2025Q2FALSE0001043509--12-316002000.004.8751.50390.4320.085.07.00.120.180.184.875500.04.8754.8754.8754.8754.8754.8754.6254.6254.6254.6254.6250.180.184.6254.87577.695.0500.04.6254.8754.6254.875320.01.252.250.251.250.18500.0350.0400.02.62.9401.251.8750.04.80.11.00.30.00.00.10.3no0.0zero0.06.125250.06.1256.125100.06.1256.1256.125103.063102.042101.021100.0006.125100.06.1256.1256.1256.1256.125101.06.1256.1256.1256.1250.126.1256.1256.125256.1256.12550.02.500.50.10250.06.1256.1256.1256.1256.125263.26.12513.26.125400.056.1253.517.031.52.92.502.25P1Y2.2500.00.00.40.3Accumulated 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, 2024. 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, 2024.

10. Subsequent Events

Subsequent to June 30, 2025, 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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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 June 30, 2025

☐ 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 July 22, 2025, there were 22,120,758 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 should not place undue reliance on these statements, and 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, 2024 and in “Item 1A. Risk Factors” of this report and elsewhere herein, as well as:

•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;

•challenges to the business model of our franchised dealerships from existing manufacturers and new technology-focused companies;

•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;

•obstacles that prevent the efficient acquisition and liquidation of used vehicle inventory;

•the number of new and used vehicles sold in the United States, including hybrid electric vehicles and battery electric vehicles, 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 business 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 and investment in new technologies;

•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;

•cybersecurity incidents and other disruptions to our information systems;

•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;

•our ability to make and integrate acquisitions;

•our ability to obtain debt on commercially favorable terms;

•the rate and timing of recovery from, and the impact of, the CDK Global software outage and future cybersecurity incidents on our business;

•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 SIX MONTHS ENDED JUNE 30, 2025

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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	82
Item 4.	Controls and Procedures	83
PART II – OTHER INFORMATION		84
Item 1.	Legal Proceedings	84
Item 1A.	Risk Factors	85
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 5.	Other Information	87
Item 6.	Exhibits	88
SIGNATURES		89

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars and shares in millions, except per share amounts)
Revenues:
Retail new vehicles	$	1,666.1	$	1,552.6	$	3,322.4	$	3,008.4
Fleet new vehicles	29.4		26.2		51.5		45.8
Total new vehicles	1,695.5		1,578.8		3,373.9		3,054.2
Used vehicles	1,180.7		1,186.2		2,405.7		2,401.8
Wholesale vehicles	83.3		71.3		166.1		148.6
Total vehicles	2,959.5		2,836.3		5,945.7		5,604.6
Parts, service and collision repair	495.6		444.1		970.0		890.8
Finance, insurance and other, net	202.1		172.6		392.8		341.6
Total revenues	3,657.2		3,453.0		7,308.5		6,837.0
Cost of sales (1):
Retail new vehicles	(1,566.9)		(1,454.8)		(3,133.8)		(2,814.2)
Fleet new vehicles	(28.9)		(25.2)		(50.4)		(44.1)
Total new vehicles	(1,595.8)		(1,480.0)		(3,184.2)		(2,858.3)
Used vehicles	(1,132.6)		(1,141.5)		(2,311.3)		(2,310.1)
Wholesale vehicles	(84.9)		(71.9)		(168.8)		(149.9)
Total vehicles	(2,813.3)		(2,693.4)		(5,664.3)		(5,318.3)
Parts, service and collision repair	(241.7)		(220.5)		(475.5)		(443.4)
Total cost of sales	(3,055.0)		(2,913.9)		(6,139.8)		(5,761.7)
Gross profit	602.2		539.1		1,168.7		1,075.3
Selling, general and administrative expenses	(412.6)		(393.0)		(792.9)		(785.3)
Impairment charges	(172.4)		(1.4)		(173.8)		(2.4)
Depreciation and amortization	(40.5)		(37.0)		(80.4)		(73.2)
Operating income (loss)	(23.3)		107.7		121.6		214.4
Other income (expense):
Interest expense, floor plan	(18.3)		(22.2)		(38.3)		(42.5)
Interest expense, other, net	(27.4)		(29.3)		(55.0)		(58.3)
Other income (expense), net	(0.1)		(0.5)		—		(0.4)
Total other income (expense)	(45.8)		(52.0)		(93.3)		(101.2)
Income (loss) before taxes	(69.1)		55.7		28.3		113.2
Provision for income taxes - benefit (expense)	23.5		(14.5)		(3.3)		(30.0)





