effect of cash flow hedge instruments, net of tax expense of $0.2	—	—		—	—		—	—		—		—		0.5		0.5
Stock compensation expense	—	—		—	—		—	—		16.9		—		—		16.9
Net income	—	—		—	—		—	—		—		279.4		—		279.4
Class A dividends declared ($0.62 per share)	—	—		—	—		—	—		—		(22.1)		—		(22.1)
Class B dividends declared ($0.62 per share)	—	—		—	—		—	—		—		(7.5)		—		(7.5)
Balance at September 30, 2022	67.6	$	0.7	(43.0)	$	(1,010.2)	12.0	$	0.1	$	815.6	$	1,301.5	$	(0.8)	$	1,106.9

	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at December 31, 2022	67.6	$	0.7	(43.4)	$	(1,026.9)	12.0	$	0.1	$	819.4	$	1,100.3	$	1.6	$	895.2
Shares awarded under stock compensation plans	0.9	—		—	—		—	—		11.6		—		—		11.6
Purchases of treasury stock	—	—		(3.3)	(177.5)		—	—		—		—		—		(177.5)
Effect of cash flow hedge instruments, net of tax expense of $0.4	—	—		—	—		—	—		—		—		1.1		1.1
Stock compensation expense	—	—		—	—		—	—		17.3		—		—		17.3
Net income	—	—		—	—		—	—		—		139.5		—		139.5
Class A dividends declared ($0.86 per share)	—	—		—	—		—	—		—		(19.4)		—		(19.4)
Class B dividends declared ($0.86 per share)	—	—		—	—		—	—		—		(10.3)		—		(10.3)
Balance at September 30, 2023	68.5	$	0.7	(46.7)	$	(1,204.4)	12.0	$	0.1	$	848.3	$	1,210.1	$	2.7	$	857.5

See notes to unaudited condensed consolidated financial statements.

5

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2023		2022
	(Dollars in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	139.5	$	279.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	92.0		84.2
Debt issuance cost amortization	4.9		3.8
Stock-based compensation expense	17.3		16.9
Deferred income taxes	(10.5)		(10.4)
Asset impairment charges	62.6		—
Gain on disposal of dealerships and property and equipment	(18.1)		(0.5)
Other	0.3		1.5
Changes in assets and liabilities that relate to operations:
Receivables	49.2		43.5
Inventories	(230.7)		101.1
Other assets	(7.2)		107.5
Notes payable - floor plan – trade	6.3		5.3
Trade accounts payable and other liabilities	(1.4)		13.1
Total adjustments	(35.3)		366.0
Net cash provided by operating activities	104.2		645.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses, net of cash acquired	(75.1)		(94.2)
Purchases of land, property and equipment	(153.6)		(197.6)
Proceeds from sales of property and equipment	5.1		15.7
Proceeds from sales of dealerships	52.2		—
Net cash used in investing activities	(171.4)		(276.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on notes payable - floor plan - non-trade	153.5		(218.8)
Debt issuance costs	(1.6)		(0.5)
Principal payments of long-term debt	(71.5)		(42.1)
Principal payments of long-term lease liabilities	(11.7)		(6.4)
Purchases of treasury stock	(177.5)		(245.2)
Issuance of shares under stock compensation plans	11.6		8.5
Dividends paid	(30.2)		(25.2)
Net cash used in financing activities	(127.4)		(529.7)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(194.6)		(160.4)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	229.2		299.4
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34.6	$	139.0
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, including amounts capitalized	$	115.0	$	68.7
Income taxes	$	73.4	$	95.2

See notes to unaudited condensed consolidated financial statements.

6

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” or “our”) for the three and nine months ended September 30, 2023 and 2022 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (the “U.S.”) (“GAAP”) for interim financial information and applicable rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all material normal, recurring adjustments necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements – Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion of recent accounting pronouncements.

Change in Accounting Principle – During the first quarter of 2023, Sonic voluntarily changed the date of its annual goodwill impairment test and other intangible assets impairment test from October 1 to April 30. This change is preferable under the circumstances as it provides Sonic with better alignment of the annual impairment test with the availability of final approved prospective financial information for use in projecting future cash flows in our impairment models. We intend to utilize the same valuation approach and do not expect the change in valuation date to produce different impairment results. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change was applied prospectively, beginning with the April 30, 2023 impairment test date.

Principles of Consolidation – All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying unaudited condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. Certain amounts and percentages may not compute due to rounding.

Revenue Recognition – Revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. We do not include the cost of obtaining contracts within the related revenue streams since we elected the practical expedient to expense the costs to obtain a contract when incurred.

Management has evaluated our established business processes, revenue transaction streams and accounting policies, and identified our material revenue streams to be: (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of third-party vehicle financing and the sale of third-party service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. Generally, performance obligations are satisfied when the associated vehicle is delivered to a customer and customer acceptance has occurred, over time as the maintenance and repair services are performed, or at the time of wholesale and retail parts sales. We do not have any revenue streams with significant financing components as payments are typically received within a short period of time following completion of the performance obligation(s).

Retrospective finance and insurance revenues (“F&I retro revenues”) are recognized when the product contract has been executed with the end customer and the transaction price is estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

We record revenue when vehicles are delivered to customers, as vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and it being probable that the proceeds from the sale will be collected.

The accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 include approximately $27.9 million and $38.7 million, respectively, related to contract assets from F&I retro revenues

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recognition, which are recorded in receivables, net. Changes in contract assets from December 31, 2022 to September 30, 2023 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion of our revenue recognition policies and processes.

Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards), in addition to Class A Common Stock purchase warrants.

2. Business Acquisitions and Dispositions

During the nine months ended September 30, 2023, we acquired one business (consisting of five locations) in our Powersports Segment (as defined below) for an aggregate gross purchase price (including inventory acquired and subsequently funded by floor plan notes payable) of approximately $75.1 million. The preliminary allocation of the approximately $75.1 million aggregate gross purchase price included inventory of approximately $11.1 million, property and equipment of approximately $0.7 million, franchise assets of approximately $22.6 million, goodwill of approximately $11.9 million, real estate of approximately $29.0 million, other assets of approximately $0.1 million, and other liabilities of approximately $0.3 million.

During the nine months ended September 30, 2022, we acquired two business in our Franchised Dealerships Segment (as defined below) and two business included in our Powersports Segment (as defined below) for an aggregate gross purchase price (including inventory acquired and subsequently funded by floor plan notes payable) of approximately $79.5 million. During that period, we also recorded the impact of a $14.7 million post-close adjustment related to the acquisition of RFJ Auto Partners, Inc. and its subsidiaries completed in December 2021 (the “RFJ Acquisition”). The allocation of the approximately $79.5 million aggregate gross purchase price included inventory of approximately $31.0 million, property and equipment of approximately $0.5 million, franchise assets of approximately $33.2 million, goodwill of approximately $14.1 million, other assets of approximately $1.1 million, and liabilities of approximately $0.4 million. During the nine months ended September 30, 2023, we booked a post-close goodwill adjustment related to one businesses acquired in our Franchised Dealership Segment and one business in our Powersports Segment for a decrease of $0.4 million and an increase of $2.9 million, respectively.

During the nine months ended September 30, 2023, we disposed of one luxury franchised dealership, one domestic franchised dealership, and one mid-line import franchised dealership that generated net cash of approximately $52.2 million. We did not dispose of any stores during the nine months ended September 30, 2022.

Revenues and other activities associated with disposed franchised dealerships that remain in continuing operations were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Income (loss) from operations	$	(0.3)	$	1.9	$	0.2	$	5.7
Gain (loss) on disposal	(0.3)		—		20.4		(0.1)
Pre-tax income (loss)	(0.6)		1.9		20.6		5.6
Total Revenues	$	—	$	38.6	$	70.1	$	119.0

On June 22, 2023, we announced a plan to indefinitely suspend operations at eight EchoPark locations and 14 related delivery/buy centers. In addition, during the three months ended September 30, 2023, we closed three Northwest Motorsport pre-owned locations within the EchoPark Segment (as defined below). In connection with these decisions, Sonic recorded a charge totaling approximately $75.2 million during the second quarter of 2023. This charge included impairments of $32.5 million related to fixed assets, $16.0 million related to right-of-use assets and $14.1 million related to cease-use accruals; $0.4 million related to lease exit charges; $10.0 million of inventory valuation adjustments (of which $5.8 million relates to stores with ongoing operations at EchoPark locations and $1.9 million relates to ongoing operations of Northwest Motorsport locations); and $2.2 million related to severance. During the third quarter of 2023, we recorded approximately $4.8 million in additional charges related to the EchoPark store closures, which included $3.9 million of lease exit charges and $0.9 million related to severance. The locations within our EchoPark Segment with indefinitely suspended operations or that were closed are not considered disposed and therefore are not included in the above table disclosing the effect of disposed franchised dealerships on continued operations.

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3. Inventories

Inventories consist of the following:

	September 30, 2023		December 31, 2022
	(In millions)
New vehicles	$	637.7	$	449.3
Used vehicles	523.4		534.0
Service loaners	173.9		143.8
Parts, accessories and other	98.9		89.7
Inventories	$	1,433.9	$	1,216.8

4. Property and Equipment

Property and equipment, net consists of the following:

	September 30, 2023		December 31, 2022
	(In millions)
Land	$	487.8	$	478.2
Buildings and improvements	1,404.0		1,365.3
Furniture, fixtures and equipment	557.3		504.1
Construction in progress	69.7		57.0
Total, at cost	2,518.8		2,404.6
Less accumulated depreciation	(907.7)		(842.9)
Subtotal	1,611.1		1,561.7
Less assets held for sale (1)	(11.9)		—
Property and equipment, net	$	1,599.2	$	1,561.7

(1)Classified in other current assets in the accompanying unaudited condensed consolidated balance sheets.

In the three and nine months ended September 30, 2023, capital expenditures were approximately $78.1 million and $153.6 million, respectively, and in the three and nine months ended September 30, 2022, capital expenditures were approximately $97.3 million and $197.6 million, respectively. Capital expenditures in all periods were primarily related to real estate acquisitions, construction of new franchised dealerships and EchoPark and powersports stores, building improvements and equipment purchased for use in our franchised dealerships and EchoPark and powersports stores.

Fixed asset impairment charges for the nine months ended September 30, 2023 were approximately $32.5 million, the majority of which relate to our decisions to indefinitely suspend operations at certain locations with our EchoPark Segment and to close certain Northwest Motorsport stores. There were no fixed asset impairment charges for the nine months ended September 30, 2022.

5. Goodwill and Intangible Assets

In accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other,” we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary.

In performing a quantitative test for impairment of goodwill, we primarily use the income approach method of valuation that includes the discounted cash flow (“DCF”) method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation.

We completed our annual impairment testing as of April 30, 2023 and determined there was no impairment.

In evaluating the recoverability of our indefinite lived franchise assets, we utilized a multi-period excess earnings method (“MPEEM”) model using unobservable inputs (Level 3) to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our MPEEM model include projected revenue,

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projected operating margins, a discount rate (and estimates in the discount rate inputs) and residual growth rates. We completed our annual impairment testing as of April 30, 2023 and determined there was no impairment.

The changes in the carrying amount of goodwill for September 30, 2023 and December 31, 2022 were as follows:

	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Balance at December 31, 2021 (1)	$	251.2	$	165.2	$	—	$	416.4
Additions through current year acquisitions	5.1		—		9.2		14.3
Reductions from impairment	—		(202.9)		—		(202.9)
Prior year acquisition allocations	(34.5)		37.7		—		3.2
Balance at December 31, 2022 (2)	$	221.8	$	—	$	9.2	$	231.0
Additions through current year acquisitions	—		—		11.9		11.9
Reductions from dispositions	(1.8)		—		—		(1.8)
Prior year acquisition allocations	(0.4)		—		2.9		2.5
Balance at September 30, 2023 (2)	$	219.6	$	—	$	24.0	$	243.6

(1)Net of accumulated impairment losses of $1.1 billion related to the Franchised Dealerships Segment.

(2)Net of accumulated impairment losses of $1.1 billion and $202.9 million related to the Franchised Dealerships Segment and the EchoPark Segment, respectively.

The carrying amount of indefinite lived franchise assets was approximately $417.4 million and $396.7 million as of September 30, 2023 and December 31, 2022, respectively. We did not record any impairment charges for the nine months ended September 30, 2023 and 2022.

6. Long-Term Debt

Long-term debt consists of the following:

	September 30, 2023		December 31, 2022
	(In millions)
2021 Revolving Credit Facility (1)	$	—	$	—
4.625% Senior Notes due 2029 (the “4.625% Notes”)	650.0		650.0
4.875% Senior Notes due 2031 (the “4.875% Notes”)	500.0		500.0
2019 Mortgage Facility (2)	315.0		327.0
Mortgage notes to finance companies - fixed rate, bearing interest from 2.05% to 7.03%	166.3		186.6
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR or SOFR	76.8		116.0
Subtotal	$	1,708.1	$	1,779.6
Debt issuance costs	(24.6)		(27.9)
Total debt	1,683.5		1,751.7
Less current maturities	(60.4)		(79.5)
Long-term debt	$	1,623.1	$	1,672.2

(1)The interest rate on the 2021 Revolving Credit Facility (as defined below) was 135 basis points above one-month Term SOFR (as defined below) at September 30, 2023 and 110 basis points above one-month Term SOFR at December 31, 2022.

(2)The interest rate on the 2019 Mortgage Facility (as defined below) was 160 basis points above one-month Term SOFR (as defined below) at September 30, 2023 and 135 basis points above one-month Term SOFR at December 31, 2022.

2021 Credit Facilities

On April 14, 2021, we entered into an amended and restated syndicated revolving credit facility (the “2021 Revolving Credit Facility”) and amended and restated syndicated new and used vehicle floor plan credit facilities (the “2021 Floor Plan

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Facilities” and, together with the 2021 Revolving Credit Facility, the “2021 Credit Facilities”). The amendment and restatement of the 2021 Credit Facilities extended the scheduled maturity dates to April 14, 2025. On October 8, 2021, we entered into an amendment to the 2021 Credit Facilities (the “Credit Facility Amendment”) to, among other things: (1) increase the aggregate commitments under the 2021 Revolving Credit Facility to $350.0 million (which may be increased at the Company’s option up to $400.0 million upon satisfaction of certain conditions) and the 2021 Floor Plan Facilities to $2.6 billion (which, under certain conditions, may be increased at the Company’s option up to $2.9 billion that may be allocated between the new vehicle revolving floor plan facility and the used vehicle revolving floor plan facility that comprise the 2021 Floor Plan Facilities as the Company requests, with no more than 40% of the aggregate commitments allocated to the commitments under the used vehicle revolving floor plan facility); and (2) permit the issuance of the 4.625% Notes and the 4.875% Notes. On October 7, 2022, we entered into an amendment to the 2021 Credit Facilities (the “Second Credit Facility Amendment”) to, among other things: (i) replace the 2021 Credit Facilities’ London InterBank Offered Rate (“LIBOR”)-based Eurodollar reference interest rate option with a reference interest rate option based upon one-month Term SOFR (as defined in the 2021 Credit Facilities) (the conversion of the interest rate benchmark from LIBOR to one-month Term SOFR included a 10-basis point credit spread adjustment); (ii) amend the provisions relating to the basis for inclusion of real property owned by the Company or certain of its subsidiaries in the borrowing base for the 2021 Revolving Credit Facility; (iii) amend the minimum amount for commitments under the 2021 Revolving Credit Facility and the proportion that such commitments under the 2021 Revolving Credit Facility may compose of the total commitments made by the lenders; and (iv) adjust aspects of the offset account used for voluntary reductions to interest under the 2021 Floor Plan Facilities.

As amended, availability under the 2021 Revolving Credit Facility is calculated as the lesser of $350.0 million or a borrowing base calculated based on certain eligible assets, less the aggregate amount of any outstanding letters of credit and borrowings under the 2021 Revolving Credit Facility (the “2021 Revolving Borrowing Base”). As of September 30, 2023, the 2021 Revolving Borrowing Base was $301.1 million based on balances as of such date. As of September 30, 2023, we had no outstanding borrowings and $12.2 million in outstanding letters of credit under the 2021 Revolving Credit Facility, resulting in $288.9 million remaining borrowing availability under the 2021 Revolving Credit Facility.

Our obligations under the 2021 Credit Facilities are guaranteed by the Company and certain of our subsidiaries and are secured by a pledge of substantially all of our and our subsidiaries’ assets. As of the dates presented in the accompanying unaudited condensed consolidated financial statements, the amounts outstanding under the 2021 Credit Facilities bear interest at variable rates based on specified percentages above LIBOR (subsequent to September 30, 2022, the Second Credit Facility Amendment replaced LIBOR with one-month term SOFR). We have agreed under the 2021 Credit Facilities not to pledge any assets to any third parties (other than those explicitly allowed to be pledged by the amended terms of the 2021 Credit Facilities), including other lenders, subject to certain stated exceptions, including floor plan financing arrangements. In addition, the 2021 Credit Facilities contain certain negative covenants, including covenants which could restrict or prohibit indebtedness, liens, the payment of dividends and other restricted payments, capital expenditures and material dispositions and acquisitions of assets, as well as other customary covenants and default provisions. Specifically, the 2021 Credit Facilities permit quarterly cash dividends on our Class A and Class B Common Stock up to $0.12 per share so long as no Event of Default (as defined in the 2021 Credit Facilities) has occurred and is continuing and provided that we remain in compliance with all financial covenants under the 2021 Credit Facilities. Additional dividends are permitted subject to limitations on restricted payments set forth in the 2021 Credit Facilities.

4.625% Notes

On October 27, 2021, we issued $650.0 million in aggregate principal amount of 4.625% Notes, which will mature on November 15, 2029. Sonic used the net proceeds from the issuance of the 4.625% Notes, along with the net proceeds of the 4.875% Notes, to fund the RFJ Acquisition and to repay existing debt.

The 4.625% Notes were issued under an Indenture, dated as of October 27, 2021 (the “2029 Indenture”), by and among the Company, certain subsidiary guarantors named therein (collectively, the “Guarantors”) and U.S. Bank National Association, as trustee (the “trustee”). The 4.625% Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis initially by all of the Company’s domestic operating subsidiaries. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered minor. Under certain circumstances set forth in the 2029 Indenture, the guarantees of the certain subsidiaries of the Company comprising the EchoPark Business (as defined in the 2029 Indenture) may be released. The 2029 Indenture also provides substantial flexibility for the Company to enter into fundamental transactions involving the EchoPark Business. The 2029 Indenture provides that interest on the 4.625% Notes will be payable semi-annually in arrears on May 15 and November 15 of each year beginning May 15, 2022. The 2029 Indenture also contains other restrictive covenants and default provisions common for an issue of senior notes of this nature. The 4.625% Notes are redeemable by the Company under certain circumstances. For further discussion of the 4.625% Notes, see Note 6,

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“Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

4.875% Notes

On October 27, 2021, we issued $500.0 million in aggregate principal amount of 4.875% Notes, which will mature on November 15, 2031. Sonic used the net proceeds from the issuance of the 4.875% Notes, along with the net proceeds of the 4.625% Notes, to fund the RFJ Acquisition and to repay existing debt.

The 4.875% Notes were issued under an Indenture, dated as of October 27, 2021 (the “2031 Indenture”), by and among the Company, the Guarantors and the trustee. The 4.875% Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis initially by all of the Company’s domestic operating subsidiaries. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered minor. Under certain circumstances set forth in the 2031 Indenture, the guarantees of the certain subsidiaries of the Company comprising the EchoPark Business (as defined in the 2031 Indenture) may be released. The 2031 Indenture also provides substantial flexibility for the Company to enter into fundamental transactions involving the Echo-Park Business. The 2031 Indenture provides that interest on the 4.875% Notes will be payable semi-annually in arrears on May 15 and November 15 of each year beginning May 15, 2022. The 2031 Indenture also contains other restrictive covenants and default provisions common for an issue of senior notes of this nature. The 4.875% Notes are redeemable by the Company under certain circumstances. For further discussion of the 4.875% Notes, see Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

2019 Mortgage Facility

On November 22, 2019, we entered into a delayed draw-term loan credit agreement, which was scheduled to mature on November 22, 2024 (the “2019 Mortgage Facility”). On October 11, 2021, we entered into an amendment to the 2019 Mortgage Facility to permit the consummation of the RFJ Acquisition and the issuance of the 4.625% Notes and the 4.875% Notes. On November 17, 2022, we entered into an amendment to the 2019 Mortgage Facility to, among other things, extend the scheduled maturity date to November 17, 2027.

On November 17, 2022, in connection with the closing of the amendment, the Company incurred a term loan under the 2019 Mortgage Facility with a principal amount of $320.0 million, with a portion of the proceeds used to repay the entire $77.6 million principal amount of the prior term loan. The $320.0 million borrowing amortizes on a fixed schedule through the maturity date. In addition, the lenders under the 2019 Mortgage Facility committed to providing, upon the terms set forth in the amendment and upon the pledging of sufficient collateral by the Company, delayed draw-term loans in an aggregate principal amount up to $78.0 million (the “Delayed Draw Credit Facility”), and revolving loans in an aggregate principal amount not to exceed $95.0 million outstanding. On November 18, 2022, the Company incurred a term loan under the Delayed Draw Credit Facility with a principal amount of $7.0 million. The aggregate commitments of the lenders under the 2019 Mortgage Facility equal a total of $500.0 million, upon satisfaction of the conditions set forth in the 2019 Mortgage Facility, including the appraisal and pledging of collateral of a specified value. The amendment also amended the 2019 Mortgage Facility to, among other things: (1) replace the 2019 Mortgage Facility’s LIBOR-based Eurodollar reference interest rate option with a reference interest rate option based upon one-month Term SOFR (as defined in the 2019 Mortgage Facility); and (2) make changes to the pricing grid for loans incurred under the 2019 Mortgage Facility, which price is based on an incremental interest margin calculated based on the Company’s Consolidated Total Lease Adjusted Leverage Ratio (as defined in the 2019 Mortgage Facility).

Under the 2019 Mortgage Facility, Sonic had an initial maximum borrowing limit of $500.0 million, which varies based on the appraised value of the collateral underlying the 2019 Mortgage Facility. Based on balances as of September 30, 2023, we had $315.0 million of outstanding borrowings under the 2019 Mortgage Facility.

Amounts outstanding under the 2019 Mortgage Facility bear interest at: (1) a specified rate above one-month Term SOFR, ranging from 1.25% to 2.25% per annum according to a performance-based pricing grid determined by the Company’s Consolidated Total Lease Adjusted Leverage Ratio as of the last day of the immediately preceding fiscal quarter (the “Performance Grid”); or (2) a specified rate above the Base Rate (as defined in the 2019 Mortgage Facility), ranging from 0.25% to 1.25% per annum according to the Performance Grid. Interest on the 2019 Mortgage Facility is paid monthly in arrears calculated using the Base Rate plus the Applicable Rate (as defined in the 2019 Mortgage Facility) according to the Performance Grid. Amortized principal payments are scheduled to be $4.0 million per quarter from the quarter ending March 31, 2023 through the quarter ending December 31, 2024 and $6.0 million per quarter from the quarter ending March 31, 2025 to the quarter ending September 30, 2027 with the remaining balance due on November 17, 2027. Prior to the November 17, 2027

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maturity date, the Company has the right to prepay the principal amount outstanding at any time without premium or penalty provided the prepayment amount exceeds $0.5 million. Additional dividends are permitted subject to limitations on restricted payments set forth in the 2021 Credit Facilities.

For further discussion of the 2019 Mortgage Facility, see Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

Mortgage Notes to Finance Companies

As of September 30, 2023, the weighted-average interest rate of our other outstanding mortgage notes (excluding the 2019 Mortgage Facility) was 5.24% and the total outstanding mortgage principal balance of these notes (excluding the 2019 Mortgage Facility) was approximately $243.1 million. These mortgage notes require monthly payments of principal and interest through their respective maturities, are secured by the underlying properties and contain certain cross-default provisions. Maturity dates for these mortgage notes range from 2024 to 2033.

Covenants

The 2021 Credit Facilities and the 2019 Mortgage Facility contain certain negative covenants, including covenants which could restrict or prohibit indebtedness, liens, the payment of dividends and other restricted payments, capital expenditures and material dispositions and acquisitions of assets, as well as other customary covenants and default provisions. The 2021 Credit Facilities and the 2019 Mortgage Facility also contain limitations on our ability to pledge assets to third parties, subject to certain stated exceptions.

We were in compliance with the financial covenants under the 2021 Credit Facilities and the 2019 Mortgage Facility as of September 30, 2023. Financial covenants include required specified ratios (as each is defined in the 2021 Credit Facilities and the 2019 Mortgage Facility) of:

	Covenant
	Minimum Consolidated Liquidity Ratio	Minimum Consolidated Fixed Charge Coverage Ratio	Maximum Consolidated Total Lease Adjusted Leverage Ratio
Required ratio	1.05	1.20	5.75
September 30, 2023 actual	1.27	1.60	2.87

The 2021 Credit Facilities and the 2019 Mortgage Facility contain events of default, including cross defaults to other material indebtedness, change of control events and other events of default customary for syndicated commercial credit facilities. Upon the future occurrence of an event of default, we could be required to immediately repay all outstanding amounts under the 2021 Credit Facilities and the 2019 Mortgage Facility.

After giving effect to the applicable restrictions on the payment of dividends under our debt agreements, as of September 30, 2023, we had approximately $245.7 million of net income and retained earnings free of such restrictions. We were in compliance with all restrictive covenants under our debt agreements as of September 30, 2023.

In addition, many of our facility leases are governed by a guarantee agreement between the landlord and us that contains financial and operating covenants. The financial covenants under the guarantee agreement are identical to those under the 2021 Credit Facilities and the 2019 Mortgage Facility with the exception of one additional financial covenant related to the ratio of EBITDAR to Rent (as defined in the guarantee agreement) with a required ratio of no less than 1.50 to 1.00. As of September 30, 2023, the ratio was 12.05 to 1.00.

7. Commitments and Contingencies

Guarantees and Indemnification Obligations

In accordance with the terms of our operating lease agreements, our dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, we have generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee.

In connection with dealership dispositions and facility relocations, certain of our subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships. In general, the subsidiaries retain responsibility

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for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or the sublessee does not perform. In the event an assignee or a sublessee does not perform its obligations, Sonic remains liable for such obligations.

In accordance with the terms of agreements entered into for the sale of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $8.0 million as of September 30, 2023 and there was not any material exposure with respect to these indemnifications at December 31, 2022. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at September 30, 2023.

We also guarantee the floor plan commitments of our 50%-owned joint venture, and the amount of such guarantee at both September 30, 2023 and December 31, 2022 was approximately $4.3 million.

Legal Matters

Sonic is involved, and expects to continue to be involved, in various legal and administrative proceedings arising out of the conduct of its business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although Sonic is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, Sonic does not believe it is reasonably possible that its current and threatened legal proceedings will have a material adverse effect on Sonic’s business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on Sonic’s financial results.

There were no significant liabilities recorded related to legal matters as of September 30, 2023 and December 31, 2022.

8. Fair Value Measurements

Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 were as follows:

	Fair Value Based on Significant Other Observable Inputs (Level 2)
	September 30, 2023		December 31, 2022
	(In millions)
Assets:
Cash surrender value of life insurance policies (1)	$	41.3	$	38.2
Interest rate caps designated as hedges (2)	2.9		—
Total assets	$	44.2	$	38.2
Liabilities:
Deferred compensation plan (3)	$	24.5	$	21.1
Total liabilities	$	24.5	$	21.1

(1)Included in other assets in the accompanying unaudited condensed consolidated balance sheets.

