Sonic Automotive (NYSE:SAH) reported fourth-quarter and full-year 2025 results that management said reflected record gross profit performance, continued strength in higher-margin fixed operations and finance and insurance (F&I), and improving profitability at its EchoPark used-vehicle business. Executives also discussed tariff-driven uncertainty in new-vehicle pricing, plans to restart EchoPark expansion in late 2026, and a stepped-up brand marketing effort beginning this year.
Quarterly and full-year results
For the fourth quarter, Sonic reported GAAP EPS of $1.36 and adjusted EPS of $1.52, up 1% year-over-year. Consolidated revenue was $3.9 billion, down 1% from the prior year period. Management said consolidated gross profit rose 4% to a fourth-quarter record, while consolidated adjusted EBITDA was flat year-over-year.
CEO David Smith highlighted customer experience metrics, saying 2025 marked the third consecutive year of record customer satisfaction scores for the company’s franchise dealerships, while EchoPark retained the highest guest satisfaction rating among pre-owned vehicle retailers.
Franchise dealerships: mix shift and margin headwinds
In the fourth quarter, the franchise dealership segment generated revenue of $3.4 billion, flat year-over-year but down 5% on a same-store basis. Management attributed the same-store revenue decline to an 11% drop in same-store new-vehicle retail volume, partially offset by a 5% increase in same-store used-vehicle retail volume.
Executives said new-vehicle volume faced headwinds from pull-forward demand for electric vehicles (EVs) ahead of the expiration of a federal tax credit in the third quarter, along with strong luxury demand in the prior-year fourth quarter. Franchised total gross profit was a fourth-quarter record, up 4% on a reported basis, but down 2% on a same-store basis.
Higher-margin areas continued to drive profitability. Sonic said fixed operations gross profit was a fourth-quarter record and F&I gross profit reached an all-time quarterly record, up 8% and 6% year-over-year, respectively, on a reported basis. Management noted those businesses typically contributed more than 75% of total gross profit in the quarter.
- Same-store new-vehicle gross profit per unit (GPU) was $3,033, down 7% year-over-year but up 6% sequentially due to a higher luxury mix.
- Reported new-vehicle GPU was $3,209, down 1% year-over-year and up $208, or 7%, sequentially from the third quarter.
- Same-store used-vehicle GPU was $1,379, down 2% year-over-year and down 10% sequentially.
- Franchised F&I GPU was $2,624, up 8% year-over-year and up 1% sequentially.
EchoPark: record profitability, marketing ramp, and omnichannel investment
EchoPark posted what management described as a fourth-quarter record for adjusted segment income of $3.6 million, up 300% year-over-year, and record adjusted EBITDA of $8.8 million, up 110% year-over-year. EchoPark revenue was $481 million, down 5% year-over-year, while gross profit increased 9% to a fourth-quarter record $54 million.
Retail unit volume declined 6% year-over-year, but EchoPark total GPU rose to a fourth-quarter record $3,420 per unit, up 15% year-over-year and up 2% sequentially. For the full year, EchoPark adjusted EBITDA reached an all-time record of $49.2 million, up 78% year-over-year.
President Jeff Dyke said management views EchoPark as “the Costco sort of of the pre-owned world,” emphasizing low pricing versus key competitors. He said EchoPark vehicles are typically priced $3,000 to $6,000 below large online and used-car rivals, and management believes that, combined with high guest satisfaction scores, supports store-level sales and long-term expansion.
Executives said the company is focused on increasing non-auction sourced inventory, including buying more vehicles “off the street” and more actively leveraging its 111 franchise stores for trade-ins and lease returns. Dyke said inventory “feeding into EchoPark will start in March and April timeframe” as the company reduces dependence on auction lanes.
Management reiterated plans to resume a “disciplined store opening cadence” beginning in late 2026, assuming used-vehicle market conditions improve, and restated its long-term target to reach 90% of U.S. car buyers and sell more than 1 million vehicles annually through EchoPark.
As part of that effort, Sonic expects to begin investing in EchoPark brand marketing during 2026, potentially increasing advertising expense by $10 million to $20 million. Executives said spending could begin around the second quarter, but the public-facing impact may not be visible until the fourth quarter as stores begin to open again. The company also said part of the spend will support the launch of an EchoPark app and a digital retail solution intended to enable an omni-channel buying experience.
Tariffs, affordability, and fixed operations opportunity
Leadership repeatedly pointed to tariffs and manufacturer pricing actions as a key variable for 2026. Dyke said the company expects automakers to pass through higher costs via increased vehicle prices and reduced programs and margins, noting record average selling prices of more than $60,000 in the third quarter and over $62,000 in the fourth quarter. He said the company is watching potential “elasticity in new car pricing” into late spring and summer, while adding that widening affordability gaps could benefit used vehicles and EchoPark.
On fixed operations, Sonic said technician hiring remains a focus. Management stated it has added about 400 technicians since March 2024 and sees significant room to grow service business as more customers return to dealerships for repairs and maintenance. Executives discussed increased use of marketing and customer outreach tools and said OEMs are also focused on improving service retention.
Capital allocation and liquidity
Sonic ended the quarter with $702 million in available liquidity, including $306 million in combined cash and floorplan deposits. The company repurchased about 600,000 shares for approximately $38 million in the quarter, bringing full-year repurchases to 1.3 million shares for about $82 million.
The board approved a quarterly cash dividend of $0.38 per share, payable April 15, 2026, to stockholders of record March 13, 2026. Management said it targets a 20% to 25% dividend payout ratio over time and remains open to buybacks when returns are attractive, while also funding EchoPark growth and potential acquisitions. Executives added they are comfortable maintaining a strong balance sheet and indicated flexibility to increase leverage for acquisitions if needed.
About Sonic Automotive (NYSE:SAH)
Sonic Automotive, Inc is a publicly traded automotive retailer that operates a network of franchised new-car dealerships and used-vehicle dealerships across the United States. Headquartered in Charlotte, North Carolina, the company offers a range of services that include vehicle sales, leasing, finance and insurance products, service and parts, and collision repair. Sonic Automotive’s dealerships represent numerous major automotive brands, and the company also markets a broad selection of pre-owned vehicles under its own banner.
In addition to its core dealership operations, Sonic Automotive has developed digital retail capabilities that allow customers to research, shop and complete transactions online.
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