Net income (loss)	$	(45.6)	$	41.2	$	25.0	$	83.2

Basic earnings per common share:


Earnings per common share	$	(1.34)	$	1.21	$	0.74	$	2.45
Weighted-average common shares outstanding	34.1		34.0		34.0		34.0
Diluted earnings per common share:


Earnings per common share	$	(1.34)	$	1.18	$	0.72	$	2.39
Weighted-average common shares outstanding	34.1		34.9		34.7		34.8

(1)Cost of sales is exclusive of depreciation and amortization shown separately below.

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Net (loss) income	$	(45.6)	$	41.2	$	25.0	$	83.2
Other comprehensive income (loss) before taxes:
Change in fair value and amortization of interest rate cap agreements	(0.7)		0.5		(2.0)		1.1

Total other comprehensive income (loss) before taxes	(0.7)		0.5		(2.0)		1.1
Provision for income tax benefit (expense) related to components of other comprehensive income (loss)	0.2		(0.1)		0.6		(0.2)
Other comprehensive income (loss)	(0.5)		0.4		(1.4)		0.9
Comprehensive (loss) income	$	(46.1)	$	41.6	$	23.6	$	84.1

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(Dollars in millions, except per share amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	110.4	$	44.0
Receivables, net	397.9		495.9
Inventories	2,119.8		1,957.7
Other current assets	149.3		387.9
Total current assets	2,777.4		2,885.5
Property and Equipment, net	1,618.2		1,606.9
Goodwill	573.7		358.5
Other Intangible Assets, net	255.6		430.3
Operating Right-of-Use Lease Assets	255.1		224.3
Finance Right-of-Use Lease Assets	327.1		317.2
Other Assets	123.3		73.0
Total Assets	$	5,930.4	$	5,895.7

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable - floor plan - trade	$	162.3	$	165.6
Notes payable - floor plan - non-trade	1,833.2		1,773.7
Trade accounts payable	173.0		172.0
Operating short-term lease liabilities	37.6		25.6
Finance short-term lease liabilities	12.8		11.9

Other accrued liabilities	441.5		412.8
Current maturities of long-term debt	46.4		76.1
Total current liabilities	2,706.8		2,637.7
Long-Term Debt	1,474.0		1,511.9
Other Long-Term Liabilities	122.0		119.7
Operating Long-Term Lease Liabilities	238.6		220.1
Finance Long-Term Lease Liabilities	359.4		344.0

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; 70,107,449 shares issued and 22,120,758 shares outstanding at June 30, 2025; 69,396,726 shares issued and 22,084,634 shares outstanding at December 31, 2024	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 June 30, 2025 and December 31, 2024	0.1		0.1
Paid-in capital	896.2		884.6
Retained earnings	1,413.2		1,412.0
Accumulated other comprehensive income (loss)	2.4		3.8
Treasury stock, at cost; 47,986,691 Class A Common Stock shares held at June 30, 2025 and 47,312,092 Class A Common Stock shares held at December 31, 2024	(1,283.0)		(1,238.9)
Total Stockholders’ Equity	1,029.6		1,062.3
Total Liabilities and Stockholders’ Equity	$	5,930.4	$	5,895.7

See notes to unaudited condensed consolidated financial statements.