(2)As of September 30, 2023, approximately $2.1 million and $0.8 million were included in other current assets and other assets, respectively, in the accompanying unaudited condensed consolidated balance sheets.

(3)Included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets.

In conjunction with the approximately $75.2 million charge recorded during the second quarter of 2023 and the subsequent $4.8 million charge recorded in the third quarter of 2023 related to our decisions to indefinitely suspend operations at certain EchoPark locations and to close certain Northwest Motorsport stores discussed above, Sonic was required to adjust certain real estate assets to fair value on a non-recurring basis. After $5.7 million of adjustments during the second quarter of 2023, the recorded balances were $55.5 million at June 30, 2023. The book value of such assets may be reevaluated as changes in circumstances require. There were no instances during the three months ended September 30, 2023 that required a fair value measurement of assets ordinarily measured at fair value on a non-recurring basis.

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As of September 30, 2023 and December 31, 2022, the fair values of Sonic’s financial instruments, including receivables, notes receivable from finance contracts, notes payable – floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes, approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates.

As of September 30, 2023 and December 31, 2022, the fair value and the carrying value of Sonic’s significant fixed rate long-term debt were as follows:

	September 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In millions)
4.875% Notes (1)	$	397.5	$	500.0	$	390.3	$	500.0
4.625% Notes (1)	$	536.3	$	650.0	$	519.5	$	650.0
Mortgage Notes (2)	$	159.0	$	166.3	$	174.0	$	186.6

(1)As determined by market quotations from similar securities as of September 30, 2023 and December 31, 2022, respectively (Level 2).

(2)As determined by the DCF method (Level 2).

For further discussion of Sonic’s fair value measurements, see Note 11, “Fair Value Measurements,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

9. Segment Information

As of September 30, 2023, Sonic had three operating segments: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle maintenance, warranty and repair services, and arrange finance and insurance products (the “Franchised Dealerships Segment”); (2) pre-owned vehicle specialty retail locations that provide guests an opportunity to search our nationwide inventory, purchase a pre-owned vehicle, select finance and insurance products and sell their current vehicle to us (the “EchoPark Segment”); and (3) retail locations that sell new and used powersports vehicles, perform vehicle maintenance, warranty and repair services, and arrange finance and insurance products (the “Powersports Segment”). Sonic has determined that its operating segments also represent its reportable segments.

The reportable segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic’s chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer; (2) the Company’s President; and (3) the Company’s Chief Financial Officer.

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SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reportable segment financial information for the three and nine months ended September 30, 2023 and 2022 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Revenues:
Franchised Dealerships Segment revenues:
Retail new vehicles	$	1,546.7	$	1,359.6	$	4,550.9	$	4,047.1
Fleet new vehicles	23.2		32.0		70.4		70.0
Total new vehicles	1,569.9		1,391.6		4,621.3		4,117.1
Used vehicles	780.7		842.4		2,322.8		2,568.1
Wholesale vehicles	51.4		75.8		165.3		261.2
Parts, service and collision repair	431.8		404.7		1,289.0		1,183.4
Finance, insurance and other, net	126.0		125.8		375.4		382.1
Franchised Dealerships Segment revenues	$	2,959.8	$	2,840.3	$	8,773.8	$	8,511.9
EchoPark Segment revenues:
Retail new vehicles	$	—	$	1.6	$	1.0	$	7.3
Used vehicles	554.8		511.4		1,651.3		1,601.3
Wholesale vehicles	26.6		38.9		89.1		143.3
Finance, insurance and other, net	45.3		38.9		136.4		121.8
EchoPark Segment revenues	$	626.7	$	590.8	$	1,877.8	$	1,873.7
Powersports Segment revenues:
Retail new vehicles	$	26.8	$	10.6	$	72.5	$	13.0
Used vehicles	4.9		2.0		17.1		5.0
Wholesale vehicles	1.3		—		1.9		0.3
Parts, service and collision repair	21.6		3.5		38.6		5.2
Finance, insurance and other, net	2.4		0.9		5.9		1.4
Powersports Segment revenues	$	57.0	$	17.0	$	136.0	$	24.9
Total consolidated revenues	$	3,643.5	$	3,448.1	$	10,787.6	$	10,410.5

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Segment Income (Loss) (1):
Franchised Dealerships Segment	$	101.5	$	146.3	$	357.2	$	472.2
EchoPark Segment	(16.9)		(31.1)		(116.5)		(100.6)
Powersports Segment	6.6		1.2		9.2		0.9
Total segment income	$	91.2	$	116.4	$	249.9	$	372.5
Impairment charges	—		—		(62.6)		—
Income before taxes	$	91.2	$	116.4	$	187.3	$	372.5

(1)Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Depreciation and Amortization:
Franchised Dealerships Segment	$	28.2	$	25.8	$	82.8	$	75.8
EchoPark Segment	6.1		6.8		20.4		17.7
Powersports Segment	0.9		0.2		2.5		0.5
Total depreciation and amortization	$	35.2	$	32.8	$	105.7	$	94.0

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Floor Plan Interest Expense:
Franchised Dealerships Segment (1)	$	12.9	$	6.6	$	34.7	$	13.9
EchoPark Segment	4.3		3.0		13.6		6.7
Powersports Segment	0.2		—		0.6		—
Total floor plan interest expense	$	17.4	$	9.6	$	48.9	$	20.6

(1)Amount is net of interest earned on the floor plan deposit balance of $5.0 million and $0.9 million in the three months ended September 30, 2023 and 2022, respectively, and $13.8 million and $2.3 million in the nine months ended September 30, 2023 and 2022, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Interest Expense, Other, Net:
Franchised Dealerships Segment	$	27.9	$	21.4	$	82.2	$	61.7
EchoPark Segment	0.7		1.1		2.5		3.0
Powersports Segment	0.4		0.4		1.5		0.4
Total interest expense, other, net	$	29.0	$	22.9	$	86.2	$	65.1

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Capital Expenditures:
Franchised Dealerships Segment	$	72.1	$	43.8	$	137.3	$	95.8
EchoPark Segment	5.4		53.5		14.1		101.8
Powersports Segment	0.6		—		2.2		—
Total capital expenditures	$	78.1	$	97.3	$	153.6	$	197.6

	September 30, 2023		December 31, 2022
	(In millions)
Assets:
Franchised Dealerships Segment	$	3,806.0	$	4,091.7
EchoPark Segment	700.9		267.6
Powersports Segment	208.8		117.8
Corporate and other:
Cash and cash equivalents	34.6		229.2
Floor plan deposit balance	300.0		272.0
Total assets	$	5,050.3	$	4,978.3

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto, as well as the consolidated financial statements and related notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Unless otherwise noted, we present the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. To the extent that we believe a discussion of the differences among reportable segments will enhance a reader’s understanding of our financial condition, cash flows and other changes in financial condition and results of operations, the differences are discussed separately. Certain amounts and percentages may not compute due to rounding.

Unless otherwise noted, all discussion of increases or decreases are for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022, respectively. 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 reported 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. 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 reported basis, except where otherwise noted.

Overview

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 September 30, 2023: (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 September 30, 2023, we operated 108 stores in the Franchised Dealerships Segment, 25 stores in the EchoPark Segment and 13 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 134 new vehicle franchises (representing 28 different brands of cars and light trucks) and 16 collision repair centers in 18 states. As of September 30, 2023, we operated 25 EchoPark stores in 11 states, including 7 Northwest Motorsport pre-owned vehicle stores acquired in the RFJ Acquisition in December 2021 that are included in the EchoPark Segment.

The Franchised Dealerships Segment provides comprehensive sales and services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of third-party financing, extended warranties, service contracts, insurance and other aftermarket products (collectively, “F&I”) for our guests. The EchoPark Segment sells used cars and light trucks and arranges third-party F&I product sales for our guests in pre-owned vehicle specialty retail locations, and does not offer customer-facing Fixed Operations services. The Powersports Segment offers guests: (1) sales of both new and used powersports vehicles (such as motorcycles, personal watercraft and all-terrain vehicles); (2) Fixed Operations activities; and (3) F&I services. All three segments generally operate independently of one another with the exception of certain shared back-office functions and corporate overhead costs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Retail Automotive Industry Performance

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 16% and 13% for the three and nine months ended September 30, 2023, respectively, to approximately 15.5 million vehicles in each period, compared to approximately 13.4 million and 13.7 million vehicles for the three and nine months ended September 30, 2022, respectively, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the full year 2023 new vehicle industry volume will be between 15.5 million vehicles (an increase of 13% compared to 2022) and 16.0 million vehicles (an increase of 17% compared to 2022). The ongoing effects of supply chain disruptions as a result of the COVID-19 pandemic, availability of new and used vehicle inventory, 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 natural disasters or other unforeseen circumstances could cause the actual 2023 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 13% and 8%, to approximately 12.6 million and 12.7 million vehicles for the three and nine months ended September 30, 2023, respectively, from approximately 11.2 million and 11.8 million vehicles for the three and nine months ended September 30, 2022, respectively.

Impact of COVID-19 and Supply Chain Disruptions

The global automotive supply chain has been significantly disrupted since the onset of the COVID-19 pandemic, primarily related to the production of semiconductors and other components that are used in many modern automobiles, in addition to workforce-related production delays and stoppages. As a result, automobile manufacturing has operated for multiple years at lower than usual production levels, reducing the amount of new vehicle inventory and certain parts inventory available to our dealerships. These inventory constraints have led to low new and used vehicle inventory and a volatile new and used vehicle pricing environment. New vehicle and certain parts production levels have improved through the first nine months of 2023; however, there is a risk that higher production levels and new vehicle inventory on hand may not result in incremental retail new vehicle sales volume, which could cause new vehicle industry volume to vary from our expectations.

During the third quarter of 2023, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”) commenced a labor strike against certain automobile manufacturers and automotive parts suppliers in North America. Depending on the length and severity of the UAW strike, certain manufacturers’ vehicle and parts inventory levels may decrease, causing disruption to our business and/or higher vehicle or parts prices for consumers. While we believe our diversified brand portfolio may somewhat mitigate the risk to our business, it is difficult to predict the potential length of the UAW strike and its potential impact on our business and financial results of operations.

Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores since the beginning of 2022, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

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. Unless otherwise noted, all comparisons are to the prior year period.

Retail new vehicle revenue increased 15% and 12% during the three and nine months ended September 30, 2023, respectively, driven primarily by a 12% and 8% increase in retail new vehicle unit sales volume, respectively, and a 2% and 4% increase in retail new vehicle average selling prices, respectively. Retail new vehicle gross profit decreased 21% and 20% during the three and nine months ended September 30, 2023, respectively, due primarily to higher inventory invoice costs and increased price competition as a result of higher levels of available inventory, which drove lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $1,988 per unit, or 30%, to $4,678 per unit during the three months ended September 30, 2023, and decreased $1,734 per unit, or 26%, to $5,056 per unit during the nine months ended September

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

30, 2023. We generally focus on maintaining Franchised Dealerships Segment new 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 Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 33 and 19 days as of September 30, 2023 and 2022, respectively.

Retail used vehicle revenue decreased 7% and 9% during the three and nine months ended September 30, 2023, respectively, driven primarily by a 3% and 7% decrease in retail used vehicle unit sales volume, respectively. Retail used vehicle gross profit decreased 5% during both the three and nine months ended September 30, 2023, primarily due to the decrease in retail used vehicle unit sales volume. Retail used vehicle gross profit per unit decreased $36 per unit, or 2%, to $1,668 per unit during the three months ended September 30, 2023, and increased $30 per unit, or 2%, to $1,694 per unit during the nine months ended September 30, 2023. The primary driver of the decrease in retail used vehicle gross profit per unit during the three months ended September 30, 2023 was the decrease in retail used vehicle unit sales volume. Wholesale vehicle gross profit increased approximately $0.5 million and $2.5 million during the three and nine months ended September 30, 2023, respectively, due primarily to a $59 per unit, or 18%, decrease in wholesale vehicle gross profit per unit during the three months ended September 30, 2023 and a $139 per unit, or 101%, improvement in wholesale vehicle gross profit per unit during the nine months ended September 30, 2023. 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 28 and 31 days as of September 30, 2023 and 2022, respectively.

Fixed Operations revenue increased 8% and 9% during the three and nine months ended September 30, 2023, respectively, and Fixed Operations gross profit increased 8% and 9% during the three and nine months ended September 30, 2023, respectively, driven primarily by higher repair order volume and higher parts and labor costs that were passed along to consumers. Fixed Operations gross margin increased 10 basis points, to 49.7%, during the three months ended September 30, 2023, and increased 10 basis points, to 49.6%, during the nine months ended September 30, 2023.

F&I revenue increased 3% and remained flat during the three and nine months ended September 30, 2023, respectively, driven primarily by decreases in F&I gross profit per retail unit. F&I gross profit per retail unit decreased $118 per unit, or 5%, to $2,407 per unit, and increased $8 per unit to $2,437 per unit, during the three and nine months ended September 30, 2023, respectively.

EchoPark Segment

The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a reported 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. Unless otherwise noted, all comparisons are to the prior year period.

On June 22, 2023, Sonic announced a plan to indefinitely suspend operations at eight EchoPark locations and 14 related delivery/buy centers. In addition, during the third quarter of 2023 we closed three Northwest Motorsport pre-owned locations within the EchoPark segment. In connection with these decisions, Sonic recorded a charge totaling approximately $75.2 million during the second quarter of 2023. This charge included impairments of $32.5 million related to fixed assets, $16.0 million related to right-of-use assets and $14.1 million related to cease-use accruals; $0.4 million related to lease exit charges; $10.0 million of inventory valuation adjustments (of which $5.8 million relates to stores with ongoing operations at EchoPark locations and $1.9 million relates to ongoing operations of Northwest Motorsport locations); and $2.2 million related to severance. During the third quarter of 2023, we recorded approximately $4.8 million in additional charges related to the EchoPark store closures, which included $3.9 million of lease exit charges and $0.9 million related to severance. We expect expenses related to the EchoPark store closures of approximately $1.5 million to $2.0 million per quarter (excluding any amounts related to exiting leased or owned properties).

Reported EchoPark Segment revenues increased 6% and remained flat during the three and nine months ended September 30, 2023, respectively, driven primarily by an increase in retail used vehicle unit sales volume, offset partially by a decrease in average unit selling prices. Reported total gross profit increased 22% during the three months ended September 30, 2023, primarily due to an increase in retail used vehicle gross profit per unit and higher retail used vehicle unit sales volume. Reported total gross profit decreased 11% during the nine months ended September 30, 2023 primarily due to a decrease in retail used vehicle gross profit (loss) per unit (including the effect of inventory valuation adjustments recorded in the second quarter of 2023), offset partially by higher retail used vehicle unit sales volume.

Reported retail used vehicle revenue increased 9% and 3% during the three and nine months ended September 30, 2023, respectively, driven primarily by an increase in retail used vehicle unit sales volume. F&I revenue increased 17% and 12%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

during the three and nine months ended September 30, 2023, driven primarily by an increase in retail used vehicle unit sales volume, offset partially by a decrease in F&I gross profit per unit. Reported combined retail used vehicle and F&I gross profit per unit decreased $101 per unit, or 4%, to $2,767 per unit during the three months ended September 30, 2023, and decreased $680 per unit, or 25%, to $2,095 per unit during the nine months ended September 30, 2023, due primarily to higher inventory acquisition costs as a result of increases in wholesale auction prices during the three and nine months ended September 30, 2023.

Reported wholesale vehicle gross profit increased approximately $0.2 million during the three months ended September 30, 2023, primarily due to an increase in wholesale vehicle gross profit per unit, and decreased approximately $2.3 million during the nine months ended September 30, 2023, primarily due to a decrease in wholesale vehicle gross profit per unit. 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 37 and 57 days as of September 30, 2023 and 2022, respectively.

Same market total revenues increased 73% and 50% during the three and nine months ended September 30, 2023, respectively, driven primarily by an increase in retail used vehicle unit sales volume. Same market total gross profit increased 126% and 92% during the three and nine months ended September 30, 2023, respectively, driven primarily by an increase in retail used vehicle unit sales volume.

Powersports Segment

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 reported basis, except where otherwise noted. In the third quarter of 2022, we acquired one powersports business with seven locations, and, in the first quarter of 2023, we acquired one powersports business with five locations.

In the three and nine months ended September 30, 2023, reported total revenue was $57.0 million and $136.0 million, respectively, and reported total gross profit was $20.8 million and $43.4 million, respectively.

Reported retail new vehicle revenue for the three and nine months ended September 30, 2023 was $26.8 million and $72.5 million, respectively, and reported retail new vehicle gross profit was $5.9 million and $14.3 million, respectively, based on a retail new vehicle average selling price of $19,271 and $18,618, respectively, and a retail new vehicle gross profit per unit of $4,213 per unit and $3,680 per unit, respectively. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 107 days as of September 30, 2023. We believe that in a normal production environment, the level of new vehicle inventory days’ supply in our Powersports Segment should be in the 90- to 120-day range, depending on seasonality.

Reported retail used vehicle revenue for the three and nine months ended September 30, 2023 was $4.9 million and $17.1 million, respectively, and reported retail used vehicle gross profit was $2.4 million and $4.7 million, respectively, based on a retail used vehicle average selling price of $5,807 and $8,683, respectively, and a retail used vehicle gross profit per unit of $2,833 per unit and $2,407 per unit, respectively. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 37 days as of September 30, 2023, due primarily to seasonally elevated sales in the quarter ended September 30, 2023. Going forward, we generally expect to maintain a used vehicle inventory days’ supply in our Powersports Segment in the 75- to 100-day range, depending on seasonality.

Reported Fixed Operations revenue for the three and nine months ended September 30, 2023 was $21.6 million and $38.6 million, respectively, and reported Fixed Operations gross profit was $10.2 million and $18.5 million, respectively. Customer pay revenue for the three and nine months ended September 30, 2023 was $4.5 million and $10.5 million, respectively, and customer pay gross profit was $2.7 million and $6.0 million, respectively. Warranty revenue for the three and nine months ended September 30, 2023 was $0.5 million and $1.3 million, respectively, and warranty gross profit was $0.3 million and $0.7 million, respectively. Wholesale parts revenue for the three and nine months ended September 30, 2023 was $0.2 million and $0.5 million, respectively. There was no wholesale parts gross profit for the three months ended September 30, 2023 and wholesale parts gross profit for the nine months ended September 30, 2023 was $0.1 million. Internal, sublet and other revenue for the three and nine months ended September 30, 2023 was $16.4 million and $26.3 million, respectively, and internal, sublet and other gross profit was $7.2 million and $11.7 million, respectively.

Reported F&I revenue for the three and nine months ended September 30, 2023 was $2.4 million and $5.9 million, respectively, based on F&I gross profit per retail unit of $1,075 per unit and $1,006 per unit, respectively.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations – Consolidated

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores and EchoPark stores since the beginning of 2022, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

New Vehicles – Consolidated

New vehicle revenues include the sale of new vehicles, including new powersports vehicles, to retail customers, as well as the sale of fleet vehicles to businesses for use in their operations. New vehicle revenues and gross profit can be influenced by vehicle manufacturer incentives to consumers (which vary from cash-back incentives to low interest rate financing, among other things), the availability of consumer credit and the level and type of manufacturer-to-dealer incentives, as well as manufacturers providing adequate inventory allocations to our dealerships to meet consumer demand. The automobile manufacturing industry is cyclical and historically has experienced periodic downturns characterized by oversupply and weak demand, both within specific brands and in the industry as a whole. As an automotive retailer, we seek to mitigate the effects of this sales cycle by maintaining a diverse brand mix of dealerships. Our brand diversity allows us to offer a broad range of products at a wide range of prices from lower-priced economy vehicles to luxury vehicles and powersports vehicles.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
Brand	2023		2022		2023		2022
Luxury:
BMW	24	%	25	%	25	%	25	%
Mercedes	13	%	14	%	14	%	13	%
Audi	7	%	6	%	6	%	6	%
Lexus	5	%	5	%	5	%	5	%
Porsche	4	%	4	%	4	%	4	%
Land Rover	4	%	3	%	4	%	3	%
Cadillac	2	%	2	%	2	%	2	%
Volvo	1	%	1	%	1	%	1	%
MINI	1	%	1	%	1	%	—	%
Other Luxury (1)	1	%	—	%	—	%	—	%
Total Luxury	62	%	61	%	62	%	59	%
Mid-line Import:
Honda	11	%	8	%	11	%	8	%
Toyota	10	%	9	%	9	%	9	%
Volkswagen	2	%	2	%	2	%	2	%
Hyundai	1	%	2	%	1	%	2	%
Other Mid-line Import (2)	—	%	—	%	—	%	1	%
Total Mid-line Import	24	%	21	%	23	%	22	%
Domestic:
General Motors (3)	5	%	7	%	6	%	7	%
Chrysler	5	%	6	%	5	%	6	%
Ford	4	%	5	%	4	%	6	%
Total Domestic	14	%	18	%	15	%	19	%
Total	100	%	100	%	100	%	100	%

(1)Includes Alfa Romeo, Infiniti, Jaguar and Maserati.

(2)Includes Mazda, Nissan and Subaru.

(3)Includes Buick, Chevrolet and GMC.

The U.S. retail automotive industry’s new vehicle unit sales volume reflects all brands marketed or sold in the U.S. This industry sales volume includes brands we do not sell and markets in which we do not operate, therefore, changes in our new vehicle unit sales volume may not trend directly in line with changes in the industry new vehicle unit sales volume. We believe that the industry retail new vehicle unit sales volume is a more meaningful metric for comparing our new vehicle unit sales volume to the industry due to our minimal fleet vehicle business.

U.S. retail new vehicle SAAR, fleet new vehicle seasonally adjusted annual rate of unit sales volume (the “fleet new vehicle SAAR”) and total new vehicle SAAR were as follows:

	Three Months Ended September 30,		Better / (Worse)		Nine Months Ended September 30,		Better / (Worse)
	2023	2022	% Change		2023	2022	% Change
	(In millions of vehicles)
U.S. Retail new vehicle SAAR (1)	12.6	11.2	13	%	12.7	11.8	8	%
U.S. Fleet new vehicle SAAR	2.9	2.2	32	%	2.8	1.9	47	%
U.S. Total new vehicle SAAR (1)	15.5	13.4	16	%	15.5	13.7	13	%

(1)Source: PIN from J.D. Power

23

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported new vehicle results (combined retail and fleet data) were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	1,573.5		$	1,371.8		$	201.7	15	%
Fleet new vehicle revenue	23.2			32.0			(8.8)		(28)	%
Total new vehicle revenue	$	1,596.7		$	1,403.8		$	192.9	14	%
Retail new vehicle gross profit	$	131.4		$	162.2		$	(30.8)	(19)	%
Fleet new vehicle gross profit	0.9			1.3			(0.4)		(31)	%
Total new vehicle gross profit	$	132.3		$	163.5		$	(31.2)	(19)	%
Retail new vehicle unit sales	28,260			24,776			3,484		14	%
Fleet new vehicle unit sales	469			672			(203)		(30)	%
Total new vehicle unit sales	28,729			25,448			3,281		13	%
Revenue per new retail unit	$	55,678		$	55,366		$	312	1	%
Revenue per new fleet unit	$	49,495		$	47,636		$	1,859	4	%
Total revenue per new unit	$	55,577		$	55,162		$	415	1	%
Gross profit per new retail unit	$	4,649		$	6,547		$	(1,898)	(29)	%
Gross profit per new fleet unit	$	2,046		$	1,955		$	91	5	%
Total gross profit per new unit	$	4,607		$	6,426		$	(1,819)	(28)	%
Retail gross profit as a % of revenue	8.4		%	11.8		%	(340)		bps
Fleet gross profit as a % of revenue	4.1		%	4.1		%	—		bps
Total new vehicle gross profit as a % of revenue	8.3		%	11.6		%	(330)		bps

24

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	4,624.4		$	4,067.4		$	557.0	14	%
Fleet new vehicle revenue	70.4			70.0			0.4		1	%
Total new vehicle revenue	$	4,694.8		$	4,137.4		$	557.4	13	%
Retail new vehicle gross profit	$	410.9		$	498.2		$	(87.3)	(18)	%
Fleet new vehicle gross profit	3.1			3.1			—		—	%
Total new vehicle gross profit	$	414.0		$	501.3		$	(87.3)	(17)	%
Retail new vehicle unit sales	82,671			73,890			8,781		12	%
Fleet new vehicle unit sales	1,500			1,454			46		3	%
Total new vehicle unit sales	84,171			75,344			8,827		12	%
Revenue per new retail unit	$	55,938		$	55,046		$	892	2	%
Revenue per new fleet unit	$	46,918		$	48,176		$	(1,258)	(3)	%
Total revenue per new unit	$	55,777		$	54,913		$	864	2	%
Gross profit per new retail unit	$	4,970		$	6,742		$	(1,772)	(26)	%
Gross profit per new fleet unit	$	2,059		$	2,133		$	(74)	(3)	%
Total gross profit per new unit	$	4,918		$	6,653		$	(1,735)	(26)	%
Retail gross profit as a % of revenue	8.9		%	12.2		%	(330)		bps
Fleet gross profit as a % of revenue	4.4		%	4.4		%	—		bps
Total new vehicle gross profit as a % of revenue	8.8		%	12.1		%	(330)		bps

For further analysis of new vehicle results, see the tables and discussion under the headings “New Vehicles - Franchised Dealerships Segment” and “New Vehicles - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

Used Vehicles – Consolidated

Used vehicle revenues include the sale of used vehicles, including used powersports vehicles, to retail customers and at wholesale. Used vehicle revenues are directly affected by a number of factors, including consumer demand for used vehicles, the pricing and level of manufacturer incentives on new vehicles, the number and quality of trade-ins and lease turn-ins available to our dealerships, the availability and pricing of used vehicles acquired at wholesale auction and the availability of consumer credit.

As a result of low levels of new vehicle inventory and a heightened demand for used vehicles by automobile dealers and rental car companies at wholesale auction, used vehicle prices reached an all-time high in 2022 and remain elevated above historical levels. Depending on the mix of inventory sourcing (trade-ins or purchases from customers versus wholesale auction), the days’ supply of used vehicle inventory, and the pricing strategy employed by the dealership, retail used vehicle gross profit per unit and retail used vehicle gross profit as a percentage of revenue may vary significantly from historical levels given the current used vehicle environment.

