Sonic Automotive Group had to change how it did business or fail, said CEO Scott Smith.
Smith spoke at the Automotive News Retail Forum on Thursday. He outlined how technology and customer demand for a reliable and stress-free car-buying experience influenced his decision to launch One Sonic-One Experience and build the used-only EchoPark stores.
“Technology is changing the world, and shoppers are knowledgeable,” Smith said. “If we didn’t change, we were dead.”
Sonic, which is headquartered in Charlotte, N.C., has 107 stores in 13 states. Smith said several years ago it surveyed about 3,000 customers who recently bought vehicles from retailers other than Sonic. Most indicated they had a positive experience researching vehicles at home, but their satisfaction dropped once they visited a dealership, he said.
So in 2010, Sonic started testing what would become its One Sonic-One Experience pilot. In 2015 the company rolled it out in five stores in North Carolina. One Sonic-One Experience promises no-haggle pricing and completion of a purchase in 45 minutes or less with one sales rep using an iPad. The sales rep is paid a salary-based plan rather than commission to offer a “softer” sale. Sonic bets that by eliminating car-buying pain points, it would become a preferred place to shop and thereby gain market share.
“Our brand is our product. Our experience is our product. The customer knows we’re predictable,” Smith said.
One Sonic-One Experience has not been rolled out to the company’s other stores yet. Smith said training its 10,000 employees has stalled the process.
“It’ll take us the better part of two years to get this completely rolled out,” Smith said.
But what Sonic has seen of it in Charlotte is working, he said.
Penske Automotive Group Inc. recently tried a no-haggle pricing pilot in its Toyota store near Phoenix. Penske killed it late last year because it was not delivering cost savings or increased sales. Sonic offers One Sonic-One Experience in its Town and Country Toyota store in Charlotte. When asked about Penske’s decision to drop it, Smith said, “Toyota is a very difficult brand. I hold Roger Penske in high esteem, but I don’t think they gave it enough forethought or time” to work.
Smith said the key to successfully implementing a one-price strategy is inventory management. His goal is to get One Sonic-One Experience into 50 more stores by year end.