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 March 31, 2024	69.0	$	0.7	(47.2)	$	(1,231.5)	12.0	$	0.1	$	862.6	$	1,270.4	$	2.1	$	904.4
Shares awarded under stock compensation plans	0.3	—		—	—		—	—		3.2		—		—		3.2
Purchases of treasury stock	—	—		—	(0.1)		—	—		—		—		—		(0.1)
Effect of cash flow hedge instruments, net of tax expense of $0.1	—	—		—	—		—	—		—		—		0.4		0.4
Stock compensation expense	—	—		—	—		—	—		5.8		—		—		5.8
Net income	—	—		—	—		—	—		—		41.2		—		41.2

Class A dividends declared ($0.30 per share)	—	—		—	—		—	—		—		(6.6)		—		(6.6)
Class B dividends declared ($0.30 per share)	—	—		—	—		—	—		—		(3.6)		—		(3.6)
Balance at June 30, 2024	69.3	$	0.7	(47.2)	$	(1,231.6)	12.0	$	0.1	$	871.6	$	1,301.4	$	2.5	$	944.7



	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 March 31, 2025	69.7	$	0.7	(47.8)	$	(1,274.2)	12.0	$	0.1	$	890.6	$	1,470.7	$	2.9	$	1,090.8
Shares awarded under stock compensation plans	0.4	—		—	—		—	—		—		—		—		—
Purchases of treasury stock	—	—		(0.2)	(8.8)		—	—		—		—		—		(8.8)
Effect of cash flow hedge instruments, net of tax benefit of $0.2	—	—		—	—		—	—		—		—		(0.5)		(0.5)
Stock compensation expense	—	—		—	—		—	—		5.6		—		—		5.6
Net loss	—	—		—	—		—	—		—		(45.6)		—		(45.6)

Class A dividends declared ($0.35 per share)	—	—		—	—		—	—		—		(7.7)		—		(7.7)
Class B dividends declared ($0.35 per share)	—	—		—	—		—	—		—		(4.2)		—		(4.2)
Balance at June 30, 2025	70.1	$	0.7	(48.0)	$	(1,283.0)	12.0	$	0.1	$	896.2	$	1,413.2	$	2.4	$	1,029.6

See notes to unaudited condensed consolidated financial statements.



	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, 2023	68.6	$	0.7	(46.7)	$	(1,204.5)	12.0	$	0.1	$	855.4	$	1,238.6	$	1.6	$	891.9
Shares awarded under stock compensation plans	0.7	—		—	—		—	—		3.7		—		—		3.7
Purchases of treasury stock	—	—		(0.5)	(27.1)		—	—		—		—		—		(27.1)
Effect of cash flow hedge instruments, net of tax expense of $0.2	—	—		—	—		—	—		—		—		0.9		0.9
Stock compensation expense	—	—		—	—		—	—		12.5		—		—		12.5
Net income	—	—		—	—		—	—		—		83.2		—		83.2

Class A dividends declared ($0.60 per share)	—	—		—	—		—	—		—		(13.2)		—		(13.2)
Class B dividends declared ($0.60 per share)	—	—		—	—		—	—		—		(7.2)		—		(7.2)
Balance at June 30, 2024	69.3	$	0.7	(47.2)	$	(1,231.6)	12.0	$	0.1	$	871.6	$	1,301.4	$	2.5	$	944.7



	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, 2024	69.4	$	0.7	(47.3)	$	(1,238.9)	12.0	$	0.1	$	884.6	$	1,412.0	$	3.8	$	1,062.3
Shares awarded under stock compensation plans	0.7	—		—	—		—	—		0.1		—		—		0.1
Purchases of treasury stock	—	—		(0.7)	(44.1)		—	—		—		—		—		(44.1)
Effect of cash flow hedge instruments, net of tax benefit of $0.6	—	—		—	—		—	—		—		—		(1.4)		(1.4)
Stock compensation expense	—	—		—	—		—	—		11.5		—		—		11.5
Net income	—	—		—	—		—	—		—		25.0		—		25.0

Class A dividends declared ($0.70 per share)	—	—		—	—		—	—		—		(19.6)		—		(19.6)
Class B dividends declared ($0.70 per share)	—	—		—	—		—	—		—		(4.2)		—		(4.2)
Balance at June 30, 2025	70.1	$	0.7	(48.0)	$	(1,283.0)	12.0	$	0.1	$	896.2	$	1,413.2	$	2.4	$	1,029.6