25

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported retail used vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	1,340.4		$	1,355.8		$	(15.4)	(1)	%
Gross profit	$	52.3		$	50.9		$	1.4	3	%
Unit sales	45,428			42,069			3,359		8	%
Revenue per unit	$	29,506		$	32,230		$	(2,724)	(8)	%
Gross profit per unit	$	1,150		$	1,211		$	(61)	(5)	%
Gross profit as a % of revenue	3.9		%	3.8		%	10		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	3,991.2		$	4,174.4		$	(183.2)	(4)	%
Gross profit	$	113.8		$	145.3		$	(31.5)	(22)	%
Unit sales	133,931			128,906			5,025		4	%
Revenue per unit	$	29,801		$	32,383		$	(2,582)	(8)	%
Gross profit per unit	$	849		$	1,127		$	(278)	(25)	%
Gross profit as a % of revenue	2.9		%	3.5		%	(60)		bps

For further analysis of used vehicle results, see the tables and discussion under the headings “Used Vehicles - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “Used Vehicles - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Wholesale Vehicles – Consolidated

Wholesale vehicle revenues are affected by retail new and used vehicle unit sales volume and the associated trade-in volume, as well as short-term, temporary and seasonal fluctuations in wholesale auction pricing. Since March 2020, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that the current wholesale vehicle price environment is not sustainable in the long term and expect that average wholesale vehicle pricing and related gross profit (loss) will continue to return toward long-term normalized levels in the fourth quarter of 2023, but may continue to experience volatility into 2024 or beyond. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

26

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported wholesale vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	79.3		$	114.7		$	(35.4)	(31)	%
Gross profit (loss)	$	(1.4)		$	(2.1)		$	0.7	33	%
Unit sales	7,996			8,263			(267)		(3)	%
Revenue per unit	$	9,922		$	13,874		$	(3,952)	(28)	%
Gross profit (loss) per unit	$	(180)		$	(264)		$	84	32	%
Gross profit (loss) as a % of revenue	(1.8)		%	(1.9)		%	10		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	256.3		$	404.8		$	(148.5)	(37)	%
Gross profit (loss)	$	0.5		$	0.6		$	(0.1)	(17)	%
Unit sales	25,203			27,229			(2,026)		(7)	%
Revenue per unit	$	10,166		$	14,867		$	(4,701)	(32)	%
Gross profit (loss) per unit	$	24		$	17		$	7	41	%
Gross profit (loss) as a % of revenue	0.2		%	0.1		%	10		bps

For further analysis of wholesale vehicle results, see the tables and discussion under the headings “Wholesale Vehicles – Franchised Dealerships Segment,” “Wholesale Vehicles – EchoPark Segment” and “Wholesale Vehicles – Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Fixed Operations – Consolidated

Parts, service and collision repair revenues consist of repairs and maintenance requested and paid by customers (“customer pay”), warranty repairs (manufacturer-paid), wholesale parts (sales of parts and accessories to third-party automotive repair businesses) and internal, sublet and other. Parts and service revenue is driven by the volume and mix of warranty repairs versus customer pay repairs, available service capacity (a combination of service bay count and technician availability), vehicle quality, manufacturer recalls, customer loyalty, and prepaid or manufacturer-paid maintenance programs. Internal, sublet and other primarily relate to preparation and reconditioning work performed on vehicles in inventory that are later sold to a third party and may vary based on used vehicle inventory and sales volume from period to period. When that work is performed by one of our dealerships or stores, the work is classified as internal. In the event the work is performed by a third party on our behalf, it is classified as sublet.

We believe that, over time, vehicle quality will continue to improve, but vehicle complexity and the associated demand for repairs by qualified technicians at manufacturer-affiliated dealerships may result in market share gains that could offset any revenue lost from improvement in vehicle quality. We also believe that, over the long term, we have the ability to continue to optimize service capacity and customer retention at our dealerships and stores to further increase Fixed Operations revenues. Manufacturers continue to extend new vehicle warranty periods (in particular for battery electric vehicles, or “BEVs”) and have also begun to include regular maintenance items in the warranty or complimentary maintenance program coverage. These factors, over the long term, combined with the extended manufacturer warranties on certified pre-owned vehicles, should facilitate growth in our parts and service business. Barriers to long-term growth may include reductions in the rate paid by manufacturers to dealers for warranty repair work performed, as well as the improved quality and design of vehicles that may affect the level and frequency of future customer pay or warranty-related repair revenues.

27

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported Fixed Operations results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	209.7		$	171.9		$	37.8	22	%
Warranty	62.0			60.4			1.6		3	%
Wholesale parts	51.3			49.9			1.4		3	%
Internal, sublet and other	130.4			126.0			4.4		3	%
Total revenue	$	453.4		$	408.2		$	45.2	11	%
Gross profit
Customer pay	$	118.0		$	100.8		$	17.2	17	%
Warranty	36.6			34.2			2.4		7	%
Wholesale parts	9.1			9.1			—		—	%
Internal, sublet and other	61.6			58.7			2.9		5	%
Total gross profit	$	225.3		$	202.8		$	22.5	11	%
Gross profit as a % of revenue
Customer pay	56.3		%	58.6		%	(230)		bps
Warranty	58.9		%	56.7		%	220		bps
Wholesale parts	17.8		%	18.2		%	(40)		bps
Internal, sublet and other	47.2		%	46.6		%	60		bps
Total gross profit as a % of revenue	49.7		%	49.7		%	—		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	621.1		$	501.2		$	119.9	24	%
Warranty	180.1			168.2			11.9		7	%
Wholesale parts	159.3			149.9			9.4		6	%
Internal, sublet and other	367.1			369.3			(2.2)		(1)	%
Total revenue	$	1,327.6		$	1,188.6		$	139.0	12	%
Gross profit
Customer pay	$	348.0		$	290.2		$	57.8	20	%
Warranty	105.7			98.3			7.4		8	%
Wholesale parts	28.3			27.0			1.3		5	%
Internal, sublet and other	176.6			172.9			3.7		2	%
Total gross profit	$	658.6		$	588.4		$	70.2	12	%
Gross profit as a % of revenue
Customer pay	56.0		%	57.9		%	(190)		bps
Warranty	58.7		%	58.5		%	20		bps
Wholesale parts	17.8		%	18.0		%	(20)		bps
Internal, sublet and other	48.1		%	46.8		%	130		bps
Total gross profit as a % of revenue	49.6		%	49.5		%	10		bps

For further analysis of Fixed Operations results, see the tables and discussion under the headings “Fixed Operations - Franchised Dealerships Segment” and “Fixed Operations - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

28

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

F&I – Consolidated

Finance, insurance and other, net revenues include commissions for arranging third-party vehicle financing and insurance, sales of third-party extended warranties and service contracts for vehicles, and sales of other aftermarket products. In connection with vehicle financing, extended warranties and service contracts, other aftermarket products and insurance contracts, we receive commissions from the third-party providers for originating these contracts. F&I revenues are recognized net of actual and estimated future chargebacks and other costs associated with originating contracts (as a result, reported F&I revenues and F&I gross profit are the same amount, resulting in a 100% gross margin for F&I). F&I revenues are affected by the level of new and retail used vehicle unit sales volume, the age and average selling price of vehicles sold, the level of manufacturer financing specials or leasing incentives, and our F&I penetration rate for each type of F&I product. The F&I penetration rate represents the number of finance contracts, extended warranties and service contracts, other aftermarket products or insurance contracts that we are able to originate per vehicle sold, expressed as a percentage.

Yield spread premium is another term for the commission earned by our dealerships for arranging vehicle financing for consumers. The amount of the commission could be zero, a flat fee or an actual spread between the interest rate charged to the consumer and the interest rate provided by the third-party direct financing source (e.g., a commercial bank, credit union or manufacturer captive finance company). We have established caps on the potential yield spread premium our dealerships can earn with all finance sources. We believe the yield spread premium we earn for arranging vehicle financing represents value to the consumer in numerous ways, including the following:

•lower cost, below-market financing is often available only from the manufacturers’ captives and franchised dealers;

•ease of access to multiple high-quality lending sources;

•lease-financing alternatives are largely available only from manufacturers’ captives or other indirect lenders;

•guests with substandard credit frequently do not have direct access to potential sources of sub-prime financing; and

•guests with significant “negative equity” in their current vehicle (i.e., the guest’s current vehicle is worth less than the balance of their vehicle loan or lease obligation) frequently are unable to pay off the loan on their current vehicle and finance the purchase or lease of a replacement new or used vehicle without the assistance of a franchised dealership’s network of lending sources.

Our consolidated reported F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	173.7	$	165.6	$	8.1	5	%
Total combined retail new and used vehicle unit sales	73,688		66,845		6,843		10	%
Gross profit per retail unit (excludes fleet)	$	2,357	$	2,477	$	(120)	(5)	%

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	517.7	$	505.3	$	12.4	2	%
Total combined retail new and used vehicle unit sales	216,602		202,796		13,806		7	%
Gross profit per retail unit (excludes fleet)	$	2,390	$	2,492	$	(102)	(4)	%

For further analysis of F&I results, see the tables and discussion under the headings “F&I - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “F&I - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

29

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations – Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores since the beginning of 2022, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. Please refer to the same store tables and discussion on the following pages for more meaningful comparison and discussion of financial results on a comparable store basis.

30

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

New Vehicles – Franchised Dealerships Segment

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

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Retail new vehicle revenue:
Same store	$	1,538.1	$	1,341.9	$	196.2	15	%
Acquisitions, open points, dispositions and holding company	8.6		17.7		(9.1)		NM
Total as reported	$	1,546.7	$	1,359.6	$	187.1	14	%
Fleet new vehicle revenue:
Same store	$	23.2	$	32.0	$	(8.8)	(28)	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	$	23.2	$	32.0	$	(8.8)	(28)	%
Total new vehicle revenue:
Same store	$	1,561.3	$	1,373.9	$	187.4	14	%
Acquisitions, open points, dispositions and holding company	8.6		17.7		(9.1)		NM
Total as reported	$	1,569.9	$	1,391.6	$	178.3	13	%
Retail new vehicle gross profit:
Same store	$	125.0	$	158.8	$	(33.8)	(21)	%
Acquisitions, open points, dispositions and holding company	0.5		1.9		(1.4)		NM
Total as reported	$	125.5	$	160.7	$	(35.2)	(22)	%
Fleet new vehicle gross profit:
Same store	$	1.0	$	1.3	$	(0.3)	(23)	%
Acquisitions, open points, dispositions and holding company	(0.1)		—		(0.1)		NM
Total as reported	$	0.9	$	1.3	$	(0.4)	(31)	%
Total new vehicle gross profit:
Same store	$	126.0	$	160.1	$	(34.1)	(21)	%
Acquisitions, open points, dispositions and holding company	0.4		1.9		(1.5)		NM
Total as reported	$	126.4	$	162.0	$	(35.6)	(22)	%
Retail new vehicle unit sales:
Same store	26,727		23,816		2,911		12	%
Acquisitions, open points, dispositions and holding company	142		425		(283)		NM
Total as reported	26,869		24,241		2,628		11	%
Fleet new vehicle unit sales:
Same store	469		672		(203)		(30)	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	469		672		(203)		(30)	%
Total new vehicle unit sales:
Same store	27,196		24,488		2,708		11	%
Acquisitions, open points, dispositions and holding company	142		425		(283)		NM
Total as reported	27,338		24,913		2,425		10	%
NM = Not Meaningful

31

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Retail new vehicle revenue:
Same store	$	4,491.8	$	3,995.7	$	496.1	12	%
Acquisitions, open points, dispositions and holding company	59.1		51.4		7.7		NM
Total as reported	$	4,550.9	$	4,047.1	$	503.8	12	%
Fleet new vehicle revenue:
Same store	$	70.4	$	70.0	$	0.4	1	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	$	70.4	$	70.0	$	0.4	1	%
Total new vehicle revenue:
Same store	$	4,562.2	$	4,065.7	$	496.5	12	%
Acquisitions, open points, dispositions and holding company	59.1		51.4		7.7		NM
Total as reported	$	4,621.3	$	4,117.1	$	504.2	12	%
Retail new vehicle gross profit:
Same store	$	392.2	$	488.8	$	(96.6)	(20)	%
Acquisitions, open points, dispositions and holding company	4.3		5.7		(1.4)		NM
Total as reported	$	396.5	$	494.5	$	(98.0)	(20)	%
Fleet new vehicle gross profit:
Same store	$	3.1	$	3.1	$	—	—	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	$	3.1	$	3.1	$	—	—	%
Total new vehicle gross profit:
Same store	$	395.3	$	491.9	$	(96.6)	(20)	%
Acquisitions, open points, dispositions and holding company	4.3		5.7		(1.4)		NM
Total as reported	$	399.6	$	497.6	$	(98.0)	(20)	%
Retail new vehicle unit sales:
Same store	77,567		71,986		5,581		8	%
Acquisitions, open points, dispositions and holding company	1,199		1,199		—		NM
Total as reported	78,766		73,185		5,581		8	%
Fleet new vehicle unit sales:
Same store	1,500		1,454		46		3	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	1,500		1,454		46		3	%
Total new vehicle unit sales:
Same store	79,067		73,440		5,627		8	%
Acquisitions, open points, dispositions and holding company	1,199		1,199		—		NM
Total as reported	80,266		74,639		5,627		8	%
NM = Not Meaningful

32

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported new vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	1,546.7		$	1,359.6		$	187.1	14	%
Fleet new vehicle revenue	23.2			32.0			(8.8)		(28)	%
Total new vehicle revenue	$	1,569.9		$	1,391.6		$	178.3	13	%
Retail new vehicle gross profit	$	125.5		$	160.7		$	(35.2)	(22)	%
Fleet new vehicle gross profit	0.9			1.3			(0.4)		(31)	%
Total new vehicle gross profit	$	126.4		$	162.0		$	(35.6)	(22)	%
Retail new vehicle unit sales	26,869			24,241			2,628		11	%
Fleet new vehicle unit sales	469			672			(203)		(30)	%
Total new vehicle unit sales	27,338			24,913			2,425		10	%
Revenue per new retail unit	$	57,561		$	56,087		$	1,474	3	%
Revenue per new fleet unit	$	49,495		$	47,636		$	1,859	4	%
Total revenue per new unit	$	57,422		$	55,859		$	1,563	3	%
Gross profit per new retail unit	$	4,672		$	6,627		$	(1,955)	(30)	%
Gross profit per new fleet unit	$	2,046		$	1,955		$	91	5	%
Total gross profit per new unit	$	4,627		$	6,501		$	(1,874)	(29)	%
Retail gross profit as a % of revenue	8.1		%	11.8		%	(370)		bps
Fleet gross profit as a % of revenue	4.1		%	4.1		%	—		bps
Total new vehicle gross profit as a % of revenue	8.1		%	11.6		%	(350)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	4,550.9		$	4,047.1		$	503.8	12	%
Fleet new vehicle revenue	70.4			70.0			0.4		1	%
Total new vehicle revenue	$	4,621.3		$	4,117.1		$	504.2	12	%
Retail new vehicle gross profit	$	396.5		$	494.5		$	(98.0)	(20)	%
Fleet new vehicle gross profit	3.1			3.1			—		—	%
Total new vehicle gross profit	$	399.6		$	497.6		$	(98.0)	(20)	%
Retail new vehicle unit sales	78,766			73,185			5,581		8	%
Fleet new vehicle unit sales	1,500			1,454			46		3	%
Total new vehicle unit sales	80,266			74,639			5,627		8	%
Revenue per new retail unit	$	57,778		$	55,299		$	2,479	4	%
Revenue per new fleet unit	$	46,918		$	48,164		$	(1,246)	(3)	%
Total revenue per new unit	$	57,575		$	55,160		$	2,415	4	%
Gross profit per new retail unit	$	5,034		$	6,757		$	(1,723)	(25)	%
Gross profit per new fleet unit	$	2,059		$	2,132		$	(73)	(3)	%
Total gross profit per new unit	$	4,978		$	6,667		$	(1,689)	(25)	%
Retail gross profit as a % of revenue	8.7		%	12.2		%	(350)		bps
Fleet gross profit as a % of revenue	4.4		%	4.4		%	—		bps
Total new vehicle gross profit as a % of revenue	8.6		%	12.1		%	(350)		bps

33

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store new vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store new vehicle:
Retail new vehicle revenue	$	1,538.1		$	1,341.9		$	196.2	15	%
Fleet new vehicle revenue	23.2			32.0			(8.8)		(28)	%
Total new vehicle revenue	$	1,561.3		$	1,373.9		$	187.4	14	%
Retail new vehicle gross profit	$	125.0		$	158.8		$	(33.8)	(21)	%
Fleet new vehicle gross profit	1.0			1.3			(0.3)		(23)	%
Total new vehicle gross profit	$	126.0		$	160.1		$	(34.1)	(21)	%
Retail new vehicle unit sales	26,727			23,816			2,911		12	%
Fleet new vehicle unit sales	469			672			(203)		(30)	%
Total new vehicle unit sales	27,196			24,488			2,708		11	%
Revenue per new retail unit	$	57,547		$	56,345		$	1,202	2	%
Revenue per new fleet unit	$	49,495		$	47,636		$	1,859	4	%
Total revenue per new unit	$	57,408		$	56,106		$	1,302	2	%
Gross profit per new retail unit	$	4,678		$	6,666		$	(1,988)	(30)	%
Gross profit per new fleet unit	$	2,046		$	1,955		$	91	5	%
Total gross profit per new unit	$	4,633		$	6,537		$	(1,904)	(29)	%
Retail gross profit as a % of revenue	8.1		%	11.8		%	(370)		bps
Fleet gross profit as a % of revenue	4.1		%	4.1		%	—		bps
Total new vehicle gross profit as a % of revenue	8.1		%	11.7		%	(360)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store new vehicle:
Retail new vehicle revenue	$	4,491.8		$	3,995.7		$	496.1	12	%
Fleet new vehicle revenue	70.4			70.0			0.4		1	%
Total new vehicle revenue	$	4,562.2		$	4,065.7		$	496.5	12	%
Retail new vehicle gross profit	$	392.2		$	488.8		$	(96.6)	(20)	%
Fleet new vehicle gross profit	3.1			3.1			—		—	%
Total new vehicle gross profit	$	395.3		$	491.9		$	(96.6)	(20)	%
Retail new vehicle unit sales	77,567			71,986			5,581		8	%
Fleet new vehicle unit sales	1,500			1,454			46		3	%
Total new vehicle unit sales	79,067			73,440			5,627		8	%
Revenue per new retail unit	$	57,908		$	55,507		$	2,401	4	%
Revenue per new fleet unit	$	46,918		$	48,164		$	(1,246)	(3)	%
Total revenue per new unit	$	57,700		$	55,361		$	2,339	4	%
Gross profit per new retail unit	$	5,056		$	6,790		$	(1,734)	(26)	%
Gross profit per new fleet unit	$	2,059		$	2,132		$	(73)	(3)	%
Total gross profit per new unit	$	5,000		$	6,698		$	(1,698)	(25)	%
Retail gross profit as a % of revenue	8.7		%	12.2		%	(350)		bps
Fleet gross profit as a % of revenue	4.4		%	4.4		%	—		bps
Total new vehicle gross profit as a % of revenue	8.7		%	12.1		%	(340)		bps

34

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same Store Franchised Dealerships Segment Retail New Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Retail new vehicle revenue increased 15%, due primarily to a 12% increase in retail new vehicle unit sales volume, as well as a 2% increase in retail new vehicle average selling prices. Retail new vehicle gross profit decreased approximately $33.8 million, or 21%, as a result of lower retail new vehicle gross profit per unit, due primarily to higher inventory invoice costs and increased price competition as a result of higher levels of available inventory. Retail new vehicle gross profit per unit decreased $1,988 per unit, or 30%, to $4,678 per unit, due primarily to higher inventory invoice costs and increased price competition as a result of higher levels of available inventory than in the prior year period.

Same Store Franchised Dealerships Segment Retail New Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Retail new vehicle revenue increased 12%, due primarily to an 8% increase in retail new vehicle unit sales volume, as well as a 4% increase in retail new vehicle average selling prices. Retail new vehicle gross profit decreased approximately $96.6 million, or 20%, as a result of lower retail new vehicle gross profit per unit, due primarily to higher inventory invoice costs and increased price competition as a result of higher levels of available inventory. Retail new vehicle gross profit per unit decreased $1,734 per unit, or 26%, to $5,056 per unit, due primarily to higher inventory invoice costs and increased price competition as a result of higher levels of available inventory than in the prior year period.

Used Vehicles – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for retail used vehicles:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Retail used vehicle revenue:
Same store	$	775.4	$	829.2	$	(53.8)	(6)	%
Acquisitions, open points, dispositions and holding company	5.3		13.2		(7.9)		NM
Total as reported	$	780.7	$	842.4	$	(61.7)	(7)	%
Retail used vehicle gross profit:
Same store	$	42.3	$	44.5	$	(2.2)	(5)	%
Acquisitions, open points, dispositions and holding company	0.3		0.9		(0.6)		NM
Total as reported	$	42.6	$	45.4	$	(2.8)	(6)	%
Retail used vehicle unit sales:
Same store	25,371		26,122		(751)		(3)	%
Acquisitions, open points, dispositions and holding company	170		525		(355)		NM
Total as reported	25,541		26,647		(1,106)		(4)	%

NM = Not Meaningful

35

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Retail used vehicle revenue:
Same store	$	2,288.8	$	2,524.3	$	(235.5)	(9)	%
Acquisitions, open points, dispositions and holding company	34.0		43.8		(9.8)		NM
Total as reported	$	2,322.8	$	2,568.1	$	(245.3)	(10)	%
Retail used vehicle gross profit:
Same store	$	126.4	$	133.5	$	(7.1)	(5)	%
Acquisitions, open points, dispositions and holding company	1.5		2.5		(1.0)		NM
Total as reported	$	127.9	$	136.0	$	(8.1)	(6)	%
Retail used vehicle unit sales:
Same store	74,631		80,221		(5,590)		(7)	%
Acquisitions, open points, dispositions and holding company	1,214		1,660		(446)		NM
Total as reported	75,845		81,881		(6,036)		(7)	%
NM = Not Meaningful

Our Franchised Dealerships Segment reported retail used vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	780.7		$	842.4		$	(61.7)	(7)	%
Gross profit	$	42.6		$	45.4		$	(2.8)	(6)	%
Unit sales	25,541			26,647			(1,106)		(4)	%
Revenue per unit	$	30,567		$	31,615		$	(1,048)	(3)	%
Gross profit per unit	$	1,666		$	1,704		$	(38)	(2)	%
Gross profit as a % of revenue	5.4		%	5.4		%	—		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	2,322.8		$	2,568.1		$	(245.3)	(10)	%
Gross profit	$	127.9		$	136.0		$	(8.1)	(6)	%
Unit sales	75,845			81,881			(6,036)		(7)	%
Revenue per unit	$	30,625		$	31,364		$	(739)	(2)	%
Gross profit per unit	$	1,685		$	1,661		$	24	1	%
Gross profit as a % of revenue	5.5		%	5.3		%	20		bps

36

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store retail used vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store retail used vehicle:
Revenue	$	775.4		$	829.2		$	(53.8)	(7)	%
Gross profit	$	42.3		$	44.5		$	(2.2)	(5)	%
Unit sales	25,371			26,122			(751)		(3)	%
Revenue per unit	$	30,563		$	31,742		$	(1,179)	(4)	%
Gross profit per unit	$	1,668		$	1,704		$	(36)	(2)	%
Gross profit as a % of revenue	5.5		%	5.4		%	10		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store retail used vehicle:
Revenue	$	2,288.8		$	2,524.3		$	(235.5)	(9)	%
Gross profit	$	126.4		$	133.5		$	(7.1)	(5)	%
Unit sales	74,631			80,221			(5,590)		(7)	%
Revenue per unit	$	30,669		$	31,467		$	(798)	(3)	%
Gross profit per unit	$	1,694		$	1,664		$	30	2	%
Gross profit as a % of revenue	5.5		%	5.3		%	20		bps

Same Store Franchised Dealerships Segment Retail Used Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Retail used vehicle revenue decreased approximately $53.8 million, or 7%, driven primarily by a 3% decrease in retail used vehicle unit sales volume, as well as a 4% decrease in retail used vehicle average selling prices. Retail used vehicle gross profit decreased approximately $2.2 million, or 5%, driven primarily by the decrease in retail used vehicle unit sales volume and a $36 per unit, or 2%, decrease in retail used vehicle gross profit per unit during the third quarter of 2023.

Same Store Franchised Dealerships Segment Retail Used Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Retail used vehicle revenue decreased approximately $235.5 million, or 9%, driven primarily by a 7% decrease in retail used vehicle unit sales volume, as well as a 3% decrease in retail used vehicle average selling prices. Retail used vehicle gross profit decreased approximately $7.1 million, or 5%, driven primarily by the decrease in retail used vehicle unit sales volume, partially offset by a $30 per unit, or 2%, increase in retail used vehicle gross profit per unit during the nine months ended September 30, 2023.

37

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Wholesale Vehicles – Franchised Dealerships Segment

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

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total wholesale vehicle revenue:
Same store	$	51.3	$	75.1	$	(23.8)	(32)	%
Acquisitions, open points, dispositions and holding company	0.1		0.7		(0.6)		NM
Total as reported	$	51.4	$	75.8	$	(24.4)	(32)	%
Total wholesale vehicle gross profit (loss):
Same store	$	(1.4)	$	(1.9)	$	0.5	26	%
Acquisitions, open points, dispositions and holding company	(0.1)		(0.2)		0.1		NM
Total as reported	$	(1.5)	$	(2.1)	$	0.6	29	%
Total wholesale vehicle unit sales:
Same store	5,131		5,738		(607)		(11)	%
Acquisitions, open points, dispositions and holding company	32		75		(43)		NM
Total as reported	5,163		5,813		(650)		(11)	%
NM = Not Meaningful

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total wholesale vehicle revenue:
Same store	$	163.3	$	258.2	$	(94.9)	(37)	%
Acquisitions, open points, dispositions and holding company	2.0		3.0		(1.0)		NM
Total as reported	$	165.3	$	261.2	$	(95.9)	(37)	%
Total wholesale vehicle gross profit (loss):
Same store	$	—	$	(2.5)	$	2.5	100	%
Acquisitions, open points, dispositions and holding company	(0.8)		(0.5)		(0.3)		NM
Total as reported	$	(0.8)	$	(3.0)	$	2.2	73	%
Total wholesale vehicle unit sales:
Same store	15,921		18,164		(2,243)		(12)	%
Acquisitions, open points, dispositions and holding company	241		272		(31)		NM
Total as reported	16,162		18,436		(2,274)		(12)	%
NM = Not Meaningful

38

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported wholesale vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	51.4		$	75.8		$	(24.4)	(32)	%
Gross profit (loss)	$	(1.5)		$	(2.1)		$	0.6	29	%
Unit sales	5,163			5,813			(650)		(11)	%
Revenue per unit	$	9,987		$	13,028		$	(3,041)	(23)	%
Gross profit (loss) per unit	$	(288)		$	(356)		$	68	19	%
Gross profit (loss) as a % of revenue	(2.9)		%	(2.7)		%	(20)		bps

    

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	165.3		$	261.2		$	(95.9)	(37)	%
Gross profit (loss)	$	(0.8)		$	(3.0)		$	2.2	73	%
Unit sales	16,162			18,436			(2,274)		(12)	%
Revenue per unit	$	10,232		$	14,170		$	(3,938)	(28)	%
Gross profit (loss) per unit	$	(38)		$	(163)		$	125	77	%
Gross profit (loss) as a % of revenue	(0.4)		%	(1.2)		%	80		bps

Our Franchised Dealerships Segment same store wholesale vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store wholesale vehicle:
Revenue	$	51.3		$	75.1		$	(23.8)	(32)	%
Gross profit (loss)	$	(1.4)		$	(1.9)		$	0.5	26	%
Unit sales	5,131			5,738			(607)		(11)	%
Revenue per unit	$	9,994		$	13,086		$	(3,092)	(24)	%
Gross profit (loss) per unit	$	(274)		$	(333)		$	59	18	%
Gross profit (loss) as a % of revenue	(2.7)		%	(2.5)		%	(20)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same store wholesale vehicle:
Revenue	$	163.3		$	258.2		$	(94.9)	(37)	%
Gross profit (loss)	$	—		$	(2.5)		$	2.5	100	%
Unit sales	15,921			18,164			(2,243)		(12)	%
Revenue per unit	$	10,255		$	14,210		$	(3,955)	(28)	%
Gross profit (loss) per unit	$	1		$	(138)		$	139	101	%
Gross profit (loss) as a % of revenue	—		%	(1.0)		%	100		bps

39

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same Store Franchised Dealerships Segment Wholesale Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Wholesale vehicle revenue decreased approximately $23.8 million, or 32%, driven primarily by a 24% decrease in wholesale vehicle revenue per unit and an 11% decrease in wholesale vehicle unit sales volume during the third quarter of 2023. Wholesale vehicle gross loss decreased approximately $0.5 million, driven primarily by a $59 per unit, or 18%, decrease in wholesale vehicle gross loss per unit as a result of higher wholesale auction prices.

Same Store Franchised Dealerships Segment Wholesale Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Wholesale vehicle revenue decreased approximately $94.9 million, or 37%, driven primarily by a 28% decrease in wholesale vehicle revenue per unit and a 12% decrease in wholesale vehicle unit sales volume during the first nine months of 2023. Wholesale vehicle gross profit (loss) improved approximately $2.5 million, driven primarily by a $139 per unit, or 101%, improvement in wholesale vehicle gross profit (loss) per unit during the first nine months of 2023.

Fixed Operations – Franchised Dealerships Segment

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

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Total Fixed Operations revenue:
Same store	$	429.2	$	399.0	$	30.2	8	%
Acquisitions, open points, dispositions and holding company	2.6		5.7		(3.1)		NM
Total as reported	$	431.8	$	404.7	$	27.1	7	%
Total Fixed Operations gross profit:
Same store	$	213.4	$	198.0	$	15.4	8	%
Acquisitions, open points, dispositions and holding company	1.7		3.0		(1.3)		NM
Total as reported	$	215.1	$	201.0	$	14.1	7	%

NM = Not Meaningful

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Total Fixed Operations revenue:
Same store	$	1,272.7	$	1,166.9	$	105.8	9	%
Acquisitions, open points, dispositions and holding company	16.3		16.5		(0.2)		NM
Total as reported	$	1,289.0	$	1,183.4	$	105.6	9	%
Total Fixed Operations gross profit:
Same store	$	630.9	$	577.1	$	53.8	9	%
Acquisitions, open points, dispositions and holding company	9.2		8.6		0.6		NM
Total as reported	$	640.1	$	585.7	$	54.4	9	%

NM = Not Meaningful

40

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported Fixed Operations results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	205.2		$	186.6		$	18.6	10	%
Warranty	61.5			60.0			1.5		3	%
Wholesale parts	51.1			49.7			1.4		3	%
Internal, sublet and other	114.0			108.4			5.6		5	%
Total revenue	$	431.8		$	404.7		$	27.1	7	%
Gross profit
Customer pay	$	115.3		$	105.5		$	9.8	9	%
Warranty	36.3			34.0			2.3		7	%
Wholesale parts	9.1			9.0			0.1		1	%
Internal, sublet and other	54.4			52.5			1.9		4	%
Total gross profit	$	215.1		$	201.0		$	14.1	7	%
Gross profit as a % of revenue
Customer pay	56.2		%	56.6		%	(40)		bps
Warranty	59.0		%	56.6		%	240		bps
Wholesale parts	17.8		%	18.2		%	(40)		bps
Internal, sublet and other	47.7		%	48.4		%	(70)		bps
Total gross profit as a % of revenue	49.8		%	49.7		%	10		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	610.6		$	549.2		$	61.4	11	%
Warranty	178.8			167.1			11.7		7	%
Wholesale parts	158.8			149.3			9.5		6	%
Internal, sublet and other	340.8			317.8			23.0		7	%
Total revenue	$	1,289.0		$	1,183.4		$	105.6	9	%
Gross profit
Customer pay	$	342.0		$	306.5		$	35.5	12	%
Warranty	105.0			97.7			7.3		7	%
Wholesale parts	28.2			26.8			1.4		5	%
Internal, sublet and other	164.9			154.7			10.2		7	%
Total gross profit	$	640.1		$	585.7		$	54.4	9	%
Gross profit as a % of revenue
Customer pay	56.0		%	55.8		%	20		bps
Warranty	58.7		%	58.5		%	20		bps
Wholesale parts	17.8		%	18.0		%	(20)		bps
Internal, sublet and other	48.4		%	48.7		%	(30)		bps
Total gross profit as a % of revenue	49.7		%	49.5		%	20		bps

41

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store Fixed Operations results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Same store Fixed Operations:
Revenue
Customer pay	$	203.9		$	184.2		$	19.7	11	%
Warranty	61.0			59.0			2.0		3	%
Wholesale parts	51.0			49.2			1.8		4	%
Internal, sublet and other	113.3			106.6			6.7		6	%
Total revenue	$	429.2		$	399.0		$	30.2	8	%
Gross profit
Customer pay	$	114.5		$	104.3		$	10.2	10	%
Warranty	36.0			33.4			2.6		8	%
Wholesale parts	9.1			8.9			0.2		2	%
Internal, sublet and other	53.8			51.4			2.4		5	%
Total gross profit	$	213.4		$	198.0		$	15.4	8	%
Gross profit as a % of revenue
Customer pay	56.2		%	56.6		%	(40)		bps
Warranty	59.1		%	56.7		%	240		bps
Wholesale parts	17.8		%	18.1		%	(30)		bps
Internal, sublet and other	47.5		%	48.2		%	(70)		bps
Total gross profit as a % of revenue	49.7		%	49.6		%	10		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Same store Fixed Operations:
Revenue
Customer pay	$	603.2		$	542.4		$	60.8	11	%
Warranty	175.7			164.1			11.6		7	%
Wholesale parts	157.6			147.9			9.7		7	%
Internal, sublet and other	336.2			312.5			23.7		8	%
Total revenue	$	1,272.7		$	1,166.9		$	105.8	9	%
Gross profit
Customer pay	$	337.9		$	303.1		$	34.8	11	%
Warranty	103.4			96.2			7.2		7	%
Wholesale parts	28.0			26.5			1.5		6	%
Internal, sublet and other	161.6			151.3			10.3		7	%
Total gross profit	$	630.9		$	577.1		$	53.8	9	%
Gross profit as a % of revenue
Customer pay	56.0		%	55.9		%	10		bps
Warranty	58.8		%	58.6		%	20		bps
Wholesale parts	17.7		%	17.9		%	(20)		bps
Internal, sublet and other	48.1		%	48.4		%	(30)		bps
Total gross profit as a % of revenue	49.6		%	49.5		%	10		bps

42

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same Store Franchised Dealerships Segment Fixed Operations – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Fixed Operations revenue increased approximately $30.2 million, or 8%, and Fixed Operations gross profit increased approximately $15.4 million, or 8%. Customer pay gross profit increased approximately $10.2 million, or 10%, warranty gross profit increased approximately $2.6 million, or 8%, wholesale parts gross profit increased approximately $0.2 million, or 2%, and internal, sublet and other gross profit increased approximately $2.4 million, or 5%. As consumer activity and vehicle miles driven have continued to improve from pandemic-induced lows in early 2020, we have experienced a recovery in Fixed Operations activity (in particular, related to customer pay repairs) above pre-pandemic levels, and expect to continue to see elevated levels in the remainder of 2023, compared to the prior year period.

Same Store Franchised Dealerships Segment Fixed Operations – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Fixed Operations revenue increased approximately $105.8 million, or 9%, and Fixed Operations gross profit increased approximately $53.8 million, or 9%. Customer pay gross profit increased approximately $34.8 million, or 11%, warranty gross profit increased approximately $7.2 million, or 7%, wholesale parts gross profit increased approximately $1.5 million, or 6%, and internal, sublet and other gross profit increased approximately $10.3 million, or 7%. As consumer activity and vehicle miles driven have continued to improve from pandemic-induced lows in early 2020, we have experienced a recovery in Fixed Operations activity (in particular, related to customer pay repairs) above pre-pandemic levels, and expect to continue to see elevated levels in the remainder of 2023, compared to the prior year period.

F&I – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for F&I:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Total F&I revenue:
Same store	$	125.4	$	122.2	$	3.2	3	%
Acquisitions, open points, dispositions and holding company	0.6		3.6		(3.0)		NM
Total as reported	$	126.0	$	125.8	$	0.2	—	%
Total F&I gross profit per retail unit (excludes fleet):
Same store	$	2,407	$	2,525	$	(118)	(5)	%
Reported	$	2,403	$	2,473	$	(70)	(3)	%
Total combined retail new and used vehicle unit sales:
Same store	52,098		49,938		2,160		4	%
Acquisitions, open points, dispositions and holding company	312		950		(638)		NM
Total as reported	52,410		50,888		1,522		3	%

NM = Not Meaningful

43

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Total F&I revenue:
Same store	$	370.9	$	369.7	$	1.2	—	%
Acquisitions, open points, dispositions and holding company	4.5		12.4		(7.9)		NM
Total as reported	$	375.4	$	382.1	$	(6.7)	(2)	%
Total F&I gross profit per retail unit (excludes fleet):
Same store	$	2,437	$	2,429	$	8	—	%
Reported	$	2,428	$	2,464	$	(36)	(1)	%
Total combined retail new and used vehicle unit sales:
Same store	152,198		152,207		(9)		—	%
Acquisitions, open points, dispositions and holding company	2,413		2,859		(446)		NM
Total as reported	154,611		155,066		(455)		—	%

NM = Not Meaningful

Our Franchised Dealerships Segment reported F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	126.0	$	125.8	$	0.2	—	%
Total combined retail new and used vehicle unit sales	52,410		50,888		1,522		3	%
Gross profit per retail unit (excludes fleet)	$	2,403	$	2,473	$	(70)	(3)	%

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	375.4	$	382.1	$	(6.7)	(2)	%
Total combined retail new and used vehicle unit sales	154,611		155,066		(455)		—	%
Gross profit per retail unit (excludes fleet)	$	2,428	$	2,464	$	(36)	(1)	%

Our Franchised Dealerships Segment same store F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Same store F&I:
Revenue	$	125.4	$	122.2	$	3.2	3	%
Total combined retail new and used vehicle unit sales	52,098		49,938		2,160		4	%
Gross profit per retail unit (excludes fleet)	$	2,407	$	2,525	$	(118)	(5)	%

44

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Same store F&I:
Revenue	$	370.9	$	369.7	$	1.2	—	%
Total combined retail new and used vehicle unit sales	152,198		152,207		(9)		—	%
Gross profit per retail unit (excludes fleet)	$	2,437	$	2,429	$	8	—	%

Same Store Franchised Dealerships Segment F&I – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

F&I revenue increased approximately $3.2 million, or 3%, due primarily to a decrease in F&I gross profit per retail unit, partially offset by an increase in F&I in combined retail new and used vehicle unit sales volume. F&I gross profit per retail unit decreased $118 per unit, or 5%, to $2,407 per unit, due primarily to a decrease in finance and service contract penetration rates, offset partially by a higher other aftermarket contract penetration rate.

Finance contract revenue for combined new and used vehicles decreased 1%, due primarily due to a 70-basis point decrease in the finance contract penetration rate and a 4% decrease in gross profit per finance contract. We believe the decrease in the finance contract penetration rate is a result of higher average interest rates driving some customers to switch to a cash purchase or to obtain their own outside financing, particularly for used vehicles. Service contract revenue for combined new and used vehicles increased 31%, due primarily to an 65% increase in gross profit per service contract, partially offset by a 1,380-basis point decrease in the service contract penetration rate. Other aftermarket contract revenue for combined new and used vehicles was flat, due primarily to a 6% decrease in gross profit per other aftermarket contract that was offset by a 440-basis point increase in the other aftermarket contract penetration rate.

Same Store Franchised Dealerships Segment F&I – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

F&I revenue increased approximately $1.2 million due primarily to a increase in F&I gross profit per retail unit and a decrease in total combined retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $8 per unit to $2,437 per unit, due primarily to a decrease in the finance, service and other aftermarket contract penetration rates.

Finance contract revenue for combined new and used vehicles decreased 7%, due primarily to a 190-basis point decrease in the finance contract penetration rate and a 4% decrease in gross profit per finance contract. We believe the decrease in the finance contract penetration rate is a result of higher average interest rates driving some customers to switch to a cash purchase or to obtain their own outside financing, particularly for used vehicles. Service contract revenue for combined new and used vehicles increased 8%, due primarily to a 15% increase in gross profit per service contract partially offset by a 280-basis point decrease in the service contract penetration rate. Other aftermarket contract revenue for combined new and used vehicles increased 8%, due primarily to a 11% increase in gross profit per other aftermarket contract, partially offset by an 400-basis point decrease in the other aftermarket contract penetration rate.

Results of Operations – EchoPark Segment

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. Same market results may vary significantly from reported results due to the closure of stores that are no longer included in same market results.

On June 22, 2023, Sonic announced a plan to indefinitely suspend operations at eight EchoPark locations and 14 related delivery/buy centers. In addition, during the third quarter of 2023, we closed three Northwest Motorsport pre-owned locations within the EchoPark Segment.

45

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Used Vehicles and F&I – EchoPark Segment

Our EchoPark operating strategy focuses on maximizing total used vehicle-related gross profit (based on a combination of retail used vehicle unit sales volume, front-end retail used vehicle gross profit (loss) per unit and F&I gross profit per retail unit) rather than realizing traditional levels of front-end retail used vehicle gross profit (loss) per unit. As such, we believe the best per unit measure of gross profit performance at our EchoPark stores is a combined total gross profit per retail unit, which includes both front-end retail used vehicle gross profit (loss) per unit and F&I gross profit per retail unit sold. See the discussion under the heading “Results of Operations - Consolidated” for additional discussion of the macro drivers of used vehicle revenues and F&I revenues.

All Fixed Operations activity at our EchoPark stores supports our used vehicle inventory reconditioning operations and EchoPark stores do not currently perform customer pay repairs or maintenance work and are not permitted to perform manufacturer-paid warranty repairs. As such, reconditioning amounts that are classified as Fixed Operations revenues and cost of sales in our Franchised Dealerships Segment are presented as used vehicle cost of sales for the EchoPark Segment.

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis and new market/closed market basis for retail used vehicles:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total retail used vehicle revenue:
Same market	$	469.9	$	268.0	$	201.9	75	%
New markets/closed markets	84.9		243.4		(158.5)		NM
Total as reported	$	554.8	$	511.4	$	43.4	9	%
Total retail used vehicle gross profit (loss):
Same market	$	5.0	$	(2.0)	$	7.0	350	%
New markets/closed markets	2.3		6.9		(4.6)		NM
Total as reported	$	7.3	$	4.9	$	2.4	49	%
Total retail used vehicle unit sales:
Same market	17,480		9,412		8,068		86	%
New markets/closed markets	1,570		5,833		(4,263)		NM
Total as reported	19,050		15,245		3,805		25	%
NM = Not Meaningful

46

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total retail used vehicle revenue:
Same market	$	1,274.1	$	818.6	$	455.5	56	%
New markets/closed markets	377.2		782.7		(405.5)		NM
Total as reported	$	1,651.3	$	1,601.3	$	50.0	3	%
Total retail used vehicle gross profit (loss):
Same market	$	(4.3)	$	(13.7)	$	9.4	69	%
New markets/closed markets	(14.5)		21.6		(36.1)		NM
Total as reported	$	(18.8)	$	7.9	$	(26.7)	(338)	%
Total retail used vehicle unit sales:
Same market	46,997		27,911		19,086		68	%
New markets/closed markets	9,117		18,761		(9,644)		NM
Total as reported	56,114		46,672		9,442		20	%
NM = Not Meaningful

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis and new market/closed market basis for F&I:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Total F&I revenue:
Same market	$	41.7	$	22.8	$	18.9	83	%
New markets/closed markets	3.6		16.1		(12.5)		NM
Total as reported	$	45.3	$	38.9	$	6.4	16	%
NM = Not Meaningful

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Total F&I revenue:
Same market	$	114.9	$	70.0	$	44.9	64	%
New markets/closed markets	21.5		51.8		(30.3)		NM
Total as reported	$	136.4	$	121.8	$	14.6	12	%
NM = Not Meaningful

47

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our EchoPark Segment reported retail used vehicle and F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle and F&I:
Retail used vehicle revenue	$	554.8	$	511.4	$	43.4	9	%
Retail used vehicle gross profit (loss)	$	7.3	$	4.9	$	2.4	49	%
Retail used vehicle unit sales	19,050		15,245		3,805		25	%
Retail used vehicle revenue per unit	$	29,125	$	33,546	$	(4,421)	(13)	%
F&I revenue	$	45.3	$	38.9	$	6.4	17	%
Combined retail used vehicle gross profit and F&I revenue	$	52.6	$	43.8	$	8.8	20	%
Combined retail used vehicle and F&I gross profit per unit	$	2,767	$	2,868	$	(101)	(4)	%

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle and F&I:
Retail used vehicle revenue	$	1,651.3	$	1,601.3	$	50.0	3	%
Retail used vehicle gross profit (loss)	$	(18.8)	$	7.9	$	(26.7)	(338)	%
Retail used vehicle unit sales	56,114		46,672		9,442		20	%
Retail used vehicle revenue per unit	$	29,428	$	34,308	$	(4,880)	(14)	%
F&I revenue	$	136.4	$	121.8	$	14.6	12	%
Combined retail used vehicle gross profit and F&I revenue	$	117.6	$	129.7	$	(12.1)	(9)	%
Combined retail used vehicle and F&I gross profit per unit	$	2,095	$	2,775	$	(680)	(25)	%

Our EchoPark Segment same market retail used vehicle and F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Same market retail used vehicle and F&I:
Retail used vehicle revenue	$	469.9	$	268.0	$	201.9	75	%
Retail used vehicle gross profit (loss)	$	5.0	$	(2.0)	$	7.0	350	%
Retail used vehicle unit sales	17,480		9,412		8,068		86	%
Retail used vehicle revenue per unit	$	26,884	$	28,479	$	(1,595)	(6)	%
F&I revenue	$	41.7	$	22.8	$	18.9	83	%
Combined retail used vehicle gross profit and F&I revenue	$	46.7	$	20.8	$	25.9	125	%
Combined retail used vehicle and F&I gross profit per unit	$	2,672	$	2,209	$	463	21	%

48

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Same market retail used vehicle and F&I:
Retail used vehicle revenue	$	1,274.1	$	818.6	$	455.5	56	%
Retail used vehicle gross profit (loss)	$	(4.3)	$	(13.7)	$	9.4	69	%
Retail used vehicle unit sales	46,997		27,911		19,086		68	%
Retail used vehicle revenue per unit	$	27,110	$	29,329	$	(2,219)	(8)	%
F&I revenue	$	114.9	$	70.0	$	44.9	64	%
Combined retail used vehicle gross profit and F&I revenue	$	110.6	$	56.3	$	54.3	96	%
Combined retail used vehicle and F&I gross profit per unit	$	2,352	$	2,015	$	337	17	%

Same Market EchoPark Segment Retail Used Vehicles and F&I – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Retail used vehicle revenue increased approximately $201.9 million, or 75%, due primarily to an 86% increase in retail used vehicle unit sales volume, offset partially by a 6% decrease in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased approximately $25.9 million, or 125%, due primarily to an $18.9 million, or 83%, increase in F&I revenue. The increase in combined retail used vehicle and F&I gross profit per unit was due primarily to improvements in inventory acquisition costs and more efficient allocation of used vehicle inventory across a smaller number of operating locations in the three months ended September 30, 2023.

Same Market EchoPark Segment Retail Used Vehicles and F&I – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Retail used vehicle revenue increased approximately $455.5 million, or 56%, due primarily to a 68% increase in retail used vehicle unit sales volume, offset partially by an 8% decrease in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased approximately $54.3 million, or 96%, due primarily to a $44.9 million, or 64%, increase in F&I revenue. The increase in combined retail used vehicle and F&I gross profit per unit was due primarily to improvements in inventory acquisition costs and more efficient allocation of used vehicle inventory across a smaller number of operating locations in the nine months ended September 30, 2023.

49

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Wholesale Vehicles – EchoPark Segment

See the discussion under the heading “Results of Operations – Consolidated” for additional discussion of the macro drivers of wholesale vehicle revenues.

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis and new market/closed market basis for wholesale vehicles:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total wholesale vehicle revenue:
Same market	$	16.0	$	14.8	$	1.2	8	%
New markets/closed markets	10.6		24.1		(13.5)		NM
Total as reported	$	26.6	$	38.9	$	(12.3)	(32)	%
Total wholesale vehicle gross profit (loss):
Same market	$	—	$	(0.1)	$	0.1	100	%
New markets/closed markets	0.2		0.1		0.1		NM
Total as reported	$	0.2	$	—	$	0.2	100	%
Total wholesale vehicle unit sales:
Same market	2,305		1,495		810		54	%
New markets/closed markets	435		954		(519)		NM
Total as reported	2,740		2,449		291		12	%
NM = Not Meaningful

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Total wholesale vehicle revenue:
Same market	$	56.4	$	73.0	$	(16.6)	(23)	%
New markets/closed markets	32.7		70.3		(37.6)		NM
Total as reported	$	89.1	$	143.3	$	(54.2)	(38)	%
Total wholesale vehicle gross profit (loss):
Same market	$	1.1	$	2.0	$	(0.9)	(45)	%
New markets/closed markets	0.2		1.6		(1.4)		NM
Total as reported	$	1.3	$	3.6	$	(2.3)	(64)	%
Total wholesale vehicle unit sales:
Same market	7,010		5,828		1,182		20	%
New markets/closed markets	1,881		2,964		(1,083)		NM
Total as reported	8,891		8,792		99		1	%
NM = Not Meaningful

50

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our EchoPark Segment reported wholesale vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	26.6		$	38.9		$	(12.3)	(32)	%
Gross profit (loss)	$	0.2		$	—		$	0.2	100	%
Unit sales	2,740			2,449			291		12	%
Revenue per unit	$	9,652		$	15,873		$	(6,221)	(39)	%
Gross profit (loss) per unit	$	23		$	(44)		$	67	NM
Gross profit (loss) as a % of revenue	0.2		%	(0.3)		%	50		bps
NM = Not Meaningful

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	89.1		$	143.3		$	(54.2)	(38)	%
Gross profit (loss)	$	1.3		$	3.6		$	(2.3)	(64)	%
Unit sales	8,891			8,792			99		1	%
Revenue per unit	$	10,014		$	16,307		$	(6,293)	(39)	%
Gross profit (loss) per unit	$	143		$	394		$	(251)	(64)	%
Gross profit (loss) as a % of revenue	1.4		%	2.4		%	(100)		bps

Our EchoPark Segment same market wholesale vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same market wholesale vehicle:
Revenue	$	16.0		$	14.8		$	1.2	8	%
Gross profit (loss)	$	—		$	(0.1)		$	0.1	100	%
Unit sales	2,305			1,495			810		54	%
Revenue per unit	$	6,910		$	9,871		$	(2,961)	(30)	%
Gross profit (loss) per unit	$	15		$	(86)		$	101	117	%
Gross profit (loss) as a % of revenue	0.2		%	(0.9)		%	110		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Same market wholesale vehicle:
Revenue	$	56.4		$	73.0		$	(16.6)	(23)	%
Gross profit (loss)	$	1.1		$	2.0		$	(0.9)	(45)	%
Unit sales	7,010			5,828			1,182		20	%
Revenue per unit	$	8,049		$	12,539		$	(4,490)	(36)	%
Gross profit (loss) per unit	$	170		$	349		$	(179)	(51)	%
Gross profit (loss) as a % of revenue	2.1		%	2.8		%	(70)		bps

Same Market EchoPark Segment Wholesale Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Same market wholesale vehicle revenue increased approximately $1.2 million, or 8%, due primarily to a 54% increase in wholesale vehicle unit sales volume, offset partially by a 30% decrease in wholesale vehicle revenue per unit. As we adjust the

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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.

Same Market EchoPark Segment Wholesale Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Same market wholesale vehicle revenue decreased approximately $16.6 million, or 23%, due primarily to a 36% decrease in wholesale vehicle revenue per unit, offset partially by a 20% increase 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.

Results of Operations – Powersports Segment

Our Powersports Segment consists of eight stores acquired during 2022 and five stores acquired in the first quarter of 2023. As a result of the timing of acquisitions in our Powersports Segment, we believe presentation and discussion of same store results is not meaningful. The following discussion of new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a reported basis, except where otherwise noted. Our Powersports Segment results are subject to seasonal variations, such that the second and third quarters are generally expected to contribute higher revenues and segment income than the first and fourth quarters.

New Vehicles – Powersports Segment

Our Powersports Segment reported retail new vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail new vehicle:
Revenue	$	26.8		$	10.6		$	16.2	153	%
Gross profit	$	5.9		$	2.1		$	3.8	181	%
Unit sales	1,391			490			901		184	%
Revenue per unit	$	19,271		$	21,537		$	(2,266)	(11)	%
Gross profit per unit	$	4,213		$	4,304		$	(91)	(2)	%
Gross profit as a % of revenue	21.9		%	20.0		%	190		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail new vehicle:
Revenue	$	72.5		$	13.0		$	59.5	458	%
Gross profit	$	14.3		$	2.7		$	11.6	430	%
Unit sales	3,894			579			3,315		573	%
Revenue per unit	$	18,618		$	22,553		$	(3,935)	(17)	%
Gross profit per unit	$	3,680		$	4,742		$	(1,062)	(22)	%
Gross profit as a % of revenue	19.8		%	21.0		%	(120)		bps

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Reported Powersports Segment Retail New Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Reported retail new vehicle revenue increased approximately $16.2 million and reported retail new vehicle gross profit increased approximately $3.8 million, due primarily to the timing of acquisitions. Reported retail new vehicle gross profit per unit decreased $91 per unit, or 2%, to $4,213 per unit, due primarily to the timing of acquisitions and changes in brand mix.

Reported Powersports Segment Retail New Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Reported retail new vehicle revenue increased approximately $59.5 million and reported retail new vehicle gross profit increased approximately $11.6 million, due primarily to the timing of acquisitions. Reported retail new vehicle gross profit per unit decreased $1,062 per unit, or 22%, to $3,680 per unit, due primarily to the timing of acquisitions and changes in brand mix.

Used Vehicles – Powersports Segment

Our Powersports Segment reported retail used vehicle results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	4.9		$	2.0		$	2.9	145	%
Gross profit	$	2.4		$	0.6		$	1.8	300	%
Unit sales	837			177			660		373	%
Revenue per unit	$	5,807		$	11,562		$	(5,755)	(50)	%
Gross profit per unit	$	2,833		$	3,328		$	(495)	(15)	%
Gross profit as a % of revenue	48.8		%	28.8		%	2,000		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	17.1		$	5.0		$	12.1	242	%
Gross profit	$	4.7		$	1.4		$	3.3	236	%
Unit sales	1,972			353			1,619		459	%
Revenue per unit	$	8,683		$	14,144		$	(5,461)	(39)	%
Gross profit per unit	$	2,407		$	3,677		$	(1,270)	(35)	%
Gross profit as a % of revenue	27.7		%	26.0		%	170		bps

Reported Powersports Segment Retail Used Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Reported retail used vehicle revenue increased approximately $2.9 million and reported retail used vehicle gross profit increased approximately $1.8 million, due primarily to the timing of acquisitions. Reported retail used vehicle gross profit per unit decreased $495 per unit, or 15%, to $2,833 per unit, due primarily to the timing of acquisitions and changes in brand mix.

Reported Powersports Segment Retail Used Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Reported retail used vehicle revenue increased approximately $12.1 million and reported retail used vehicle gross profit increased approximately $3.3 million, due primarily to the timing of acquisitions. Reported retail used vehicle gross profit per unit decreased $1,270 per unit, or 35%, to $2,407 per unit, due primarily to the timing of acquisitions and changes in brand mix.