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(Dollars in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25.0	$	83.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	69.4		63.4


Debt issuance cost amortization	3.2		2.9

Stock-based compensation expense	11.5		12.5
Deferred income taxes	(55.2)		(7.2)

Asset impairment charges	173.8		2.4
Loss (gain) on disposal of dealerships and property and equipment	3.8		0.8


Other	0.6		0.9
Changes in assets and liabilities that relate to operations:
Receivables	105.2		96.6
Inventories	(26.5)		(376.9)
Other assets	7.1		7.4
Notes payable - floor plan – trade	(3.3)		12.2
Trade accounts payable and other liabilities	18.0		35.5
Total adjustments	307.6		(149.5)
Net cash provided by (used in) operating activities	332.6		(66.3)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses, net of cash acquired	(359.9)		—
Purchases of land, property and equipment	(79.1)		(92.6)
Proceeds from sales of property and equipment	17.1		27.4

Net cash used in investing activities	(421.9)		(61.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable - floor plan - non-trade	299.5		186.3
Borrowings on revolving credit facilities	10.2		62.3
Repayments on revolving credit facilities	(10.2)		(62.3)

Debt issuance costs	(0.9)		(5.4)
Principal payments of long-term debt	(69.9)		(44.6)
Principal payments of long-term lease liabilities	(5.2)		(4.1)
Purchases of treasury stock	(44.1)		(27.1)

Issuance of shares under stock compensation plans	0.1		3.7
Dividends paid	(23.8)		(20.4)
Net cash provided by financing activities	155.7		166.4
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	66.4		38.3
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	44.0		28.9
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	110.4	$	67.2



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest, including amounts capitalized	$	93.0	$	94.9
Income taxes	$	8.1	$	40.2

See notes to unaudited condensed consolidated financial statements.

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 (collectively referred to herein as “Sonic,” the “Company,” “we,” “us” or “our”) for the three and six months ended June 30, 2025 and 2024 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, 2024. Due to rounding, segment level financial data may not sum to consolidated results.

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, 2024 for further discussion of recent accounting pronouncements.

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments require the disclosure of significant segment expenses as well as expanded interim disclosures, along with other changes to segment disclosure requirements. The standard will be effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. We have implemented the provisions of ASU 2023-07. See Note 9, “Segment Information,” to the accompanying consolidated financial statements for the expanded disclosures required by ASC Topic 280.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard will be effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. We are currently evaluating the impact that the adoption of the provisions of the ASU will have on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)”. The amendments require the disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion, and amortization recognized as part of oil and gas producing activities. It also requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as the total amount of selling expenses and, in annual reporting periods, an entity’s description of selling expenses. The standard will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact that the adoption of the provisions of the ASU will have on our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position, but we expect that the legislation will likely not have a material impact on our financial statements. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.

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 for the period ended June 30, 2024. The remaining 50% of this dealership was purchased in the fourth quarter of 2024 and its balance sheet is fully consolidated as of December 31, 2024 and June 30, 2025, and its operating results are included in the consolidated statement of operations from the acquisition date through June 30, 2025. 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.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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. The transaction price for a retail vehicle sale is specified in the contract with the customer and encompasses both cash and non-cash considerations. In the context of a retail vehicle sale, customers frequently trade in their existing vehicles. The value of this trade-in is determined based on its stand-alone selling price as specified in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration associated with retail vehicle sales, and sales are reported net of sales tax and other similar assets. 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 June 30, 2025 and December 31, 2024 include approximately $6.1 million and $8.0 million, respectively, related to contract assets from F&I retro revenues recognition, which are recorded in receivables, net. In addition, we recorded approximately $14.4 million related to contract assets from F&I retro revenues recognition in other assets as of June 30, 2025. Changes in contract assets from December 31, 2024 to June 30, 2025 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, 2024 for further discussion of our revenue recognition policies and processes.

Income Taxes – The income tax rate for the three and six month periods ended June 30, 2025 was impacted by the effect of the impairment charge discussed in Note 5 - Goodwill and Intangible Assets below. Absent the impairment charge, the effective rate for the three and six month periods ended June 30, 2025 would have been 24.8% and 26.1%, respectively.

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

2. Business Acquisitions and Dispositions

During the six months ended June 30, 2025, we acquired four businesses in our Franchised Dealerships Segment and were awarded one franchise in our Powersports Segment, which was previously an authorized retail outlet in Sturgis, South Dakota. The businesses acquired were Jaguar Land Rover Los Angeles, Jaguar Land Rover Newport Beach, Jaguar Land Rover San Jose and Land Rover Pasadena for an aggregate gross purchase price of approximately $359.9 million. The preliminary allocation of the aggregate gross purchase price included inventory of approximately $135.6 million, property and equipment of approximately $8.0 million, goodwill of approximately $215.5 million, other assets of approximately $1.5 million, and other liabilities of approximately $0.7 million.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As the businesses acquired in 2025 were purchased on the last day of the second quarter, no revenue or earnings attributable to those businesses are included in the accompanying statements of income. Acquisition costs recognized as an expense in the June 30, 2025 consolidated statements of operations related to these acquisitions were immaterial. Additionally, the total amount of goodwill from these acquisitions that is expected to be deductible for tax purposes related to these acquisitions is approximately $215.5 million.

The following unaudited pro forma summary presents consolidated information as if the 2025 acquisitions had occurred on January 1, 2024:


	Six Months Ended June 30, 2025		Twelve Months Ended December 31, 2024
	(In millions)
Revenue	$	7,585.3	$	14,735.4
Income before taxes	$	36.7	$	283.4

We did not acquire any businesses during the six months ended June 30, 2024.

During the six months ended June 30, 2025, we terminated one domestic franchised dealership and one powersports dealership. During the six months ended June 30, 2024, we terminated two luxury franchised dealerships and disposed of one mid-line import franchised dealership, in addition to closing the remaining seven Northwest Motorsport stores within the EchoPark Segment. The disposal generated net cash of approximately $3.4 million.

3. Inventories

Inventories consist of the following:


	June 30, 2025		December 31, 2024
	(In millions)
New vehicles	$	1,236.1	$	1,146.0
Used vehicles	554.3		514.4
Service loaners (1)	209.1		184.9
Parts, accessories and other	120.3		112.4
Inventories	$	2,119.8	$	1,957.7

(1)Service loaner inventory includes approximately $29.9 million and $31.7 million as of June 30, 2025 and December 31, 2024, respectively, related to vehicles that are leased directly from the manufacturer on a short-term basis. A corresponding liability is included within notes payable - floor plan - trade on the accompanying unaudited condensed consolidated balance sheets.

4. Property and Equipment

Property and equipment, net consists of the following:


	June 30, 2025		December 31, 2024
	(In millions)
Land	$	476.0	$	484.3
Buildings and improvements	1,536.9		1,510.7
Furniture, fixtures and equipment	591.7		577.3
Construction in progress	73.1		61.6
Total, at cost	2,677.7		2,633.9
Less accumulated depreciation	(1,050.5)		(1,003.6)
Subtotal	1,627.2		1,630.3
Less assets held for sale (1)	(9.0)		(23.4)
Property and equipment, net	$	1,618.2	$	1,606.9

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

Capital expenditures were approximately $34.1 million and $79.1 million in the three and six months ended June 30, 2025, respectively, and, in the three and six months ended June 30, 2024, capital expenditures were approximately $48.8

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

million and $92.6 million, respectively. Capital expenditures in all periods were primarily related to construction of new franchised dealerships and powersports stores, and building improvements and equipment purchased for use in our franchised dealerships and EchoPark and powersports stores. Certain capital expenditures are recognized in the Franchised Dealerships Segment to better monitor project development costs prior to transferring the capitalized asset balance to the appropriate entity or operating segment upon project completion. Assets held for sale as of June 30, 2025 and December 31, 2024 consisted of real property not currently used in operations that we expect to dispose of in the next 12 months.