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Wholesale Vehicles – Powersports Segment

Our Powersports Segment reported wholesale vehicle results were as follows: 

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	1.3		$	—		$	1.3	100	%
Gross profit (loss)	$	(0.1)		$	—		$	(0.1)	(100)	%
Unit sales	93			9			84		933	%
Revenue per unit	$	14,282		$	4,011		$	10,271	256	%
Gross profit (loss) per unit	$	(188)		$	—		$	(188)	(100)	%
Gross profit (loss) as a % of revenue	(1.3)		%	—		%	(130)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	1.9		$	0.3		$	1.6	533	%
Gross profit (loss)	$	—		$	—		$	—	—	%
Unit sales	150			29			121		417	%
Revenue per unit	$	12,157		$	7,342		$	4,815	66	%
Gross profit (loss) per unit	$	(344)		$	(2,095)		$	1,751	84	%
Gross profit (loss) as a % of revenue	(2.8)		%	(1.0)		%	(180)		bps

Reported Powersports Segment Wholesale Vehicles – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Reported wholesale vehicle revenue increased approximately $1.3 million, due to the timing of acquisitions. Reported wholesale vehicle gross profit decreased approximately $0.1 million.

Reported Powersports Segment Wholesale Vehicles – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Reported wholesale vehicle revenue increased approximately $1.6 million, due to the timing of acquisitions. Reported wholesale vehicle gross profit was flat.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Fixed Operations – Powersports Segment

Our Powersports Segment reported Fixed Operations results were as follows:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	4.5		$	1.6		$	2.9	181	%
Warranty	0.5			0.2			0.3		150	%
Wholesale parts	0.2			0.1			0.1		100	%
Internal, sublet and other	16.4			1.6			14.8		925	%
Total revenue	$	21.6		$	3.5		$	18.1	517	%
Gross profit
Customer pay	$	2.7		$	0.9		$	1.8	200	%
Warranty	0.3			0.2			0.1		50	%
Wholesale parts	—			—			—		—	%
Internal, sublet and other	7.2			0.7			6.5		929	%
Total gross profit	$	10.2		$	1.8		$	8.4	467	%
Gross profit as a % of revenue
Customer pay	59.7		%	57.4		%	230		bps
Warranty	56.5		%	65.9		%	(940)		bps
Wholesale parts	15.3		%	15.9		%	(60)		bps
Internal, sublet and other	43.9		%	43.8		%	10		bps
Total gross profit as a % of revenue	47.1		%	51.8		%	(470)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	10.5		$	3.1		$	7.4	239	%
Warranty	1.3			0.4			0.9		225	%
Wholesale parts	0.5			0.1			0.4		400	%
Internal, sublet and other	26.3			1.6			24.7		NM
Total revenue	$	38.6		$	5.2		$	33.4	642	%
Gross profit
Customer pay	$	6.0		$	1.9		$	4.1	216	%
Warranty	0.7			0.3			0.4		133	%
Wholesale parts	0.1			—			0.1		100	%
Internal, sublet and other	11.7			0.5			11.2		NM
Total gross profit	$	18.5		$	2.7		$	15.8	585	%
Gross profit as a % of revenue
Customer pay	56.6		%	61.6		%	(500)		bps
Warranty	58.2		%	69.9		%	(1,170)		bps
Wholesale parts	17.9		%	15.5		%	240		bps
Internal, sublet and other	44.5		%	31.3		%	1,320		bps
Total gross profit as a % of revenue	47.8		%	51.1		%	(330)		bps

NM = Not Meaningful

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reported Powersports Segment Fixed Operations – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Reported Fixed Operations revenue increased approximately $18.1 million and reported Fixed Operations gross profit increased approximately $8.4 million. Customer pay revenue increased approximately $2.9 million and customer pay gross profit increased approximately $1.8 million. Warranty revenue increased approximately $0.3 million and warranty gross profit increased approximately $0.1 million. Wholesale parts revenue increased approximately $0.1 million and wholesale parts gross profit was flat. Internal, sublet and other revenue increased approximately $14.8 million and internal, sublet and other gross profit increased approximately $6.5 million.

Reported Powersports Segment Fixed Operations – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Reported Fixed Operations revenue increased approximately $33.4 million and reported Fixed Operations gross profit increased approximately $15.8 million. Customer pay revenue increased approximately $7.4 million and customer pay gross profit increased approximately $4.1 million. Warranty revenue increased approximately $0.9 million and warranty gross profit increased approximately $0.4 million. Wholesale parts revenue increased approximately $0.4 million and wholesale parts gross profit increased approximately $0.1 million. Internal, sublet and other revenue increased approximately $24.7 million and internal, sublet and other gross profit increased approximately $11.2 million.

F&I – Powersports Segment

Our Powersports Segment reported F&I results were as follows:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	2.4	$	0.9	$	1.5	167	%
Unit sales	2,228		667		1,561		234	%
Gross profit per retail unit (excludes fleet)	$	1,075	$	1,297	$	(222)	(17)	%

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	5.9		$	1.4		$	4.5	321	%
Unit sales	5,866		—	932		—	4,934		529	%
Gross profit per retail unit (excludes fleet)	$	1,006		$	1,445		$	(439)	(30)	%

Reported Powersports Segment F&I – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Reported F&I revenue increased $1.5 million and reported F&I gross profit per retail unit decreased $222 per unit, or 17%, to $1,075 per unit, due primarily to changes in brand mix. The combined new and used vehicle finance contract penetration rate was 35%, the combined new and used vehicle service contract penetration rate was 22% and the total other aftermarket contract penetration rate was 29%.

Reported Powersports Segment F&I – Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Reported F&I revenue increased $4.5 million and reported F&I gross profit per retail unit decreased $439 per unit, or 30%, to $1,006 per unit, due primarily to changes in brand mix. The combined new and used vehicle finance contract penetration rate was 41%, the combined new and used vehicle service contract penetration rate was 25% and the total other aftermarket contract penetration rate was 39%.

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Segment Results Summary

In the following table of financial data, total segment income (loss) (defined as income (loss) before taxes and impairment charges for each reportable segment) of the reportable segments is reconciled to consolidated income before taxes. See above for tables and discussion of results by reportable segment.

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Segment Revenues:
Franchised Dealerships Segment revenues:
Retail new vehicles	$	1,546.7	$	1,359.6	$	187.1	14	%
Fleet new vehicles	23.2		32.0		(8.8)		(28)	%
Total new vehicles	1,569.9		1,391.6		178.3		13	%
Used vehicles	780.7		842.4		(61.7)		(7)	%
Wholesale vehicles	51.4		75.8		(24.4)		(32)	%
Parts, service and collision repair	431.8		404.7		27.1		7	%
Finance, insurance and other, net	126.0		125.8		0.2		—	%
Franchised Dealerships Segment revenues	$	2,959.8	$	2,840.3	$	119.5	4	%
EchoPark Segment revenues:
Retail new vehicles	$	—	$	1.6	$	(1.6)	(100)	%
Used vehicles	554.8		511.4		43.4		8	%
Wholesale vehicles	26.6		38.9		(12.3)		(32)	%
Finance, insurance and other, net	45.3		38.9		6.4		16	%
EchoPark Segment revenues	$	626.7	$	590.8	$	35.9	6	%
Powersports Segment revenues:
Retail new vehicles	$	26.8	$	10.6	$	16.2	153	%
Used vehicles	4.9		2.0		2.9		145	%
Wholesale vehicles	1.3		—		1.3		100	%
Parts, service and collision repair	21.6		3.5		18.1		517	%
Finance, insurance and other, net	2.4		0.9		1.5		167	%
Powersports Segment revenues	$	57.0	$	17.0	$	40.0	235	%
Total consolidated revenues	$	3,643.5	$	3,448.1	$	195.4	6	%
Segment Income (Loss) (1):
Franchised Dealerships Segment	$	101.5	$	146.3	$	(44.8)	(31)	%
EchoPark Segment	(16.9)		(31.1)		14.2		46	%
Powersports Segment	6.6		1.2		5.4		450	%
Income before taxes	$	91.2	$	116.4	$	(25.2)	(22)	%
Segment Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment	52,410		50,888		1,522		3	%
EchoPark Segment	19,050		15,290		3,760		25	%
Powersports Segment	2,228		667		1,561		234	%
Total retail new and used vehicle unit sales volume	73,688		66,845		6,843		10	%

(1)Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges.

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	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions, except unit data)
Segment Revenues:
Franchised Dealerships Segment revenues:
Retail new vehicles	$	4,550.9	$	4,047.1	$	503.8	12	%
Fleet new vehicles	70.4		70.0		0.4		1	%
Total new vehicles	4,621.3		4,117.1		504.2		12	%
Used vehicles	2,322.8		2,568.1		(245.3)		(10)	%
Wholesale vehicles	165.3		261.2		(95.9)		(37)	%
Parts, service and collision repair	1,289.0		1,183.4		105.6		9	%
Finance, insurance and other, net	375.4		382.1		(6.7)		(2)	%
Franchised Dealerships Segment revenues	$	8,773.8	$	8,511.9	$	261.9	3	%
EchoPark Segment revenues:
Retail new vehicles	$	1.0	$	7.3	$	(6.3)	(86)	%
Used vehicles	1,651.3		1,601.3		50.0		3	%
Wholesale vehicles	89.1		143.3		(54.2)		(38)	%
Finance, insurance and other, net	136.4		121.8		14.6		12	%
EchoPark Segment revenues	$	1,877.8	$	1,873.7	$	4.1	—	%
Powersports Segment revenues:
Retail new vehicles	$	72.5	$	13.0	$	59.5	458	%
Used vehicles	17.1		5.0		12.1		242	%
Wholesale vehicles	1.9		0.3		1.6		533	%
Parts, service and collision repair	38.6		5.2		33.4		642	%
Finance, insurance and other, net	5.9		1.4		4.5		322	%
Powersports Segment revenues	$	136.0	$	24.9	$	111.1	446	%
Total consolidated revenues	$	10,787.6	$	10,410.5	$	377.1	4	%
Segment Income (Loss) (1):
Franchised Dealerships Segment	$	357.2	$	472.2	$	(115.0)	(24)	%
EchoPark Segment	(116.5)		(100.6)		(15.9)		(16)	%
Powersports Segment	9.2		0.9		8.3		922	%
Total segment income (loss)	249.9		372.5		(122.6)		(33)	%
Impairment charges	(62.6)		—		(62.6)		100	%
Income before taxes	$	187.3	$	372.5	$	(185.2)	(50)	%
Segment Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment	154,611		155,066		(455)		—	%
EchoPark Segment	56,125		46,798		9,327		20	%
Powersports Segment	5,866		932		4,934		529	%
Total retail new and used vehicle unit sales volume	216,602		202,796		13,806		7	%

(1) Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges.

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Selling, General and Administrative (“SG&A”) Expenses – Consolidated

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 IT 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.

The following tables set forth information related to our consolidated reported SG&A expenses:

	Three Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
SG&A expenses:
Compensation	$	256.0		$	255.2		$	(0.8)	—	%
Advertising	22.5			21.1			(1.4)		(7)	%
Rent	11.7			11.9			0.2		2	%
Other	119.4			110.8			(8.6)		(8)	%
Total SG&A expenses	$	409.6		$	399.0		$	(10.6)	(3)	%
SG&A expenses as a % of gross profit:
Compensation	44.0		%	43.9		%	(10)		bps
Advertising	3.9		%	3.6		%	(30)		bps
Rent	2.0		%	2.1		%	10		bps
Other	20.5		%	19.1		%	(140)		bps
Total SG&A expenses as a % of gross profit	70.4		%	68.7		%	(170)		bps

	Nine Months Ended September 30,						Better / (Worse)
	2023			2022			Change		% Change
	(In millions)
SG&A expenses:
Compensation	$	775.8		$	774.1		$	(1.7)	—	%
Advertising	71.4			72.8			1.4		2	%
Rent	34.5			38.3			3.8		10	%
Other	332.5			303.6			(28.9)		(10)	%
Total SG&A expenses	$	1,214.2		$	1,188.8		$	(25.4)	(2)	%
SG&A expenses as a % of gross profit:
Compensation	45.5		%	44.5		%	(100)		bps
Advertising	4.2		%	4.2		%	—		bps
Rent	2.0		%	2.2		%	20		bps
Other	19.5		%	17.4		%	(210)		bps
Total SG&A expenses as a % of gross profit	71.2		%	68.3		%	(290)		bps

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher IT and salary expenses, $0.9 million in severance charges, and $3.9 million in lease exit charges. Compensation expense was flat in both dollar amount and as a percentage of gross profit. 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, including higher inventory availability and lower new vehicle gross profit levels. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to the purchase of several properties that were previously leased. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher IT expenses, $0.9 million in severance charges, and $3.9 million in lease exit charges.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher IT and salary expenses, $3.1 million in severance charges, $3.9 million in lease exit charges and $1.9 million in hail damage, offset partially by a $20.7 million gain on the disposal of franchises. Compensation expense was flat in dollar amount and increased as a percentage of gross profit primarily due to lower new vehicle gross profit and lower new vehicle gross profit per unit. Advertising expense decreased in dollar amount and was flat as a percentage of gross profit as a result of adapting our advertising spending to the current retail automotive environment. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to the purchase of several properties that were previously leased. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher IT expenses, $3.1 million in severance charges, $3.9 million in lease exit charges and $1.9 million in hail damage, offset partially by a $20.7 million gain on the disposal of franchises.

Impairment Charges – Consolidated

There were no impairment charges for the three months ended September 30, 2023. Impairment charges were approximately $62.6 million for the nine months ended September 30, 2023, related to fixed assets, lease right-of-use assets, and other contractual obligations related to abandoned property as a result of our decisions to indefinitely suspend operations at certain EchoPark locations and to close certain Northwest Motorsport stores during the second and third quarters of 2023. There were no impairment charges for the three and nine months ended September 30, 2022.

Depreciation and Amortization – Consolidated

Depreciation and amortization expense increased approximately $2.4 million, or 7%, and $11.7 million, or 12%, during the three and nine months ended September 30, 2023, respectively, due primarily to acquisitions and completed construction projects and purchases of fixed assets for use in our franchised dealerships and EchoPark stores.

Interest Expense, Floor Plan – Consolidated

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 agreed upon floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense. The below discussion of interest expense, floor plan includes the effect of interest income earned on the floor plan deposit balance, unless otherwise noted. Our interest expense, floor plan fluctuates with changes in our outstanding borrowing and associated interest rates, which are variable based on SOFR or the U.S. prime rate, plus a rate spread.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Interest expense, floor plan for new vehicles increased approximately $9.0 million. The average interest rate applied to the new vehicle floor plan increased in the three months ended September 30, 2023, resulting in $6.5 million of the overall increase. The average new vehicle floor plan notes payable balance increased approximately $319.8 million, which resulted in $2.5 million of the overall increase.

Interest expense, floor plan for used vehicles decreased approximately $1.2 million including the effect of interest income earned on the floor plan deposit balance which caused $4.2 million of this decrease. Excluding the effect of interest income earned on the floor plan deposit balance, interest expense, floor plan for used vehicles increased approximately $3.0 million. Excluding the effect of interest income earned on the floor plan deposit balance, the average interest rate applied to the used vehicle floor plan increased in the three months ended September 30, 2023, driving $3.4 million of the overall increase.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The average used vehicle floor plan notes payable balance decreased approximately $42.4 million, which reduced used vehicle floor plan interest expense by approximately $0.4 million.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Interest expense, floor plan for new vehicles increased approximately $26.6 million. The average interest rate applied to the new vehicle floor plan increased in the nine months ended September 30, 2023, resulting in $22.3 million of the overall increase. The average new vehicle floor plan notes payable balance increased approximately $271.3 million, which resulted in $4.3 million of the overall increase.

Interest expense, floor plan for used vehicles increased approximately $1.6 million, including the effect of interest income earned on the floor plan deposit balance which reduced the increase by approximately $11.7 million. Excluding the effect of interest income earned on the floor plan deposit balance, interest expense, floor plan for used vehicles increased approximately $13.3 million. Excluding the effect of interest income earned on the floor plan deposit balance, the average interest rate applied to the used vehicle floor plan increased in the nine months ended September 30, 2023, resulting in $15.3 million of the overall increase. The average used vehicle floor plan notes payable balance decreased approximately $79.7 million, which reduced used vehicle floor plan interest expense by approximately $2.0 million.

Interest Expense, Other, Net – Consolidated

Interest expense, other, net is summarized in the tables below:

	Three Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Stated/coupon interest	$	22.9	$	18.0	$	(4.9)	(27)	%
Deferred loan cost amortization	1.6		1.5		(0.1)		(7)	%
Interest rate hedge expense (benefit)	0.2		—		(0.2)		(100)	%
Capitalized interest	(0.5)		(0.2)		0.3		150	%
Interest on finance lease liabilities	4.8		3.7		(1.1)		(30)	%
Other interest	—		(0.1)		(0.1)		(100)	%
Total interest expense, other, net	$	29.0	$	22.9	$	(6.1)	(27)	%

	Nine Months Ended September 30,				Better / (Worse)
	2023		2022		Change		% Change
	(In millions)
Stated/coupon interest	$	68.3	$	52.0	$	(16.3)	(31)	%
Deferred loan cost amortization	4.9		3.8		(1.1)		(29)	%
Interest rate hedge expense (benefit)	0.9		0.7		(0.2)		(29)	%
Capitalized interest	(1.6)		(1.0)		0.6		60	%
Interest on finance lease liabilities	13.7		9.3		(4.4)		(47)	%
Other interest	—		0.3		0.3		100	%
Total interest expense, other, net	$	86.2	$	65.1	$	(21.1)	(32)	%

Interest expense, other, net increased approximately $6.1 million, or 27%, during the three months ended September 30, 2023 and increased approximately $21.1 million, or 32%, during the nine months ended September 30, 2023. These increases were primarily related to higher interest rates on variable rate mortgage debt and higher interest on finance lease liabilities as a result of a rising interest rate environment, combined with increased borrowings under the 2019 Mortgage Facility.

Income Taxes

The overall effective income tax rate was 25.0% and 25.5% for the three and nine months ended September 30, 2023, respectively, and 25.0% for both the three and nine months ended September 30, 2022. Sonic’s effective income tax rate 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.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

We require cash to fund debt service, lease obligations, working capital requirements, facility improvements and other capital improvements, and dividends on our common stock and to finance acquisitions and otherwise invest in our business. We rely on cash flows from operations, borrowings under our revolving credit and floor plan borrowing arrangements, real estate mortgage financing, asset sales and offerings of debt and equity securities to meet these requirements. We were in compliance with all restrictive covenants under our debt agreements as of September 30, 2023 and expect to be in compliance for at least the next 12 months. We closely monitor our available liquidity and projected future operating results in order to remain in compliance with the restrictive covenants under the 2021 Credit Facilities, the 2019 Mortgage Facility, the indentures governing the 4.625% Notes and the 4.875% Notes, and our other debt obligations and lease arrangements. However, our liquidity could be negatively affected if we fail to comply with the financial covenants in our existing debt obligations or lease arrangements. After giving effect to the applicable restrictions on the payment of dividends under our debt agreements, as of September 30, 2023, we had approximately $245.7 million of net income and retained earnings free of such restrictions. Cash flows provided by our dealerships are derived from various sources. The primary sources include individual consumers, automobile manufacturers, automobile manufacturers’ captive finance subsidiaries and other financial institutions. Disruptions in these cash flows could have a material adverse impact on our operations and overall liquidity.

Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

We had the following liquidity resources available as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
	(In millions)
Cash and cash equivalents	$	34.6	$	229.2
Floor plan deposit balance	300.0		272.0
Availability under the 2021 Revolving Credit Facility	288.9		292.9
Availability under the 2019 Mortgage Facility	173.0		—
Total available liquidity resources	$	796.5	$	794.1

We maintain a floor plan deposit balance (as shown in the table above) that offsets interest based on the agreed upon floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense with the lender. This deposit balance is not designated as a prepayment of notes payable - floor plan, nor is it our intent to use this amount to offset principal amounts owed under notes payable - floor plan in the future, although we have the right and ability to do so. The deposit balances of approximately $300.0 million as of September 30, 2023 and $272.0 million as of December 31, 2022 are classified as other current assets in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

Floor Plan Facilities

We finance all of our new and certain of our used vehicle inventory through standardized floor plan facilities with (1) certain manufacturer captive finance companies (classified as notes payable - floor plan - trade in the accompanying unaudited condensed consolidated balance sheets) and (2) a syndicate of manufacturer-affiliated finance companies and commercial banks (classified as notes payable - floor plan - non-trade in the accompanying unaudited condensed consolidated balance sheets). These floor plan facilities are due on demand and currently bear interest at variable rates based on either one-month Term SOFR or prime plus an additional spread, as applicable. The weighted-average interest rate for our combined new and used vehicle floor plan facilities was 4.96% and 3.42% for the three months ended September 30, 2023 and 2022, respectively, and 4.87% and 2.40% for the nine months ended September 30, 2023 and 2022, respectively. Excluding the effect of interest income earned on the floor plan deposit balance, the weighted-average interest rate for our combined new and used vehicle floor plan facilities was 6.39% and 3.73% for the three months ended September 30, 2023 and 2022, respectively, and 6.24% and 2.64% for the nine months ended September 30, 2023 and 2022, respectively.

We receive floor plan assistance in the form of direct payments or credits from certain manufacturers. Floor plan assistance received is capitalized in inventory and recorded as a reduction of cost of sales when the associated inventory is sold. We received approximately $14.7 million and $12.6 million in manufacturer assistance in the three months ended September 30, 2023 and 2022, respectively, and approximately $42.9 million and $38.1 million in manufacturer assistance in the nine months ended September 30, 2023 and 2022, respectively. We recognized in cost of sales approximately $14.5 million and

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

$13.9 million in manufacturer assistance in the three months ended September 30, 2023 and 2022, respectively, and approximately $42.3 million and $39.4 million in manufacturer assistance in the nine months ended September 30, 2023 and 2022, respectively. Interest payments under each of our floor plan facilities are due monthly and we are generally not required to make principal repayments prior to the sale of the associated vehicles.

Long-Term Debt and Credit Facilities

See Note 6, “Long-Term Debt,” to the accompanying unaudited condensed consolidated financial statements for a discussion of our long-term debt, mortgage notes and credit facilities and compliance with debt covenants.

Capital Expenditures

Our capital expenditures include the purchase of land and buildings, the construction of new franchised dealerships, EchoPark and powersports stores and collision repair centers, building improvements and equipment purchased for use in our franchised dealerships and EchoPark and powersports stores. We selectively construct new or improve existing franchised dealership facilities to maintain compliance with manufacturers’ image requirements. We typically finance these projects through cash flows from operations, new mortgages or our credit facilities.

Capital expenditures in the nine months ended September 30, 2023 were approximately $153.6 million, including approximately $137.3 million related to our Franchised Dealerships Segment, approximately $14.1 million related to our EchoPark Segment and approximately $2.2 million related to our Powersports Segment. Of the total capital expenditures, approximately $71.1 million was related to facility construction projects, approximately $14.0 million was related to acquisitions of real estate (land and buildings) and approximately $68.5 million was for other fixed assets utilized in our operations.

All of the $153.6 million in gross capital expenditures in the nine months ended September 30, 2023 was funded through existing cash balances. As of September 30, 2023, commitments for facility construction projects totaled approximately $40.9 million, nearly all of which is expected to be completed in the next 12 months.

Share Repurchase Program

Our Board of Directors has authorized us to repurchase shares of our Class A Common Stock. Historically, we have used our share repurchase authorization to offset dilution caused by the exercise of stock options or the vesting of equity compensation awards and to maintain our desired capital structure. During the three months ended September 30, 2023, we repurchased approximately 1.7 million shares of our Class A Common Stock for approximately $86.7 million in open-market transactions at prevailing market prices and in connection with tax withholding on the vesting of equity compensation awards. During the nine months ended September 30, 2023, we repurchased approximately 3.3 million shares of our Class A Common Stock for approximately $177.5 million in open-market transactions at prevailing market prices and in connection with tax withholding on the vesting of equity compensation awards. As of September 30, 2023, our total remaining share repurchase authorization was approximately $286.8 million. Under the 2021 Credit Facilities, share repurchases are permitted to the extent that no Event of Default exists and we do not exceed the restrictions set forth in our debt agreements. After giving effect to the applicable restrictions on share repurchases and certain other transactions under our debt agreements, as of September 30, 2023, we had approximately $245.7 million of net income and retained earnings free of such restrictions.

Our share repurchase activity is subject to the business judgment of our Board of Directors and management, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, the current economic environment and other factors considered by our Board of Directors and management to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors and management determine our share repurchase policy in the future.

Dividends

During the three months ended September 30, 2023, our Board of Directors approved a cash dividend of $0.29 per share on all outstanding shares of Class A and Class B Common Stock as of September 15, 2023, which was paid on October 13, 2023. Subsequent to September 30, 2023, our Board of Directors approved a cash dividend of $0.30 per share on all outstanding shares of Class A and Class B Common Stock as of December 15, 2023 to be paid on January 12, 2024. The 2021 Credit Facilities permit quarterly cash dividends on our Class A and Class B Common Stock up to $0.12 per share so long as no Event of Default has occurred and is continuing and provided that we remain in compliance with all financial covenants under the 2021 Credit Facilities. Additional dividends are permitted subject to the limitations on restricted payments set forth in the 2021 Credit Facilities. The 2029 Indenture and the 2031 Indenture also contain restrictions on our ability to pay dividends. After giving effect to the applicable restrictions on share repurchases and certain other transactions under our debt agreements, as of September 30, 2023, we had approximately $245.7 million of net income and retained earnings free of such restrictions. The

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

declaration and payment of any future dividend is subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, share repurchases, the current economic environment and other factors considered by our Board of Directors to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors determines our dividend policy in the future. There is no guarantee that additional dividends will be declared and paid at any time in the future. See Note 6, “Long-Term Debt,” to the accompanying unaudited condensed consolidated financial statements for a description of restrictions on the payment of dividends.

Cash Flows

Cash Flows from Operating Activities – Net cash provided by operating activities in the nine months ended September 30, 2023 was approximately $104.2 million. This provision of cash was comprised primarily of net income less non-cash items, a decrease in receivables, an increase in trade accounts payable and other liabilities and an increase in notes payable – floor plan – trade, offset partially by an increase in inventories. Net cash provided by operating activities in the nine months ended September 30, 2022 was approximately $645.4 million. This provision of cash was comprised primarily of net income less non-cash items, a decrease in inventories, a decrease in receivables, and an increase in notes payable – floor plan – trade, offset partially by a decrease in trade accounts payable and other liabilities.

Cash Flows from Investing Activities – Net cash used in investing activities in the nine months ended September 30, 2023 was approximately $171.4 million. This use of cash was comprised primarily of the purchase of a powersports business (including real property), net of cash acquired, and purchases of land, property and equipment, partially offset by the proceeds from the sale of four franchised dealerships. Net cash used in investing activities in the nine months ended September 30, 2022 was approximately $276.1 million. This use of cash was comprised primarily of purchases of land, property and equipment and purchases of businesses, net of cash acquired.

Cash Flows from Financing Activities – Net cash used in financing activities in the nine months ended September 30, 2023 was approximately $127.4 million. This use of cash was comprised primarily of purchases of treasury stock and payments on long-term debt, offset partially by net borrowings on notes payable – floor plan – non-trade. Net cash used in financing activities in the nine months ended September 30, 2022 was approximately $529.7 million. This use of cash was comprised primarily of net repayments on notes payable – floor plan – non-trade, purchases of treasury stock and payments on long-term debt.