Fixed asset impairment charges for the six months ended June 30, 2025 were approximately $0.2 million, which was related to property held for sale. Fixed asset impairment charges for the six months ended June 30, 2024 were approximately $2.4 million, which was related to the sale of real estate, capitalized IT project write-off costs and property associated with our decision to close the remaining Northwest Motorsport stores within the EchoPark Segment in January 2024.

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. We evaluated our Franchised Dealership Segment reporting unit on a qualitative basis as substantial cushion existed between the calculated fair value and associated carrying values in the prior year evaluation and there were not any meaningful events or trends which would significantly erode this cushion. We evaluated our Powersports Segment reporting unit on a quantitative basis.

In performing the quantitative test in the Powersports Segment reporting unit for impairment of goodwill, we primarily used 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, 2025 and determined there was no impairment of goodwill in either reporting unit evaluated.

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, 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, 2025 and determined that several of our franchise assets’ fair values did not exceed the carrying values, resulting in a non-cash pre-tax franchise asset impairment charge of $172.4 million to reduce the carrying value to fair value as of April 30, 2025. After the effect of impairment charges, the carrying value of our franchise assets totaled approximately $255.6 million at June 30, 2025, and is included in other intangible assets, net, in the accompanying consolidated balance sheet as of such date.

The changes in the carrying amount of goodwill for the year ended December 31, 2024 and the six months ended June 30, 2025 were as follows:


	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Balance at December 31, 2023 (1)	$	229.8	$	—	$	24.0	$	253.8
Additions through current year acquisitions	8.1		—		3.3		11.4
Reductions from dispositions	(0.2)		—		—		(0.2)

Prior year acquisition allocations	93.5		—		—		93.5
Balance at December 31, 2024 (1)	$	331.2	$	—	$	27.3	$	358.5
Additions through current year acquisitions (2)	215.5		—		—		215.5


Prior year acquisition allocations	(0.3)		—		—		(0.3)
Balance at June 30, 2025 (1)	$	546.4	$	—	$	27.3	$	573.7

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

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2)Purchase accounting allocations for current year acquisitions are preliminary. Amounts will be allocated from goodwill to franchise assets once the overall purchase accounting allocation is finalized.

The changes in the carrying amount of franchise assets for the year ended December 31, 2024 and the six months ended June 30, 2025 were as follows:


	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Balance at December 31, 2023	$	371.7	$	—	$	45.7	$	417.4
Additions through current year acquisitions	10.9		—		2.0		12.9



Balance at December 31, 2024	$	382.6	$	—	$	47.7	$	430.3

Reductions from dispositions	(1.6)		—		(0.7)		(2.3)
Reductions from impairment	(165.9)		—		(6.5)		(172.4)

Balance at June 30, 2025	$	215.1	$	—	$	40.5	$	255.6

6. Long-Term Debt

Long-term debt consists of the following:


	June 30, 2025		December 31, 2024
	(In millions)
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
Mortgage Facility (2)	347.3		366.8
Mortgage notes to finance companies - fixed rate, bearing interest from 2.05% to 4.40%	45.6		96.1



Subtotal	$	1,542.9	$	1,612.9
Debt issuance costs	(22.5)		(24.9)
Total debt	1,520.4		1,588.0
Less current maturities	(46.4)		(76.1)
Long-term debt	$	1,474.0	$	1,511.9

(1)The interest rate on the Revolving Credit Facility (as defined below) was 125 basis points above one-month Term SOFR (as defined in the Credit Facilities) at both June 30, 2025 and December 31, 2024.

(2)The interest rate on the Mortgage Facility (as defined below) was 150 basis points above one-month Term SOFR (as defined in the Mortgage Facility) at both June 30, 2025 and December 31, 2024.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Credit Facilities

Our Credit Agreement, originally dated as of April 14, 2021, entered into by, among others, the Company and Bank of America, N.A., as administrative agent (as amended to date, the "Credit Agreement"), provides for a syndicated revolving credit facility (the “Revolving Credit Facility”) and syndicated new and used vehicle floor plan facilities (the “Floor Plan Facilities” and, together with the Revolving Credit Facility, the “Credit Facilities”). The Credit Facilities are guaranteed by the Company and certain subsidiaries and are secured by a pledge of substantially all of the guarantors' assets subject to certain exceptions, including floor plan agreements with various manufacturer-affiliated captive finance companies.