We arrange our inventory floor plan financing through both manufacturer captive finance companies and a syndicate of manufacturer-affiliated finance companies and commercial banks. Our floor plan financed with manufacturer captives is recorded in the accompanying unaudited condensed consolidated balance sheets as notes payable - floor plan - trade (with the change in balance being reflected in operating cash flows). Our dealerships that obtain floor plan financing from a syndicate of manufacturer-affiliated finance companies and commercial banks record their obligation in the accompanying unaudited condensed consolidated balance sheets as notes payable - floor plan - non-trade (with the change in balance being reflected in financing cash flows). Due to the presentation differences for changes in trade floor plan financing and non-trade floor plan financing in the accompanying unaudited condensed consolidated statements of cash flows, decisions made by us to move dealership floor plan financing arrangements from one finance source to another may cause significant variations in operating and financing cash flows without affecting our overall liquidity, working capital or cash flows. Net cash provided by combined trade and non-trade floor plan financing was approximately $159.8 million in the nine months ended September 30, 2023. Net cash used in combined trade and non-trade floor plan financing was approximately $213.5 million in the nine months ended September 30, 2022. Accordingly, if all changes in floor plan notes payable were classified as an operating activity (to align changes in floor plan liability balances with the associated changes in inventory balances for cash flow classification), the result would have been net cash provided by operating activities of approximately $257.7 million in the nine months ended September 30, 2023 and net cash provided by operating activities of approximately $426.6 million in the nine months ended September 30, 2022.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

One metric that management uses to measure operating performance is Adjusted EBITDA, a non-GAAP financial measure, for each of the Company’s reportable segments and on a consolidated basis. This non-GAAP financial measure is reconciled to net income (the most directly comparable GAAP financial measure) in the table below:

	Three Months Ended September 30, 2023								Three Months Ended September 30, 2022
	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total		Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Net income							$	68.4							$	87.3
Provision for income taxes							22.8								29.1
Income (loss) before taxes	$	101.5	$	(16.9)	$	6.6	$	91.2	$	146.3	$	(31.1)	$	1.2	$	116.4
Non-floor plan interest (1)	26.2		0.7		0.4		27.3		19.9		1.1		0.4		21.4
Depreciation & amortization (2)	29.9		6.1		0.9		36.9		27.3		6.7		0.3		34.3
Stock-based compensation expense	6.7		—		—		6.7		3.8		—		—		3.8
Loss (gain) on exit of leased dealerships	—		3.9		—		3.9		—		—		—		—
Severance and long-term compensation charges	—		0.9		—		0.9		—		—		—		—
Acquisition and disposition related (gain) loss	0.2		0.1		—		0.3		0.5		—		—		0.5
Adjusted EBITDA (3)	$	164.5	$	(5.2)	$	7.9	$	167.2	$	197.8	$	(23.3)	$	1.9	$	176.4

(1)Includes the following line items from the accompanying unaudited condensed consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in footnote (2) below: interest expense, other, net.

(2)Includes the following line items from the accompanying unaudited condensed consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium and other amortization.

(3)Adjusted EBITDA is a non-GAAP financial measure.

	Nine Months Ended September 30, 2023								Nine Months Ended September 30, 2022
	Franchised Dealerships Segment		EchoPark Segment		Discontinued Operations		Total		Franchised Dealerships Segment		EchoPark Segment		Discontinued Operations		Total
	(In millions)
Net income							$	139.5							$	279.4
Provision for income taxes							47.8								93.1
Income (loss) before taxes	$	357.2	$	(179.1)	$	9.2	$	187.3	$	472.2	$	(100.6)	$	0.9	$	372.5
Non-floor plan interest (1)	77.4		2.5		1.6		81.5		58.0		3.0		0.2		61.2
Depreciation & amortization (2)	87.6		20.4		2.4		110.4		79.6		17.6		0.5		97.7
Stock-based compensation expense	17.3		—		—		17.3		12.4		—		—		12.4
Loss (gain) on exit of leased dealerships	—		4.3		—		4.3		—		—		—		—
Impairment charges	—		62.6		—		62.6		—		—		—		—
Severance and long-term compensation charges	—		5.1		—		5.1		4.4		—		—		4.4
Acquisition and disposition related (gain) loss	(20.7)		0.3		—		(20.4)		(0.5)		—		—		(0.5)
Hail and storm damage charges	1.9		—		—		1.9		—		—		—		—
Used vehicle inventory valuation adjustment	—		10.0		—		10.0		—		—		—		—
Adjusted EBITDA (3)	$	520.7	$	(73.9)	$	13.2	$	460.0	$	626.1	$	(80.0)	$	1.6	$	547.7

(1)Includes the following line items from the accompanying unaudited condensed consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in footnote (2) below: interest expense, other, net.

(2)Includes the following line items from the accompanying unaudited condensed consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium and other amortization.

(3)Adjusted EBITDA is a non-GAAP financial measure.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Seasonality

Our operations are subject to seasonal variations. Due in part to our brand mix and the seasonal nature of automotive retail, the first quarter historically has contributed less operating profit than the second and third quarters, while the fourth quarter historically has contributed the highest operating profit of any quarter. Due to the abnormal effects of the COVID-19 pandemic on the automotive supply chain and inventory levels, in addition to the effects of a potential economic recession, this historical seasonality did not play out in 2022 and may not hold true for the year ending December 31, 2023. Weather conditions and the timing of manufacturer incentive programs and model changeovers cause seasonality and may adversely affect vehicle demand and, consequently, our profitability. Comparatively, parts and service demand has historically remained stable throughout the year.

Future Liquidity Outlook

We believe our best sources of liquidity for operations and debt service remain cash flows generated from operations combined with the availability of borrowings under our floor plan facilities (or any replacements thereof), the 2021 Credit Facilities (or any replacements thereof), the 2019 Mortgage Facility (or any replacements thereof) and real estate mortgage financing, selected dealership and other asset sales and our ability to raise funds in the capital markets through offerings of debt or equity securities. Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

We do not currently anticipate any materially negative changes to our cost of, or access to, capital over the next 12 months.

Off-Balance Sheet Arrangements

Guarantees and Indemnification Obligations

In connection with the operation and disposition of our dealerships, we have entered into various guarantees and indemnification obligations. When we sell dealerships, we attempt to assign any related lease to the buyer of the dealership to eliminate any future liability. However, if we are unable to assign the related leases to the buyer, we will attempt to sublease the leased properties to the buyer at a rate equal to the terms of the original leases. In the event we are unable to sublease the properties to the buyer with terms at least equal to our leases, we may be required to record lease exit accruals. As of September 30, 2023, our future gross minimum lease payments related to properties subleased to buyers of sold dealerships totaled approximately $8.0 million. Future sublease payments expected to be received related to these lease payments were approximately $7.9 million at September 30, 2023.

In accordance with the terms of agreements entered into for the sale of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $8.0 million as of September 30, 2023 and there was not any material exposure with respect to these indemnifications as of December 31, 2022. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at September 30, 2023.

We also guarantee the floor plan commitments of our 50%-owned joint venture, and the amount of such guarantee at both September 30, 2023 and December 31, 2022 was approximately $4.3 million. We expect the aggregate amount of the obligations we guarantee to fluctuate based on dealership disposition activity. Although we seek to mitigate our exposure in connection with these matters, these guarantees and indemnification obligations, including environmental exposures and the financial performance of lease assignees and sublessees, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on our liquidity and capital resources.

See Note 7, “Commitments and Contingencies,” to the accompanying unaudited condensed consolidated financial statements and Note 12, “Commitments and Contingencies,” to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion regarding these guarantees and indemnification obligations.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Our variable rate floor plan facilities, the 2021 Revolving Credit Facility, the 2019 Mortgage Facility and our other variable rate notes expose us to risks caused by fluctuations in the applicable interest rates. The total net outstanding balance of our variable rate instruments was approximately $1.5 billion at September 30, 2023. A decrease of 100 basis points in the underlying interest rates would have reduced interest expense by approximately $10.0 million while a 100-basis point rise in rates would have increased interest expense by approximately $7.4 million for the nine months ended September 30, 2023. Of those changes, approximately $7.0 million of the decrease and approximately $4.5 million of the increase would have resulted from floor plan net of offset. The difference between these amounts results from the mitigating effect of our interest rate hedges.

Foreign Currency Risk

We purchase certain of our new vehicle and parts inventories from foreign manufacturers. Although we purchase our inventories in U.S. Dollars, our business is subject to foreign exchange rate risk that may influence automobile manufacturers’ ability to provide their products at competitive prices in the U.S. To the extent that we cannot recapture this exchange rate volatility in prices charged to customers or if this volatility negatively impacts consumer demand for our products, this volatility could adversely affect our future operating results. To the extent that we cannot recapture this exchange rate volatility in prices charged to customers or if this volatility negatively impacts consumer demand for our products, this volatility could adversely affect our future operating results.

67

SONIC AUTOMOTIVE, INC.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures – Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2023. Based upon that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of September 30, 2023.

Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of its inherent limitations, internal control over financial reporting can provide only reasonable assurance that the objectives of the control system are met and may not prevent or detect misstatements. In addition, any evaluation of the effectiveness of internal control over financial reporting in future periods is subject to risk that those internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

68

SONIC AUTOMOTIVE, INC.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For information regarding legal proceedings, see the discussion under the heading “Legal Matters” in Note 7, “Commitments and Contingencies,” to the accompanying unaudited condensed consolidated financial statements.

69

SONIC AUTOMOTIVE, INC.

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those included in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

70

SONIC AUTOMOTIVE, INC.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

The following table sets forth information about the shares of Class A Common Stock we repurchased during the three months ended September 30, 2023;

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
	(In millions, except per share data)
July 2023	—	$	—	—	$	373.5
August 2023	1.1	$	50.87	1.1	$	314.5
September 2023	0.5	$	52.51	0.5	$	286.8
Total	1.7			1.7

(1)On July 28, 2022, we announced that our Board of Directors had increased the dollar amount authorized for us to repurchase shares of our Class A Common Stock pursuant to our share repurchase program. Our share repurchase program does not have an expiration date and current remaining availability under the program is as follows:

	(In millions)
July 2022 authorization	$	500.0
Total active program repurchases prior to September 30, 2023	(213.2)
Current remaining availability as of September 30, 2023	$	286.8

See “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” for additional discussion of restrictions on share repurchases and payment of dividends.

71

SONIC AUTOMOTIVE, INC.

Item 5. Other Information.

Insider Trading Arrangements

During the quarter ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).

72

SONIC AUTOMOTIVE, INC.

Item 6. Exhibits.

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Sonic Automotive, Inc., dated August 7, 1997 (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-13395)).
3.2	Certificate of Designation, Preferences and Rights of Class A Convertible Preferred Stock, dated March 20, 1998 (incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-13395)).
3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Sonic Automotive, Inc., dated June 16, 1999 (incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-13395)).
3.4	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Sonic Automotive, Inc., dated April 18, 2017 (incorporated by reference to Exhibit 3.4 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-13395)).
3.5	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Sonic Automotive, Inc., dated May 3, 2021 (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-8 filed June 8, 2021 (File No. 333-256891)).
3.6	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Sonic Automotive, Inc., dated May 16, 2023 (incorporated by reference to Exhibit 3.6 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 001-13395))
3.7	Amended and Restated Bylaws of Sonic Automotive, Inc., dated February 10, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed February 12, 2021 (File No. 001-13395)).
31.1*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_______________________________

*Filed herewith.

**Furnished herewith.

73

SONIC AUTOMOTIVE, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SONIC AUTOMOTIVE, INC.
October 26, 2023	By:	/s/ DAVID BRUTON SMITH
		David Bruton Smith
		Chairman and Chief Executive Officer
October 26, 2023	By:	/s/ HEATH R. BYRD
		Heath R. Byrd
		Executive Vice President and Chief Financial Officer

74

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Heath R. Byrd, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Sonic Automotive, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 26, 2023
By:	/s/ HEATH R. BYRD
	Heath R. Byrd
	Executive Vice President and Chief Financial Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David Bruton Smith, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Sonic Automotive, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 26, 2023
By:	/s/ DAVID BRUTON SMITH
	David Bruton Smith
	Chairman and Chief Executive Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sonic Automotive, Inc. (the Company) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Heath R. Byrd, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ HEATH R. BYRD

Heath R. Byrd

Executive Vice President and Chief Financial Officer

October 26, 2023

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sonic Automotive, Inc. (the Company) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David Bruton Smith, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DAVID BRUTON SMITH

David Bruton Smith

Chairman and Chief Executive Officer

October 26, 2023

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Apr. 27, 2022
Document Information [Line Items]
Entity Registrant Name	SONIC AUTOMOTIVE, INC.
Entity Central Index Key	0001043509
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Trading Symbol	SAH
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
City Area Code	(704)
Entity Address, Address Line One	4401 Colwick Road
Entity Address, Postal Zip Code	28211
Entity Tax Identification Number	56-2010790
Local Phone Number	566-2400
Entity File Number	1-13395
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Address, City or Town	Charlotte,
Entity Address, State or Province	NC
Document Quarterly Report	true
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		21,857,279
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,029,375

XML

Details	9 Months Ended
	Sep. 30, 2023
Document Information [Line Items]
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Security Exchange Name	NYSE
Entity Incorporation, State or Country Code	DE
Document Transition Report	false
Title of 12(b) Security	Class A Common Stock, par value $0.01 per share
Entity Small Business	false
Entity Emerging Growth Company	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Revenues	$ 3,643,500,000	$ 3,448,100,000	$ 10,787,600,000	$ 10,410,500,000
Cost of Sales:
Cost of Sales	(3,061,300,000)	(2,867,400,000)	(9,083,000,000)	(8,669,600,000)
Gross profit	582,200,000	580,700,000	1,704,600,000	1,740,900,000
Selling, general and administrative expenses	(409,600,000)	(399,000,000.0)	(1,214,200,000)	(1,188,800,000)
Impairment charges	0	0	(62,600,000)	0
Depreciation and amortization	(35,200,000)	(32,800,000)	(105,700,000)	(94,000,000.0)
Operating income (loss)	137,400,000	148,900,000	322,100,000	458,100,000
Other income (expense):
Interest expense, floor plan	(17,400,000)	(9,600,000)	(48,900,000)	(20,600,000)
Interest expense, other, net	(29,000,000.0)	(22,900,000)	(86,200,000)	(65,100,000)
Other income (expense), net	200,000	0	300,000	100,000
Total other income (expense)	(46,200,000)	(32,500,000)	(134,800,000)	(85,600,000)
Income (loss) from continuing operations before taxes	91,200,000	116,400,000	187,300,000	372,500,000
Provision for income taxes for continuing operations - benefit (expense)	(22,800,000)	(29,100,000)	(47,800,000)	(93,100,000)
Discontinued operations:
Net income (loss)	$ 68,400,000	$ 87,300,000	$ 139,500,000	$ 279,400,000
Basic earnings (loss) per common share:
Earnings (loss) per common share (usd per share)	$ 1.96	$ 2.28	$ 3.94	$ 7.09
Weighted average common shares outstanding	34,900	38,300	35,400	39,400
Diluted earnings (loss) per common share:
Earnings (loss) per common share (usd per share)	$ 1.92	$ 2.23	$ 3.85	$ 6.90
Weighted average common shares outstanding	35,600	39,200	36,200	40,500
Total vehicles
Revenues:
Revenues	$ 3,016,400,000	$ 2,874,300,000	$ 8,942,300,000	$ 8,716,600,000
Cost of Sales:
Cost of Sales	(2,833,200,000)	(2,662,000,000)	(8,414,000,000)	(8,069,400,000)
New vehicles
Revenues:
Revenues	1,596,700,000	1,403,800,000	4,694,800,000	4,137,400,000
Cost of Sales:
Cost of Sales	(1,464,400,000)	(1,240,300,000)	(4,280,800,000)	(3,636,100,000)
Used vehicles
Revenues:
Revenues	1,340,400,000	1,355,800,000	3,991,200,000	4,174,400,000
Cost of Sales:
Cost of Sales	(1,288,100,000)	(1,304,900,000)	(3,877,400,000)	(4,029,100,000)
Wholesale vehicles
Revenues:
Revenues	79,300,000	114,700,000	256,300,000	404,800,000
Cost of Sales:
Cost of Sales	(80,700,000)	(116,800,000)	(255,800,000)	(404,200,000)
Retail New Vehicles [Member]
Revenues:
Revenues	1,573,500,000	1,371,800,000	4,624,400,000	4,067,400,000
Cost of Sales:
Cost of Sales	(1,442,100,000)	(1,209,600,000)	(4,213,500,000)	(3,569,200,000)
Fleet New Vehicles [Member]
Revenues:
Revenues	23,200,000	32,000,000.0	70,400,000	70,000,000.0
Cost of Sales:
Cost of Sales	(22,300,000)	(30,700,000)	(67,300,000)	(66,900,000)
Parts, service and collision repair
Revenues:
Revenues	453,400,000	408,200,000	1,327,600,000	1,188,600,000
Cost of Sales:
Cost of Sales	(228,100,000)	(205,400,000)	(669,000,000.0)	(600,200,000)
Finance, insurance and other, net
Revenues:
Revenues	$ 173,700,000	$ 165,600,000	$ 517,700,000	$ 505,300,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 68,400	$ 87,300	$ 139,500	$ 279,400
Other comprehensive income (loss) before taxes:
Change in fair value of interest rate swap and interest rate cap agreements	300	0	1,500	700
Total other comprehensive income (loss) before taxes	300	0	1,500	700
Provision for income tax benefit (expense) related to components of other comprehensive income (loss)	(100)	0	(400)	(200)
Other comprehensive income (loss)	200	0	1,100	500
Comprehensive income (loss)	$ 68,600	$ 87,300	$ 140,600	$ 279,900

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 34,600	$ 229,200
Receivables, net	431,500	462,400
Inventories	1,433,900	1,216,800
Other current assets	341,500	297,900
Total current assets	2,241,500	2,206,300
Property and Equipment, net	1,599,200	1,561,700
Goodwill	243,600	231,000
Other Intangible Assets, net	417,400	396,700
Right-of-use asset	189,200	260,700
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	258,400	224,100
Other Assets	101,000	97,800
Total Assets	5,050,300	4,978,300
Current Liabilities:
Notes payable - floor plan - trade	121,200	114,900
Notes payable - floor plan - non-trade	1,266,200	1,112,700
Trade accounts payable	143,000	138,400
Operating Lease, Liability, Current	31,700	36,400
Finance Lease, Liability, Current	10,400	11,100
Other accrued liabilities	376,300	352,400
Current maturities of long-term debt	60,400	79,500
Total current liabilities	2,009,200	1,845,400
Long-Term Debt	1,623,100	1,672,200
Other Long-Term Liabilities	108,200	105,500
Operating Lease, Liability, Noncurrent	176,100	231,400
Finance Lease, Liability, Noncurrent	276,200	228,600
Commitments and Contingencies
Stockholders' Equity:
Class A convertible preferred stock, none issued	0	0
Paid-in capital	848,300	819,400
Retained Earnings (Accumulated Deficit)	1,210,100	1,100,300
Accumulated other comprehensive income (loss)	2,700	1,600
Treasury stock, at cost; 33,476,159 Class A common stock shares held at September 30, 2018 and 32,290,493 Class A common stock shares held at December 31, 2017	(1,204,400)	(1,026,900)
Total Stockholders' Equity	857,500	895,200
Total Liabilities and Stockholders' Equity	5,050,300	4,978,300
Class A Common Stock
Stockholders' Equity:
Common stock, value	$ 700	$ 700
Treasury Stock, Common, Shares	46,684,562	43,370,598
Class B common stock
Stockholders' Equity:
Common stock, value	$ 100	$ 100

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Convertible preferred stock issued	0	0
Class A Common Stock
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	68,541,841	67,574,922
Common stock, shares outstanding	21,857,279	24,204,324
Class B common stock
Common stock, par value (usd per share)	$ 0.01
Common stock, shares authorized	30,000,000
Common stock, shares issued	12,029,375

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Class A Common Stock	Class A Common Stock Common Stock	Class A Common Stock Retained Earnings	Class A Common Stock Treasury Stock, Common	Class B Common Stock	Class B Common Stock Common Stock	Class B Common Stock Retained Earnings
Beginning balance at Dec. 31, 2021	$ 1,076,400	$ 790,200	$ 1,051,700	$ (1,300)		$ 700		$ (765,000)		$ 100
Beginning balance (shares) at Dec. 31, 2021						66,500		37,800		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares awarded under stock compensation plan	8,500	8,500				$ 0
Shares awarded under stock compensation plan (shares)						1,100
Purchase of treasury stock	(245,200)							$ (245,200)
Purchases of treasury stock (shares)								(5,200)
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563	500			500
Restricted stock amortization		16,900
Net income (loss)	279,400		279,400
Dividends, Common Stock					$ 22,100		$ 22,100		$ 7,500		$ 7,500
Ending balance at Sep. 30, 2022	1,106,900	815,600	1,301,500	(800)		$ 700		$ (1,010,200)		$ 100
Ending balance (shares) at Sep. 30, 2022						67,600		43,000		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per common share (usd per share)					$ 0.86				$ 0.86
Tax effect on fair value of interest rate swap and rate cap agreements	200
Beginning balance at Jun. 30, 2022	1,170,000	804,600	1,223,500	(800)		$ 700		$ (858,100)		$ 100
Beginning balance (shares) at Jun. 30, 2022						67,100		39,900		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares awarded under stock compensation plan	7,200	7,200				$ 0
Shares awarded under stock compensation plan (shares)						500
Purchase of treasury stock	(152,100)							$ (152,100)
Purchases of treasury stock (shares)								(3,100)
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563	0
Restricted stock amortization	3,800	3,800
Net income (loss)	87,300		87,300
Dividends, Common Stock					$ 6,300		6,300		$ 3,000		3,000
Ending balance at Sep. 30, 2022	1,106,900	815,600	1,301,500	(800)		$ 700		$ (1,010,200)		$ 100
Ending balance (shares) at Sep. 30, 2022						67,600		43,000		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per common share (usd per share)					$ 0.29				$ 0.29
Retained Earnings (Accumulated Deficit)	1,100,300
Beginning balance at Dec. 31, 2022	895,200	819,400	1,100,300	1,600		$ 700		$ (1,026,900)		$ 100
Beginning balance (shares) at Dec. 31, 2022						67,600		43,400		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares awarded under stock compensation plan	11,600	11,600				$ 0
Shares awarded under stock compensation plan (shares)						900
Purchase of treasury stock	(177,500)							$ (177,500)
Purchases of treasury stock (shares)								(3,300)
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563	1,100			1,100
Restricted stock amortization		17,300
Net income (loss)	139,500		139,500
Dividends, Common Stock					$ 19,400		19,400		$ 10,300		10,300
Ending balance at Sep. 30, 2023	857,500	848,300	1,210,100	2,700		$ 700		$ (1,204,400)		$ 100
Ending balance (shares) at Sep. 30, 2023						68,500		46,700		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per common share (usd per share)					$ 0.62				$ 0.62
APIC, Share-based Payment Arrangement, Increase for Cost Recognition		17,300
Tax effect on fair value of interest rate swap and rate cap agreements	400
Beginning balance at Jun. 30, 2023	876,700	839,800	1,151,200	2,500		$ 700		$ (1,117,600)		$ 100
Beginning balance (shares) at Jun. 30, 2023						68,400		45,000		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares awarded under stock compensation plan	1,800	1,800				$ 0
Shares awarded under stock compensation plan (shares)						100
Purchase of treasury stock	(86,800)							$ (86,800)
Purchases of treasury stock (shares)								(1,700)
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563	200			200
Restricted stock amortization	6,700
Net income (loss)	68,400		68,400
Dividends, Common Stock					$ 6,000		$ 6,000		$ 3,500		$ 3,500
Ending balance at Sep. 30, 2023	857,500	848,300	$ 1,210,100	$ 2,700		$ 700		$ (1,204,400)		$ 100
Ending balance (shares) at Sep. 30, 2023						68,500		46,700		12,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per common share (usd per share)					$ 0.25				$ 0.25
APIC, Share-based Payment Arrangement, Increase for Cost Recognition		$ 6,700
Tax effect on fair value of interest rate swap and rate cap agreements	100
Retained Earnings (Accumulated Deficit)	$ 1,210,100

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Tax effect on fair value of interest rate swap and rate cap agreements	$ 100	$ 400	$ 200

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 139,500	$ 279,400
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment	92,000	84,200
Debt issuance cost amortization	4,900	3,800
Stock-based compensation expense	17,300	16,900
Deferred income taxes	(10,500)	(10,400)
Asset impairment charges	62,600	0
Loss (gain) on disposal of dealerships and property and equipment	(18,100)	(500)
Other	300	1,500
Changes in assets and liabilities that relate to operations:
Receivables	49,200	43,500
Inventories	(230,700)	101,100
Other assets	(7,200)	107,500
Notes payable - floor plan - trade	6,300	5,300
Trade accounts payable and other liabilities	(1,400)	13,100
Total adjustments	(35,300)	366,000
Net cash provided by (used in) operating activities	104,200	645,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of businesses, net of cash acquired	(75,100)	(94,200)
Purchases of land, property and equipment	(153,600)	(197,600)
Proceeds from sales of property and equipment	5,100	15,700
Proceeds from sales of dealerships	52,200	0
Net cash provided by (used in) investing activities	(171,400)	(276,100)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on notes payable - floor plan - non-trade	(153,500)	(218,800)
Debt issuance costs	1,600	(500)
Principal payments and repurchase of long-term debt	(71,500)	(42,100)
Purchases of treasury stock	(177,500)	(245,200)
Finance Lease, Principal Payments	11,700	6,400
Issuance of shares under stock compensation plans	11,600	8,500
Dividends paid	(30,200)	(25,200)
Net cash provided by (used in) financing activities	(127,400)	(529,700)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(194,600)	(160,400)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	229,200	299,400
CASH AND CASH EQUIVALENTS, END OF PERIOD	34,600	139,000
Cash paid (received) during the period for:
Interest, including amount capitalized	115,000	68,700
Income taxes	$ 73,400	$ 95,200

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Statement of Cash Flows [Abstract]
Tax effect on fair value of interest rate swap and rate cap agreements	$ 400	$ 200

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Per Share Data and Stockholders' Equity

Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards), in addition to Class A Common Stock purchase warrants.

Revenue from Contract with Customer

Revenue Recognition – Revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. We do not include the cost of obtaining contracts within the related revenue streams since we elected the practical expedient to expense the costs to obtain a contract when incurred.

Management has evaluated our established business processes, revenue transaction streams and accounting policies, and identified our material revenue streams to be: (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of third-party vehicle financing and the sale of third-party service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. Generally, performance obligations are satisfied when the associated vehicle is delivered to a customer and customer acceptance has occurred, over time as the maintenance and repair services are performed, or at the time of wholesale and retail parts sales. We do not have any revenue streams with significant financing components as payments are typically received within a short period of time following completion of the performance obligation(s).

Retrospective finance and insurance revenues (“F&I retro revenues”) are recognized when the product contract has been executed with the end customer and the transaction price is estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

We record revenue when vehicles are delivered to customers, as vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and it being probable that the proceeds from the sale will be collected.

The accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 include approximately $27.9 million and $38.7 million, respectively, related to contract assets from F&I retro revenues

recognition, which are recorded in receivables, net. Changes in contract assets from December 31, 2022 to September 30, 2023 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion of our revenue recognition policies and processes.

Error Correction

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Inventories

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories Inventories consist of the following:

	September 30, 2023		December 31, 2022
	(In millions)
New vehicles	$	637.7	$	449.3
Used vehicles	523.4		534.0
Service loaners	173.9		143.8
Parts, accessories and other	98.9		89.7
Inventories	$	1,433.9	$	1,216.8

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Property and Equipment	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Property and Equipment

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Long-Term Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

2016 Credit Facilities [Text Block]

2021 Credit Facilities

On April 14, 2021, we entered into an amended and restated syndicated revolving credit facility (the “2021 Revolving Credit Facility”) and amended and restated syndicated new and used vehicle floor plan credit facilities (the “2021 Floor Plan

Facilities” and, together with the 2021 Revolving Credit Facility, the “2021 Credit Facilities”). The amendment and restatement of the 2021 Credit Facilities extended the scheduled maturity dates to April 14, 2025. On October 8, 2021, we entered into an amendment to the 2021 Credit Facilities (the “Credit Facility Amendment”) to, among other things: (1) increase the aggregate commitments under the 2021 Revolving Credit Facility to $350.0 million (which may be increased at the Company’s option up to $400.0 million upon satisfaction of certain conditions) and the 2021 Floor Plan Facilities to $2.6 billion (which, under certain conditions, may be increased at the Company’s option up to $2.9 billion that may be allocated between the new vehicle revolving floor plan facility and the used vehicle revolving floor plan facility that comprise the 2021 Floor Plan Facilities as the Company requests, with no more than 40% of the aggregate commitments allocated to the commitments under the used vehicle revolving floor plan facility); and (2) permit the issuance of the 4.625% Notes and the 4.875% Notes. On October 7, 2022, we entered into an amendment to the 2021 Credit Facilities (the “Second Credit Facility Amendment”) to, among other things: (i) replace the 2021 Credit Facilities’ London InterBank Offered Rate (“LIBOR”)-based Eurodollar reference interest rate option with a reference interest rate option based upon one-month Term SOFR (as defined in the 2021 Credit Facilities) (the conversion of the interest rate benchmark from LIBOR to one-month Term SOFR included a 10-basis point credit spread adjustment); (ii) amend the provisions relating to the basis for inclusion of real property owned by the Company or certain of its subsidiaries in the borrowing base for the 2021 Revolving Credit Facility; (iii) amend the minimum amount for commitments under the 2021 Revolving Credit Facility and the proportion that such commitments under the 2021 Revolving Credit Facility may compose of the total commitments made by the lenders; and (iv) adjust aspects of the offset account used for voluntary reductions to interest under the 2021 Floor Plan Facilities.

As amended, availability under the 2021 Revolving Credit Facility is calculated as the lesser of $350.0 million or a borrowing base calculated based on certain eligible assets, less the aggregate amount of any outstanding letters of credit and borrowings under the 2021 Revolving Credit Facility (the “2021 Revolving Borrowing Base”). As of September 30, 2023, the 2021 Revolving Borrowing Base was $301.1 million based on balances as of such date. As of September 30, 2023, we had no outstanding borrowings and $12.2 million in outstanding letters of credit under the 2021 Revolving Credit Facility, resulting in $288.9 million remaining borrowing availability under the 2021 Revolving Credit Facility.

Our obligations under the 2021 Credit Facilities are guaranteed by the Company and certain of our subsidiaries and are secured by a pledge of substantially all of our and our subsidiaries’ assets. As of the dates presented in the accompanying unaudited condensed consolidated financial statements, the amounts outstanding under the 2021 Credit Facilities bear interest at variable rates based on specified percentages above LIBOR (subsequent to September 30, 2022, the Second Credit Facility Amendment replaced LIBOR with one-month term SOFR). We have agreed under the 2021 Credit Facilities not to pledge any assets to any third parties (other than those explicitly allowed to be pledged by the amended terms of the 2021 Credit Facilities), including other lenders, subject to certain stated exceptions, including floor plan financing arrangements. In addition, the 2021 Credit Facilities contain certain negative covenants, including covenants which could restrict or prohibit indebtedness, liens, the payment of dividends and other restricted payments, capital expenditures and material dispositions and acquisitions of assets, as well as other customary covenants and default provisions. Specifically, the 2021 Credit Facilities permit quarterly cash dividends on our Class A and Class B Common Stock up to $0.12 per share so long as no Event of Default (as defined in the 2021 Credit Facilities) has occurred and is continuing and provided that we remain in compliance with all financial covenants under the 2021 Credit Facilities. Additional dividends are permitted subject to limitations on restricted payments set forth in the 2021 Credit Facilities.

6.125 Note Text Block [Text Block]

On October 27, 2021, we issued $650.0 million in aggregate principal amount of 4.625% Notes, which will mature on November 15, 2029. Sonic used the net proceeds from the issuance of the 4.625% Notes, along with the net proceeds of the 4.875% Notes, to fund the RFJ Acquisition and to repay existing debt.

The 4.625% Notes were issued under an Indenture, dated as of October 27, 2021 (the “2029 Indenture”), by and among the Company, certain subsidiary guarantors named therein (collectively, the “Guarantors”) and U.S. Bank National Association, as trustee (the “trustee”). The 4.625% Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis initially by all of the Company’s domestic operating subsidiaries. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered minor. Under certain circumstances set forth in the 2029 Indenture, the guarantees of the certain subsidiaries of the Company comprising the EchoPark Business (as defined in the 2029 Indenture) may be released. The 2029 Indenture also provides substantial flexibility for the Company to enter into fundamental transactions involving the EchoPark Business. The 2029 Indenture provides that interest on the 4.625% Notes will be payable semi-annually in arrears on May 15 and November 15 of each year beginning May 15, 2022. The 2029 Indenture also contains other restrictive covenants and default provisions common for an issue of senior notes of this nature. The 4.625% Notes are redeemable by the Company under certain circumstances. For further discussion of the 4.625% Notes, see Note 6,

“Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

4.875% Notes

On October 27, 2021, we issued $500.0 million in aggregate principal amount of 4.875% Notes, which will mature on November 15, 2031. Sonic used the net proceeds from the issuance of the 4.875% Notes, along with the net proceeds of the 4.625% Notes, to fund the RFJ Acquisition and to repay existing debt.

The 4.875% Notes were issued under an Indenture, dated as of October 27, 2021 (the “2031 Indenture”), by and among the Company, the Guarantors and the trustee. The 4.875% Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis initially by all of the Company’s domestic operating subsidiaries. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered minor. Under certain circumstances set forth in the 2031 Indenture, the guarantees of the certain subsidiaries of the Company comprising the EchoPark Business (as defined in the 2031 Indenture) may be released. The 2031 Indenture also provides substantial flexibility for the Company to enter into fundamental transactions involving the Echo-Park Business. The 2031 Indenture provides that interest on the 4.875% Notes will be payable semi-annually in arrears on May 15 and November 15 of each year beginning May 15, 2022. The 2031 Indenture also contains other restrictive covenants and default provisions common for an issue of senior notes of this nature. The 4.875% Notes are redeemable by the Company under certain circumstances. For further discussion of the 4.875% Notes, see Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

2019 Mortgage Facility Text Block [Text Block]

2019 Mortgage Facility

On November 22, 2019, we entered into a delayed draw-term loan credit agreement, which was scheduled to mature on November 22, 2024 (the “2019 Mortgage Facility”). On October 11, 2021, we entered into an amendment to the 2019 Mortgage Facility to permit the consummation of the RFJ Acquisition and the issuance of the 4.625% Notes and the 4.875% Notes. On November 17, 2022, we entered into an amendment to the 2019 Mortgage Facility to, among other things, extend the scheduled maturity date to November 17, 2027.

On November 17, 2022, in connection with the closing of the amendment, the Company incurred a term loan under the 2019 Mortgage Facility with a principal amount of $320.0 million, with a portion of the proceeds used to repay the entire $77.6 million principal amount of the prior term loan. The $320.0 million borrowing amortizes on a fixed schedule through the maturity date. In addition, the lenders under the 2019 Mortgage Facility committed to providing, upon the terms set forth in the amendment and upon the pledging of sufficient collateral by the Company, delayed draw-term loans in an aggregate principal amount up to $78.0 million (the “Delayed Draw Credit Facility”), and revolving loans in an aggregate principal amount not to exceed $95.0 million outstanding. On November 18, 2022, the Company incurred a term loan under the Delayed Draw Credit Facility with a principal amount of $7.0 million. The aggregate commitments of the lenders under the 2019 Mortgage Facility equal a total of $500.0 million, upon satisfaction of the conditions set forth in the 2019 Mortgage Facility, including the appraisal and pledging of collateral of a specified value. The amendment also amended the 2019 Mortgage Facility to, among other things: (1) replace the 2019 Mortgage Facility’s LIBOR-based Eurodollar reference interest rate option with a reference interest rate option based upon one-month Term SOFR (as defined in the 2019 Mortgage Facility); and (2) make changes to the pricing grid for loans incurred under the 2019 Mortgage Facility, which price is based on an incremental interest margin calculated based on the Company’s Consolidated Total Lease Adjusted Leverage Ratio (as defined in the 2019 Mortgage Facility).

Under the 2019 Mortgage Facility, Sonic had an initial maximum borrowing limit of $500.0 million, which varies based on the appraised value of the collateral underlying the 2019 Mortgage Facility. Based on balances as of September 30, 2023, we had $315.0 million of outstanding borrowings under the 2019 Mortgage Facility.

Amounts outstanding under the 2019 Mortgage Facility bear interest at: (1) a specified rate above one-month Term SOFR, ranging from 1.25% to 2.25% per annum according to a performance-based pricing grid determined by the Company’s Consolidated Total Lease Adjusted Leverage Ratio as of the last day of the immediately preceding fiscal quarter (the “Performance Grid”); or (2) a specified rate above the Base Rate (as defined in the 2019 Mortgage Facility), ranging from 0.25% to 1.25% per annum according to the Performance Grid. Interest on the 2019 Mortgage Facility is paid monthly in arrears calculated using the Base Rate plus the Applicable Rate (as defined in the 2019 Mortgage Facility) according to the Performance Grid. Amortized principal payments are scheduled to be $4.0 million per quarter from the quarter ending March 31, 2023 through the quarter ending December 31, 2024 and $6.0 million per quarter from the quarter ending March 31, 2025 to the quarter ending September 30, 2027 with the remaining balance due on November 17, 2027. Prior to the November 17, 2027

maturity date, the Company has the right to prepay the principal amount outstanding at any time without premium or penalty provided the prepayment amount exceeds $0.5 million. Additional dividends are permitted subject to limitations on restricted payments set forth in the 2021 Credit Facilities.

For further discussion of the 2019 Mortgage Facility, see Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

Mortgage Notes Text Block [Text Block]

Mortgage Notes to Finance Companies

As of September 30, 2023, the weighted-average interest rate of our other outstanding mortgage notes (excluding the 2019 Mortgage Facility) was 5.24% and the total outstanding mortgage principal balance of these notes (excluding the 2019 Mortgage Facility) was approximately $243.1 million. These mortgage notes require monthly payments of principal and interest through their respective maturities, are secured by the underlying properties and contain certain cross-default provisions. Maturity dates for these mortgage notes range from 2024 to 2033.

2020 Line of Credit Text Block [Text Block]

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Per Share Data and Stockholders' Equity	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Per Share Data and Stockholders' Equity	Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards), in addition to Class A Common Stock purchase warrants.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments Contingencies and Guarantees

Commitments and Contingencies

Guarantees and Indemnification Obligations

In accordance with the terms of our operating lease agreements, our dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, we have generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee.

In connection with dealership dispositions and facility relocations, certain of our subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships. In general, the subsidiaries retain responsibility

for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or the sublessee does not perform. In the event an assignee or a sublessee does not perform its obligations, Sonic remains liable for such obligations.

In accordance with the terms of agreements entered into for the sale of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $8.0 million as of September 30, 2023 and there was not any material exposure with respect to these indemnifications at December 31, 2022. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at September 30, 2023.

We also guarantee the floor plan commitments of our 50%-owned joint venture, and the amount of such guarantee at both September 30, 2023 and December 31, 2022 was approximately $4.3 million.

Legal Matters

Sonic is involved, and expects to continue to be involved, in various legal and administrative proceedings arising out of the conduct of its business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although Sonic is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, Sonic does not believe it is reasonably possible that its current and threatened legal proceedings will have a material adverse effect on Sonic’s business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on Sonic’s financial results.

There were no significant liabilities recorded related to legal matters as of September 30, 2023 and December 31, 2022.

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Fair Value Measurements
$ in Thousands

9 Months Ended

Sep. 30, 2023

USD ($)

Fair Value Disclosures [Abstract]

Fair Value Measurements

8. Fair Value Measurements

Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 were as follows:

	Fair Value Based on Significant Other Observable Inputs (Level 2)
	September 30, 2023		December 31, 2022
	(In millions)
Assets:
Cash surrender value of life insurance policies (1)	$	41.3	$	38.2
Interest rate caps designated as hedges (2)	2.9		—
Total assets	$	44.2	$	38.2
Liabilities:
Deferred compensation plan (3)	$	24.5	$	21.1
Total liabilities	$	24.5	$	21.1

(1)Included in other assets in the accompanying unaudited condensed consolidated balance sheets.

(2)As of September 30, 2023, approximately $2.1 million and $0.8 million were included in other current assets and other assets, respectively, in the accompanying unaudited condensed consolidated balance sheets.

(3)Included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets.

In conjunction with the approximately $75.2 million charge recorded during the second quarter of 2023 and the subsequent $4.8 million charge recorded in the third quarter of 2023 related to our decisions to indefinitely suspend operations at certain EchoPark locations and to close certain Northwest Motorsport stores discussed above, Sonic was required to adjust certain real estate assets to fair value on a non-recurring basis. After $5.7 million of adjustments during the second quarter of 2023, the recorded balances were $55.5 million at June 30, 2023. The book value of such assets may be reevaluated as changes in circumstances require. There were no instances during the three months ended September 30, 2023 that required a fair value measurement of assets ordinarily measured at fair value on a non-recurring basis.

As of September 30, 2023 and December 31, 2022, the fair values of Sonic’s financial instruments, including receivables, notes receivable from finance contracts, notes payable – floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes, approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates.

As of September 30, 2023 and December 31, 2022, the fair value and the carrying value of Sonic’s significant fixed rate long-term debt were as follows:

	September 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In millions)
4.875% Notes (1)	$	397.5	$	500.0	$	390.3	$	500.0
4.625% Notes (1)	$	536.3	$	650.0	$	519.5	$	650.0
Mortgage Notes (2)	$	159.0	$	166.3	$	174.0	$	186.6

(1)As determined by market quotations from similar securities as of September 30, 2023 and December 31, 2022, respectively (Level 2).

(2)As determined by the DCF method (Level 2).

For further discussion of Sonic’s fair value measurements, see Note 11, “Fair Value Measurements,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

Real Estate, Fair Value

$ 55,500

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Accumulated Other Comprehensive Income (Loss)	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss)For further discussion of Sonic’s accumulated other comprehensive income (loss), see Note 13, “Accumulated Other Comprehensive Income (Loss),” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022. For further discussion of Sonic’s defined benefit pension plan, see Note 10, “Employee Benefit Plans,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

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Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

9. Segment Information

As of September 30, 2023, Sonic had three operating segments: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle maintenance, warranty and repair services, and arrange finance and insurance products (the “Franchised Dealerships Segment”); (2) pre-owned vehicle specialty retail locations that provide guests an opportunity to search our nationwide inventory, purchase a pre-owned vehicle, select finance and insurance products and sell their current vehicle to us (the “EchoPark Segment”); and (3) retail locations that sell new and used powersports vehicles, perform vehicle maintenance, warranty and repair services, and arrange finance and insurance products (the “Powersports Segment”). Sonic has determined that its operating segments also represent its reportable segments.

The reportable segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic’s chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer; (2) the Company’s President; and (3) the Company’s Chief Financial Officer.

Reportable segment financial information for the three and nine months ended September 30, 2023 and 2022 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Revenues:
Franchised Dealerships Segment revenues:
Retail new vehicles	$	1,546.7	$	1,359.6	$	4,550.9	$	4,047.1
Fleet new vehicles	23.2		32.0		70.4		70.0
Total new vehicles	1,569.9		1,391.6		4,621.3		4,117.1
Used vehicles	780.7		842.4		2,322.8		2,568.1
Wholesale vehicles	51.4		75.8		165.3		261.2
Parts, service and collision repair	431.8		404.7		1,289.0		1,183.4
Finance, insurance and other, net	126.0		125.8		375.4		382.1
Franchised Dealerships Segment revenues	$	2,959.8	$	2,840.3	$	8,773.8	$	8,511.9
EchoPark Segment revenues:
Retail new vehicles	$	—	$	1.6	$	1.0	$	7.3
Used vehicles	554.8		511.4		1,651.3		1,601.3
Wholesale vehicles	26.6		38.9		89.1		143.3
Finance, insurance and other, net	45.3		38.9		136.4		121.8
EchoPark Segment revenues	$	626.7	$	590.8	$	1,877.8	$	1,873.7
Powersports Segment revenues:
Retail new vehicles	$	26.8	$	10.6	$	72.5	$	13.0
Used vehicles	4.9		2.0		17.1		5.0
Wholesale vehicles	1.3		—		1.9		0.3
Parts, service and collision repair	21.6		3.5		38.6		5.2
Finance, insurance and other, net	2.4		0.9		5.9		1.4
Powersports Segment revenues	$	57.0	$	17.0	$	136.0	$	24.9
Total consolidated revenues	$	3,643.5	$	3,448.1	$	10,787.6	$	10,410.5

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Segment Income (Loss) (1):
Franchised Dealerships Segment	$	101.5	$	146.3	$	357.2	$	472.2
EchoPark Segment	(16.9)		(31.1)		(116.5)		(100.6)
Powersports Segment	6.6		1.2		9.2		0.9
Total segment income	$	91.2	$	116.4	$	249.9	$	372.5
Impairment charges	—		—		(62.6)		—
Income before taxes	$	91.2	$	116.4	$	187.3	$	372.5

(1)Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Depreciation and Amortization:
Franchised Dealerships Segment	$	28.2	$	25.8	$	82.8	$	75.8
EchoPark Segment	6.1		6.8		20.4		17.7
Powersports Segment	0.9		0.2		2.5		0.5
Total depreciation and amortization	$	35.2	$	32.8	$	105.7	$	94.0

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Floor Plan Interest Expense:
Franchised Dealerships Segment (1)	$	12.9	$	6.6	$	34.7	$	13.9
EchoPark Segment	4.3		3.0		13.6		6.7
Powersports Segment	0.2		—		0.6		—
Total floor plan interest expense	$	17.4	$	9.6	$	48.9	$	20.6

(1)Amount is net of interest earned on the floor plan deposit balance of $5.0 million and $0.9 million in the three months ended September 30, 2023 and 2022, respectively, and $13.8 million and $2.3 million in the nine months ended September 30, 2023 and 2022, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Interest Expense, Other, Net:
Franchised Dealerships Segment	$	27.9	$	21.4	$	82.2	$	61.7
EchoPark Segment	0.7		1.1		2.5		3.0
Powersports Segment	0.4		0.4		1.5		0.4
Total interest expense, other, net	$	29.0	$	22.9	$	86.2	$	65.1

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Capital Expenditures:
Franchised Dealerships Segment	$	72.1	$	43.8	$	137.3	$	95.8
EchoPark Segment	5.4		53.5		14.1		101.8
Powersports Segment	0.6		—		2.2		—
Total capital expenditures	$	78.1	$	97.3	$	153.6	$	197.6

	September 30, 2023		December 31, 2022
	(In millions)
Assets:
Franchised Dealerships Segment	$	3,806.0	$	4,091.7
EchoPark Segment	700.9		267.6
Powersports Segment	208.8		117.8
Corporate and other:
Cash and cash equivalents	34.6		229.2
Floor plan deposit balance	300.0		272.0
Total assets	$	5,050.3	$	4,978.3

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Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

10. Subsequent Events

Subsequent to September 30, 2023, we repurchased an additional [ ] shares of Class A Common Stock at an average price of [ ], resulting in current remaining share repurchase authorization of approximately [ ] million.

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Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” or “our”) for the three and nine months ended September 30, 2023 and 2022 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (the “U.S.”) (“GAAP”) for interim financial information and applicable rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all material normal, recurring adjustments necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.
Principles of Consolidation	Principles of Consolidation – All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying unaudited condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. Certain amounts and percentages may not compute due to rounding.
Per Share Data and Stockholders' Equity	Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards), in addition to Class A Common Stock purchase warrants.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Unusual Risks and Uncertainties

Recent Accounting Pronouncements – Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion of recent accounting pronouncements.

Change in Accounting Principle – During the first quarter of 2023, Sonic voluntarily changed the date of its annual goodwill impairment test and other intangible assets impairment test from October 1 to April 30. This change is preferable under the circumstances as it provides Sonic with better alignment of the annual impairment test with the availability of final approved prospective financial information for use in projecting future cash flows in our impairment models. We intend to utilize the same valuation approach and do not expect the change in valuation date to produce different impairment results. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change was applied prospectively, beginning with the April 30, 2023 impairment test date.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Components of Inventories

Inventories consist of the following:

	September 30, 2023		December 31, 2022
	(In millions)
New vehicles	$	637.7	$	449.3
Used vehicles	523.4		534.0
Service loaners	173.9		143.8
Parts, accessories and other	98.9		89.7
Inventories	$	1,433.9	$	1,216.8

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Components of Property and Equipment, Net

Property and equipment, net consists of the following:

	September 30, 2023		December 31, 2022
	(In millions)
Land	$	487.8	$	478.2
Buildings and improvements	1,404.0		1,365.3
Furniture, fixtures and equipment	557.3		504.1
Construction in progress	69.7		57.0
Total, at cost	2,518.8		2,404.6
Less accumulated depreciation	(907.7)		(842.9)
Subtotal	1,611.1		1,561.7
Less assets held for sale (1)	(11.9)		—
Property and equipment, net	$	1,599.2	$	1,561.7

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Instrument [Line Items]

Long-Term Debt

Long-term debt consists of the following:

	September 30, 2023		December 31, 2022
	(In millions)
2021 Revolving Credit Facility (1)	$	—	$	—
4.625% Senior Notes due 2029 (the “4.625% Notes”)	650.0		650.0
4.875% Senior Notes due 2031 (the “4.875% Notes”)	500.0		500.0
2019 Mortgage Facility (2)	315.0		327.0
Mortgage notes to finance companies - fixed rate, bearing interest from 2.05% to 7.03%	166.3		186.6
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR or SOFR	76.8		116.0
Subtotal	$	1,708.1	$	1,779.6
Debt issuance costs	(24.6)		(27.9)
Total debt	1,683.5		1,751.7
Less current maturities	(60.4)		(79.5)
Long-term debt	$	1,623.1	$	1,672.2

(1)The interest rate on the 2021 Revolving Credit Facility (as defined below) was 135 basis points above one-month Term SOFR (as defined below) at September 30, 2023 and 110 basis points above one-month Term SOFR at December 31, 2022.

(2)The interest rate on the 2019 Mortgage Facility (as defined below) was 160 basis points above one-month Term SOFR (as defined below) at September 30, 2023 and 135 basis points above one-month Term SOFR at December 31, 2022.

Financial Covenants Include Required Specified Ratios

Covenants

The 2021 Credit Facilities and the 2019 Mortgage Facility contain certain negative covenants, including covenants which could restrict or prohibit indebtedness, liens, the payment of dividends and other restricted payments, capital expenditures and material dispositions and acquisitions of assets, as well as other customary covenants and default provisions. The 2021 Credit Facilities and the 2019 Mortgage Facility also contain limitations on our ability to pledge assets to third parties, subject to certain stated exceptions.

We were in compliance with the financial covenants under the 2021 Credit Facilities and the 2019 Mortgage Facility as of September 30, 2023. Financial covenants include required specified ratios (as each is defined in the 2021 Credit Facilities and the 2019 Mortgage Facility) of:

	Covenant
	Minimum Consolidated Liquidity Ratio	Minimum Consolidated Fixed Charge Coverage Ratio	Maximum Consolidated Total Lease Adjusted Leverage Ratio
Required ratio	1.05	1.20	5.75
September 30, 2023 actual	1.27	1.60	2.87

The 2021 Credit Facilities and the 2019 Mortgage Facility contain events of default, including cross defaults to other material indebtedness, change of control events and other events of default customary for syndicated commercial credit facilities. Upon the future occurrence of an event of default, we could be required to immediately repay all outstanding amounts under the 2021 Credit Facilities and the 2019 Mortgage Facility.

After giving effect to the applicable restrictions on the payment of dividends under our debt agreements, as of September 30, 2023, we had approximately $245.7 million of net income and retained earnings free of such restrictions. We were in compliance with all restrictive covenants under our debt agreements as of September 30, 2023.

In addition, many of our facility leases are governed by a guarantee agreement between the landlord and us that contains financial and operating covenants. The financial covenants under the guarantee agreement are identical to those under the 2021 Credit Facilities and the 2019 Mortgage Facility with the exception of one additional financial covenant related to the ratio of EBITDAR to Rent (as defined in the guarantee agreement) with a required ratio of no less than 1.50 to 1.00. As of September 30, 2023, the ratio was 12.05 to 1.00.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Assets and Liabilities Recorded at Fair Value

Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 were as follows:

	Fair Value Based on Significant Other Observable Inputs (Level 2)
	September 30, 2023		December 31, 2022
	(In millions)
Assets:
Cash surrender value of life insurance policies (1)	$	41.3	$	38.2
Interest rate caps designated as hedges (2)	2.9		—
Total assets	$	44.2	$	38.2
Liabilities:
Deferred compensation plan (3)	$	24.5	$	21.1
Total liabilities	$	24.5	$	21.1

(1)Included in other assets in the accompanying unaudited condensed consolidated balance sheets.

(2)As of September 30, 2023, approximately $2.1 million and $0.8 million were included in other current assets and other assets, respectively, in the accompanying unaudited condensed consolidated balance sheets.

(3)Included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets.

Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt

As of September 30, 2023 and December 31, 2022, the fair value and the carrying value of Sonic’s significant fixed rate long-term debt were as follows:

	September 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In millions)
4.875% Notes (1)	$	397.5	$	500.0	$	390.3	$	500.0
4.625% Notes (1)	$	536.3	$	650.0	$	519.5	$	650.0
Mortgage Notes (2)	$	159.0	$	166.3	$	174.0	$	186.6

(1)As determined by market quotations from similar securities as of September 30, 2023 and December 31, 2022, respectively (Level 2).

(2)As determined by the DCF method (Level 2).

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Accumulated Other Comprehensive Income (Loss) (Tables)	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Summary of Changes in Accumulated Other Comprehensive Income (Loss)	For further discussion of Sonic’s accumulated other comprehensive income (loss), see Note 13, “Accumulated Other Comprehensive Income (Loss),” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022. For further discussion of Sonic’s defined benefit pension plan, see Note 10, “Employee Benefit Plans,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2022.

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Leases, Codification Topic 842 (Tables) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Lease, Cost [Abstract]
Finance Lease, Principal Payments	$ 11,700	$ 6,400
Leases [Abstract]
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	258,400		$ 224,100
Operating Lease, Liability, Current	31,700		36,400
Finance Lease, Liability, Current	10,400		11,100
Operating Lease, Liability, Noncurrent	176,100		231,400
Finance Lease, Liability, Noncurrent	$ 276,200		$ 228,600

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Summary of Significant Accounting Policies - Cumulative Effect of Adjustments for Adoption of ASC 606 (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Revenues:
Revenues	$ 3,643,500,000	$ 3,448,100,000	$ 10,787,600,000	$ 10,410,500,000
Cost of Sales:
Cost of Sales	(3,061,300,000)	(2,867,400,000)	(9,083,000,000)	(8,669,600,000)
Operating income (loss)	137,400,000	148,900,000	322,100,000	458,100,000
Assets:
Receivables, net	431,500,000		431,500,000		$ 462,400,000
Liabilities:
Other accrued liabilities	376,300,000		376,300,000		352,400,000
Stockholders' Equity:
Retained Earnings (Accumulated Deficit)	1,210,100,000		1,210,100,000		1,100,300,000
Parts, service and collision repair
Revenues:
Revenues	453,400,000	408,200,000	1,327,600,000	1,188,600,000
Cost of Sales:
Cost of Sales	(228,100,000)	(205,400,000)	(669,000,000.0)	(600,200,000)
Finance, insurance and other, net
Revenues:
Revenues	173,700,000	$ 165,600,000	517,700,000	$ 505,300,000
ASU 2014-09 | Finance, insurance and other, net
Assets:
Contract assets	$ 27,900,000		$ 27,900,000		$ 38,700,000

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Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	$ 258,400	$ 224,100
Intangible assets	417,400	396,700
Right-of-use asset	$ 189,200	$ 260,700

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Summary of Significant Accounting Policies - Activity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	$ 258,400	$ 224,100
Operating Lease, Right-of-Use Asset	$ 189,200	$ 260,700

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Schedule of Equity Method Investments [Line Items]
Percentage of dealership that is accounted for under the equity method	50.00%		50.00%
Effective tax rate from continuing operations	25.00%	25.00%
Income benefit	$ (22,800)	$ (29,100)	$ (47,800)	$ (93,100)
Impairment charges	$ 0	$ 0	$ 62,600	$ 0
Dealership
Schedule of Equity Method Investments [Line Items]
Percentage of dealership that is accounted for under the equity method	50.00%		50.00%
ASU 2014-09 | Finance, insurance and other, net
Schedule of Equity Method Investments [Line Items]
Contract assets	$ 27,900		$ 27,900		$ 38,700

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Business Acquisitions and Dispositions - Additional Information (Details)	3 Months Ended					9 Months Ended
	Mar. 31, 2024 retail_Units	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) retail_Units Business	Sep. 30, 2022 USD ($) Business	Sep. 30, 2022 USD ($) retail_Units	Sep. 30, 2022 USD ($)
Business Acquisition [Line Items]
Number of franchises disposed						0	0	1
Net cash generated from disposition						$ 52,200,000
Proceeds from sales of dealerships						52,200,000			$ 0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other		$ 100,000				100,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Inventory						4,300,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles						1,100,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Consideration Transferred						14,700,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Assets						3,400,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Liabilities						5,900,000
Payments to Acquire Businesses, Gross						75,100,000
PY Acq GW Allocations Fdealer				$ (34,500,000)		(400,000)
PY Acq GW Allocations Powersports						2,900,000			0
Restructuring Costs		4,800,000	$ 75,200,000			75,200,000
Interest Income, Other Domestic Deposits		5,000,000			$ 900,000	$ 13,800,000			2,300,000
Inventories
Business Acquisition [Line Items]
Restructuring Costs			10,000,000
Powersports Segment | Powersports Segment
Business Combinations [Abstract]
Number of acquired franchises | retail_Units						1
Business Acquisition [Line Items]
Number of acquired franchises | retail_Units						1
Powersports Segment | Inventories
Business Acquisition [Line Items]
Restructuring Costs			$ 1,900,000
Mid-line import franchise
Business Acquisition [Line Items]
Number of franchises disposed | retail_Units						1
Net cash generated from disposition									0
Luxury Dealership [Domain]
Business Acquisition [Line Items]
Number of franchises disposed | retail_Units						1
domestic franchise dealership [Domain]
Business Acquisition [Line Items]
Number of franchises disposed | retail_Units						1
EchoPark Segment [Member]
Business Combinations [Abstract]
Number of acquired franchises | Business						0
Business Acquisition [Line Items]
Number of acquired franchises | Business						0
Stand-alone pre-owned vehicle business
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory		11,100,000				$ 11,100,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment		700,000				700,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill		22,600,000				$ 22,600,000
Franchised [Member]
Business Combinations [Abstract]
Number of acquired franchises | retail_Units	2
Business Acquisition [Line Items]
Number of acquired franchises | retail_Units	2
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory					31,000,000		$ 31,000,000	$ 31,000,000	31,000,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment					500,000		500,000	500,000	500,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill					33,200,000		33,200,000	33,200,000	33,200,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other					1,100,000		1,100,000	1,100,000	1,100,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities					$ (400,000)		$ (400,000)	$ (400,000)	(400,000)
Franchised [Member] | Franchised [Member]
Business Combinations [Abstract]
Number of acquired franchises | retail_Units						1
Business Acquisition [Line Items]
Number of acquired franchises | retail_Units						1
Powersports Segment
Business Combinations [Abstract]
Number of acquired franchises | retail_Units						1		2
Business Acquisition [Line Items]
Number of acquired franchises | retail_Units						1		2
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Land		29,000,000				$ 29,000,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		$ (300,000)				$ (300,000)
Franchised Dealerships Acquired
Business Acquisition [Line Items]
Business acquisition, consideration amount									$ 79,500,000

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Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations (Details) - Disposed dealerships that remain in continuing operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from operations	$ (300)	$ 1,900	$ 200	$ 5,700
Gain (loss) on disposal	(300)	0	20,400	(100)
Pre-tax income (loss)	(600)	1,900	20,600	5,600
Total revenues	$ 0	$ 38,600	$ 70,100	$ 119,000

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Inventories - Components of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
New vehicles	$ 637,700	$ 449,300
Used vehicles	523,400	534,000
Service loaners	173,900	143,800
Parts, accessories and other	98,900	89,700
Net inventories	$ 1,433,900	$ 1,216,800

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Property and Equipment - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Less accumulated depreciation	$ (907,700)	$ (842,900)
Subtotal	1,611,100	1,561,700
Less assets held for sale	(11,900)	0
Property and equipment, net	1,599,200	1,561,700
Land
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	487,800	478,200
Building and improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,404,000	1,365,300
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	557,300	504,100
Construction in progress
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	69,700	57,000
Property, Plant and Equipment, Net, Excluding Capital Leased Assets
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 2,518,800	$ 2,404,600

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Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Capital expenditures	$ 78,100	$ 97,300	$ 153,600	$ 197,600
Impairment charges	$ 0	$ 0	62,600	$ 0
Impairment of Long-Lived Assets to be Disposed of			32,500
Property, Plant and Equipment [Line Items]
Impairment of Long-Lived Assets to be Disposed of			$ 32,500

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Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Net of accumulated impairment losses							$ 1,100,000
Goodwill - Franchise Segment	$ 219,600			$ 219,600		$ 221,800	251,200
Goodwill - Preowned Segment	0			0		0	165,200
Goodwill - Powersports Segment	24,000			24,000		9,200	0
GW Accm Amort Fdealer						1,100,000
GW Amm Amort Preowned						202,900
Finite-Lived Intangible Assets [Line Items]
Impairment charges	0		$ 0	62,600	$ 0
Indefinite-Lived Franchise Rights	417,400			417,400		396,700
Goodwill [Line Items]
Goodwill - Preowned Segment	0			0		0	165,200
Net of accumulated impairment losses							1,100,000
Goodwill and Intangible Asset Impairment		$ (202,900)		(1,800)
Goodwill	243,600			243,600		231,000	416,400
Goodwill and Intangible Assets Acquired		14,300		11,900
Goodwill - Franchise Segment	219,600			219,600		221,800	251,200
Goodwill - Powersports Segment	$ 24,000			24,000		$ 9,200	$ 0
PY Acq GW Allocations		3,200		2,500
PY Acq GW Allocations Fdealer		(34,500)		(400)
PY Acq GW Allocations Preowned		37,700		0
PY Acq GW Allocations Powersports				2,900	$ 0
Goodwill and Intangible Assets Acquired Fdealer		5,100		0
Goodwill and Intangible Assets Acquired Preowned		0		0
Goodwill and Intangible Assets Acquired Powersports		9,200		11,900
GW Asset Impairment Fdealer		0		(1,800)
GW Asset Impairment Preowned		(202,900)		0
GW Asset Impairment Powersports		$ 0		$ 0

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Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Oct. 13, 2021
Debt Instrument [Line Items]
Subtotal	$ 1,708,100	$ 1,779,600
Debt issuance costs	(24,600)	(27,900)
Total debt	1,683,500	1,751,700
Less current maturities	(60,400)	(79,500)
Long-term debt	1,623,100	1,672,200
Mortgage notes
Debt Instrument [Line Items]
Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03%	166,300	186,600
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR	76,800	116,000
Subtotal	$ 243,100
Mortgage notes | Minimum
Debt Instrument [Line Items]
Mortgage notes to finance companies-fixed rate, percentage	3.51%
Mortgage notes to finance companies-variable rate, percentage	1.50%
Mortgage notes | Maximum
Debt Instrument [Line Items]
Mortgage notes to finance companies-fixed rate, percentage	7.03%
Mortgage notes to finance companies-variable rate, percentage	2.90%
TwoThousandSixteenRevolvingCreditFacilityMember
Debt Instrument [Line Items]
2016 Revolving Credit Facility	$ 0	$ 0
Interest rate	2.50%	2.25%
5.0% Senior Subordinate Notes due 2023
Debt Instrument [Line Items]
Stated interest rate	5.00%
6.125% Senior Subordinate Notes due 2027
Debt Instrument [Line Items]
Stated interest rate	6.125%		6.125%
2019 Mortgage Facility [Member]
Debt Instrument [Line Items]
Senior Subordinated Notes	$ 315,000	$ 327,000
4.625% Senior Notes [Member]
Debt Instrument [Line Items]
Senior Subordinated Notes	650,000	650,000
4.875% Senior Notes [Member]
Debt Instrument [Line Items]
Senior Subordinated Notes	500,000	500,000
Total debt	$ 500,000	$ 500,000
Stated interest rate	4.875%

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Long-Term Debt - 2016 Credit Facilities (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
TwoThousandSixteenRevolvingCreditFacilityMember
Line of Credit Facility [Line Items]
2016 Revolving Credit Facility	$ 0	$ 0
Revolving Credit Facility | Two Thousand Twenty Vehicle Floor Plan Facility
Line of Credit Facility [Line Items]
Current borrowing capacity	2,600,000,000
Maximum borrowing capacity	$ 2,900,000,000
Maximum aggregate commitments allocated to commitments under the 2016 Used Vehicle Floor Plan Facility	40.00%
Revolving Credit Facility | TwoThousandTwentyRevolvingCreditFacility
Line of Credit Facility [Line Items]
Current borrowing capacity	$ 350,000,000
Maximum borrowing capacity	400,000,000
Borrowing base	301,100,000
2016 Revolving Credit Facility	0
Letters of credit outstanding amount	12,200,000
Borrowing availability amount	$ 288,900,000
Maximum dividend (usd per share)	$ 0.12

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Long-Term Debt - Notes Narrative (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Mar. 31, 2024	Dec. 31, 2022	Oct. 13, 2021
Debt Instrument [Line Items]
Debt outstanding	$ 1,708,100,000		$ 1,779,600,000
Maximum Borrowing 2019 Mortgage Facility		$ 500,000,000
Mortgage notes
Debt Instrument [Line Items]
Debt weighted average interest rate on note	5.24%
Debt outstanding	$ 243,100,000
5.0% Notes
Debt Instrument [Line Items]
Stated interest rate	5.00%
6.125% Notes
Debt Instrument [Line Items]
Stated interest rate	6.125%			6.125%
Principal amount				$ 250,000,000
2019 Mortgage Facility [Member]
Debt Instrument [Line Items]
Long Term Debt Prepayment	$ 500,000
4.875% Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate	4.875%
4.625% Notes [Member]
Debt Instrument [Line Items]
Stated interest rate	4.625%
Minimum | 2019 Mortgage Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.25%
Debt Instrument, Basis Spread LIBOR	1.25%
Maximum | 2019 Mortgage Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Debt Instrument, Basis Spread LIBOR	2.25%

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Long-Term Debt - Covenants (Details) $ in Millions	Sep. 30, 2023 USD ($)
Line of Credit Facility [Line Items]
Minimum Consolidated Liquidity Ratio	127.00%
Minimum Consolidated Fixed Charge Coverage Ratio	160.00%
Maximum Consolidated Total Lease Adjusted Leverage Ratio	287.00%
2016 Credit Facilities
Line of Credit Facility [Line Items]
Net income and retained earnings free of restrictions	$ 245.7
Minimum EBTDAR to rent ratio	1205.00%
Required ratio
Line of Credit Facility [Line Items]
Minimum Consolidated Liquidity Ratio	105.00%
Minimum Consolidated Fixed Charge Coverage Ratio	120.00%
Maximum Consolidated Total Lease Adjusted Leverage Ratio	575.00%
Required ratio | 2016 Credit Facilities
Line of Credit Facility [Line Items]
Minimum EBTDAR to rent ratio	150.00%

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Long-Term Debt - 2019 Mortgage Facility (Details) - USD ($) $ in Thousands	9 Months Ended	30 Months Ended
	Sep. 30, 2023	Sep. 30, 2027	Mar. 31, 2024	Oct. 13, 2021
Debt Instrument [Line Items]
Maximum Borrowing 2019 Mortgage Facility			$ 500,000
Repayments of Debt	$ 4,000	$ 6,000
6.125% Notes
Debt Instrument [Line Items]
Stated interest rate	6.125%			6.125%
2019 Mortgage Facility [Member]
Debt Instrument [Line Items]
Term Loan, Principal Amount			320,000
Prior Term Loan, Principal Amount			77,600
Delayed Draw-Term Loan, Aggregate Principal			78,000
Revolving Loan, Aggregate Principal			95,000
Outstanding Balance, Delayed Draw Credit Facility			7,000
2019 Mortgage Facility Outstanding			$ 315,000

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Long-Term Debt (Details) - TwoThousandTwentyRevolvingCreditFacility - Revolving Credit Facility	Sep. 30, 2023 USD ($)
Line of Credit Facility [Line Items]
2016 Revolving Credit Facility	$ 0
Borrowing availability amount	$ 288,900,000

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Per Share Data and Stockholders' Equity - Dilutive Effect on Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Weighted Average Shares
Weighted average common shares outstanding	34,900	38,300	35,400	39,400
Diluted earnings (loss) (shares)	35,600	39,200	36,200	40,500
Net Income (Loss)
Earnings (loss)	$ 68,400	$ 87,300	$ 139,500	$ 279,400
Basic earnings (loss) per share (usd per share)	$ 1.96	$ 2.28	$ 3.94	$ 7.09
Effect of dilutive securities:
Earnings (loss) per common share (usd per share)	$ 1.92	$ 2.23	$ 3.85	$ 6.90

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Other Commitments [Line Items]
Maximum exposure associated with general indemnifications	$ 8,000
General indemnifications minimum expiration period	1 year
General indemnifications maximum expiration period	3 years
Percentage of dealership that is accounted for under the equity method	50.00%
Contingent liability reserve balance after reduction	$ 4,300
Other accrued liabilities
Other Commitments [Line Items]
Amount reserved for pending proceedings	400
Other long-term liabilities
Other Commitments [Line Items]
Amount reserved for pending proceedings	$ 300	$ 300
Accrued Liabilities
Other Commitments [Line Items]
Amount reserved for pending proceedings		$ 400

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Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate, Valuation Adjustments	$ 5,700
Real Estate, Fair Value	55,500
Fair Value Based on Significant Other Observable Inputs (Level 2)
Assets:
Cash surrender value of life insurance policies	41,300	$ 38,200
Cash flow swaps and interest rate caps designated as hedges	2,900	0
Total assets	44,200	38,200
Liabilities:
Deferred compensation plan	24,500	21,100
Total liabilities	24,500	21,100
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other current assets
Assets:
Cash flow swaps and interest rate caps designated as hedges	2,100
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other assets
Assets:
Cash flow swaps and interest rate caps designated as hedges	$ 800
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other accrued liabilities
Liabilities:
Cash flow swaps and interest rate caps designated as hedges		0
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other long-term liabilities
Liabilities:
Cash flow swaps and interest rate caps designated as hedges		$ 0

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Fair Value Measurements - Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Oct. 13, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Value	$ 1,683,500	$ 1,751,700
Mortgage Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value	159,000	174,000
Carrying Value	$ 166,300	186,600
5.0% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated interest rate	5.00%
6.125% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated interest rate	6.125%		6.125%
4.875% Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value	$ 397,500	390,300
Carrying Value	$ 500,000	500,000
Stated interest rate	4.875%
4.625% Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value	$ 536,300	519,500
Carrying Value	$ 650,000	$ 650,000
Stated interest rate	4.625%

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Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 876,700	$ 1,170,000	$ 895,200	$ 1,076,400
Other comprehensive income (loss)	200	0	1,100	500
Ending balance	857,500	1,106,900	857,500	1,106,900
Total Accumulated Other Comprehensive Income (Loss)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	2,500	(800)	1,600	(1,300)
Other comprehensive income (loss)	200		1,100	500
Ending balance	$ 2,700	$ (800)	$ 2,700	$ (800)

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Segment Information - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) Segment	Sep. 30, 2022 USD ($)
Segment Reporting [Abstract]
Number of operating segments | Segment			3
Impairment charges | $	$ 0	$ 0	$ 62,600	$ 0

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Segment Information - Summary of Reportable Operating Segment (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Revenues:
Total consolidated revenues	$ 3,643,500,000	$ 3,448,100,000	$ 10,787,600,000	$ 10,410,500,000
Segment income (loss):
Segment income (loss)	137,400,000	148,900,000	322,100,000	458,100,000
Interest expense, other, net	(29,000,000.0)	(22,900,000)	(86,200,000)	(65,100,000)
Other income (expense), net	200,000	0	300,000	100,000
Income (loss) from continuing operations before taxes	91,200,000	116,400,000	187,300,000	372,500,000
FloorPlanDepositBalance	300,000,000.0		300,000,000.0		$ 272,000,000.0
Impairment charges	0	0	(62,600,000)	0
Impairment of Long-Lived Assets to be Disposed of			32,500,000
Depreciation, Depletion and Amortization	35,200,000	32,800,000	105,700,000	94,000,000.0
FloorPlanInterestExpense	17,400,000	9,600,000	48,900,000	20,600,000
Interest Expense, Other	29,000,000.0	22,900,000	86,200,000	65,100,000
Payments to Acquire Property, Plant, and Equipment	78,100,000	97,300,000	153,600,000	197,600,000
Cash and cash equivalents	34,600,000	139,000,000.0	34,600,000	139,000,000.0	229,200,000	$ 299,400,000
Assets	5,050,300,000		5,050,300,000		4,978,300,000
Powersports Used Vehicle Revenue	4,900,000	2,000,000.0	17,100,000	5,000,000.0
Powersports Wholesale Vehicle Revenue	1,300,000	0	1,900,000	300,000
Powersports Fixed Ops Revenue	21,600,000	3,500,000	38,600,000	5,200,000
Powersports F&I Revenue	2,400,000	900,000	5,900,000	1,400,000
Powersports Segment Revenue	57,000,000.0	17,000,000.0	136,000,000.0	24,900,000
Franchised Dealerships Segment
Revenues:
Total consolidated revenues	2,959,800,000	2,840,300,000	8,773,800,000	8,511,900,000
Segment income (loss):
Interest expense, other, net	(27,900,000)	(21,400,000)	(82,200,000)	(61,700,000)
Depreciation, Depletion and Amortization	28,200,000	25,800,000	82,800,000	75,800,000
FloorPlanInterestExpense	12,900,000	6,600,000	34,700,000	13,900,000
Interest Expense, Other	27,900,000	21,400,000	82,200,000	61,700,000
Payments to Acquire Property, Plant, and Equipment	72,100,000	43,800,000	137,300,000	95,800,000
Assets	3,806,000,000		3,806,000,000		4,091,700,000
EchoPark Segment
Revenues:
Total consolidated revenues	626,700,000	590,800,000	1,877,800,000	1,873,700,000
Segment income (loss):
Interest expense, other, net	(700,000)	(1,100,000)	(2,500,000)	(3,000,000.0)
Depreciation, Depletion and Amortization	6,100,000	6,800,000	20,400,000	17,700,000
FloorPlanInterestExpense	4,300,000	3,000,000.0	13,600,000	6,700,000
Interest Expense, Other	700,000	1,100,000	2,500,000	3,000,000.0
Payments to Acquire Property, Plant, and Equipment	5,400,000	53,500,000	14,100,000	101,800,000
Assets	700,900,000		700,900,000		267,600,000
Powersports Segment
Segment income (loss):
Interest expense, other, net	(400,000)	(400,000)	(1,500,000)	(400,000)
Depreciation, Depletion and Amortization	900,000	200,000	2,500,000	500,000
FloorPlanInterestExpense	200,000	0	600,000	0
Interest Expense, Other	400,000	400,000	1,500,000	400,000
Payments to Acquire Property, Plant, and Equipment	600,000	0	2,200,000	0
Assets	208,800,000		208,800,000		$ 117,800,000
Operating segments
Segment income (loss):
Segment income (loss)	91,200,000	116,400,000	249,900,000	372,500,000
Operating segments | Franchised Dealerships Segment
Segment income (loss):
Segment income (loss)	101,500,000	146,300,000	357,200,000	472,200,000
Operating segments | EchoPark Segment
Segment income (loss):
Segment income (loss)	(16,900,000)	(31,100,000)	(116,500,000)	(100,600,000)
Operating segments | Powersports Segment
Segment income (loss):
Segment income (loss)	6,600,000	1,200,000	9,200,000	900,000
Reconciling items
Segment income (loss):
Interest expense, other, net			(62,600,000)	0
Other income (expense), net	91,200,000	116,400,000	187,300,000	372,500,000
Impairment charges	0	0
Interest Expense, Other			62,600,000	0
New vehicles
Revenues:
Total consolidated revenues	1,596,700,000	1,403,800,000	4,694,800,000	4,137,400,000
New vehicles | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	1,569,900,000	1,391,600,000	4,621,300,000	4,117,100,000
Used vehicles
Revenues:
Total consolidated revenues	1,340,400,000	1,355,800,000	3,991,200,000	4,174,400,000
Used vehicles | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	780,700,000	842,400,000	2,322,800,000	2,568,100,000
Used vehicles | EchoPark Segment
Revenues:
Total consolidated revenues	554,800,000	511,400,000	1,651,300,000	1,601,300,000
Wholesale vehicles
Revenues:
Total consolidated revenues	79,300,000	114,700,000	256,300,000	404,800,000
Wholesale vehicles | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	51,400,000	75,800,000	165,300,000	261,200,000
Wholesale vehicles | EchoPark Segment
Revenues:
Total consolidated revenues	26,600,000	38,900,000	89,100,000	143,300,000
Parts, service and collision repair
Revenues:
Total consolidated revenues	453,400,000	408,200,000	1,327,600,000	1,188,600,000
Parts, service and collision repair | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	431,800,000	404,700,000	1,289,000,000	1,183,400,000
Finance, insurance and other, net
Revenues:
Total consolidated revenues	173,700,000	165,600,000	517,700,000	505,300,000
Finance, insurance and other, net | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	126,000,000.0	125,800,000	375,400,000	382,100,000
Finance, insurance and other, net | EchoPark Segment
Revenues:
Total consolidated revenues	45,300,000	38,900,000	136,400,000	121,800,000
NewVehiclesMember | EchoPark Segment
Revenues:
Total consolidated revenues	0	1,600,000	1,000,000.0	7,300,000
Retail New Vehicles [Member]
Revenues:
Total consolidated revenues	1,573,500,000	1,371,800,000	4,624,400,000	4,067,400,000
Retail New Vehicles [Member] | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	1,546,700,000	1,359,600,000	4,550,900,000	4,047,100,000
Fleet New Vehicles [Member]
Revenues:
Total consolidated revenues	23,200,000	32,000,000.0	70,400,000	70,000,000.0
Fleet New Vehicles [Member] | Franchised Dealerships Segment
Revenues:
Total consolidated revenues	23,200,000	32,000,000.0	70,400,000	70,000,000.0
Retail New Vehcile
Revenues:
Powersports New Vehicle Revenue	$ 26,800,000	$ 10,600,000	$ 72,500,000	$ 13,000,000.0

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Leases, Codification Topic 842 (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	$ 258,400	$ 224,100
Right-of-use asset	$ 189,200	$ 260,700

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Business Combinations (Details) $ in Thousands	3 Months Ended				9 Months Ended
	Mar. 31, 2024 retail_Units	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) retail_Units Business	Sep. 30, 2022 USD ($) Business	Sep. 30, 2022 USD ($) retail_Units	Sep. 30, 2022 USD ($)
Business Combinations [Abstract]
Number of franchises disposed					0	0	1
Proceeds from sales of dealerships					$ 52,200			$ 0
Asset Acquisition [Line Items]
Number of franchises disposed					0	0	1
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other		$ 100			$ 100
Severance Costs		900	$ 2,200
Impairment charges		0		$ 0	62,600			0
Restructuring Costs		4,800	75,200		75,200
Payments to Acquire Businesses, Gross					75,100
Purchase of businesses, net of cash acquired					75,100			94,200
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Consideration Transferred					14,700
Inventories
Asset Acquisition [Line Items]
Restructuring Costs			10,000
Inventories | EchoPark Segment [Member]
Asset Acquisition [Line Items]
Restructuring Costs					5,800
Contract Termination
Asset Acquisition [Line Items]
Restructuring Costs		3,900	$ 400
Contract Termination
Asset Acquisition [Line Items]
Restructuring Costs					14,100
ROU asset
Asset Acquisition [Line Items]
Restructuring Costs					16,000
Property, Plant and Equipment
Asset Acquisition [Line Items]
Restructuring Costs					$ 32,500
Luxury Dealership [Domain]
Business Combinations [Abstract]
Number of franchises disposed | retail_Units					1
Asset Acquisition [Line Items]
Number of franchises disposed | retail_Units					1
Mid-line import franchise
Business Combinations [Abstract]
Number of franchises disposed | retail_Units					1
Asset Acquisition [Line Items]
Number of franchises disposed | retail_Units					1
EchoPark Stores [Abstract]
Asset Acquisition [Line Items]
NumberofPreownedStoresDisposed | retail_Units					8
EchoPark Delivery/Buy Centers [Abstract]
Asset Acquisition [Line Items]
NumberofPreownedStoresDisposed | retail_Units					14
Northwest Motorsport Segment [Abstract]
Asset Acquisition [Line Items]
NumberofPreownedStoresDisposed | retail_Units					3
domestic franchise dealership [Domain]
Business Combinations [Abstract]
Number of franchises disposed | retail_Units					1
Asset Acquisition [Line Items]
Number of franchises disposed | retail_Units					1
EchoPark Segment [Member]
Asset Acquisition [Line Items]
Number of acquired franchises | Business					0
Stand-alone pre-owned vehicle business
Asset Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory		11,100			$ 11,100
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill		22,600			22,600
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment		700			700
Goodwill, Acquired During Period					$ 11,900
Franchised [Member]
Asset Acquisition [Line Items]
Number of acquired franchises | retail_Units	2
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory				31,000		$ 31,000	$ 31,000	31,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill				33,200		33,200	33,200	33,200
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment				500		500	500	500
Goodwill, Acquired During Period								14,100
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other				1,100		1,100	1,100	1,100
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities				$ (400)		$ (400)	$ (400)	(400)
Franchised Dealerships Acquired
Asset Acquisition [Line Items]
Business acquisition, consideration amount								79,500
Business acquisition, consideration amount								$ 79,500
Powersports Segment
Asset Acquisition [Line Items]
Number of acquired franchises | retail_Units					1		2
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Land		29,000			$ 29,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		$ (300)			$ (300)

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Subsequent Events (Details) - 6.125% Notes - USD ($)	Sep. 30, 2023	Oct. 13, 2021
Subsequent Events [Abstract]
Principal amount		$ 250,000,000
Stated interest rate	6.125%	6.125%
Subsequent Event [Line Items]
Principal amount		$ 250,000,000
Stated interest rate	6.125%	6.125%