On March 13, 2024, we amended and restated our Credit Agreement (the “Sixth Credit Facility Amendment”) to extend the maturity date to March 13, 2029, with an optional one-year extension. The agreement set the aggregate commitments to $2.4 billion consisting of $1.35 billion under the new vehicle floor plan, $700.0 million under the used vehicle floor plan and $350.0 million under the Revolving Credit Facility. The amendment includes an accordion feature allowing for an increase in the commitments up to $450.0 million to be allocated between the three facilities on a pro rata basis. It also contains a provision indicating that the Revolving Credit Facility commitment can neither be reduced below $50.0 million nor consist of more than 40% of the aggregate commitments.

In addition, the Sixth Credit Facility Amendment increased the basket for unrestricted quarterly dividends from $0.12 to $0.18 per share of qualified capital stock, provided additional flexibility to make asset sales and repurchases of qualified capital stock, removed the consolidated liquidity ratio covenant, and clarified that “Adjusted Term SOFR” (as defined) is inclusive of a 10-basis point credit spread adjustment. Amounts outstanding under the Credit Facilities bear interest at Adjusted Term SOFR plus credit spreads indicated by our Consolidated Total Lease Adjusted Leverage Ratio (as defined).

Availability under the Revolving Credit Facility is the lesser of the $350.0 million commitment or a borrowing base collateralized by eligible assets, less any outstanding letters of credit and borrowings. As of June 30, 2025, the Revolving Borrowing Base was $331.8 million with $11.2 million in outstanding letters of credit and no borrowings, resulting in $320.6 million of availability.

Senior Notes

On October 27, 2021, we issued two series of Senior Notes: $650.0 million bearing interest at 4.625% and maturing on November 15, 2029 (the “4.625% Notes”) and $500.0 million bearing interest at 4.875% and maturing on November 15, 2031 (the “4.875% Notes” and together with the 4.625% Notes, the "Senior Notes"). We used the net proceeds from the issuances to fund the acquisition of RFJ Auto Partners, Inc. and its subsidiaries (the “RFJ Acquisition”) and to repay existing debt.

The notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and its domestic operating subsidiaries. Under certain circumstances, the guarantees of the subsidiaries comprising the EchoPark Business (as defined in the indentures governing the Senior Notes (the "Indentures")) may be released. The Indentures contain customary restrictive covenants and default provisions. Interest on the Senior Notes is payable semi-annually in arrears on May 15 and November 15 of each year.

The Senior notes are redeemable, in whole or in part, at any time during the twelve-month period beginning on November 15 of each year at the redemption prices (expressed as percentages of the principal amount thereof) set forth below:


	Redemption Price
Year	4.625% Notes		4.875% Notes
2024	102.313	%	No Call
2025	101.156	%	No Call
2026	100.000	%	102.438	%
2027	100.000	%	101.625	%
2028	100.000	%	100.813	%
2029 and thereafter			100.000	%

Before November 15, 2026, we may redeem all or part of the 4.875% Notes, subject to a make-whole premium.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Facility and Sidecar Facility

On November 22, 2019, we entered into an agreement between, among others, the Company and PNC Bank, N.A., as administrative agent, providing for both revolving credit and delayed draw term loans (as amended to date, the “Mortgage Facility”).

On March 22, 2024, we amended the Mortgage Facility to conform to the terms of the Sixth A&R Credit agreement.

On May 17, 2024, we incurred a $78.0 million term loan as required under the Mortgage Facility in order to achieve full term loan utilization.

On December 27, 2024, we entered into an agreement, which established a syndicated mortgage loan facility (the “Sidecar Facility”) providing an incremental $149.1 million of term loan commitments. Though the Sidecar Facility is distinct and separate from the Mortgage Facility, the two facilities contain similar terms and conditions, are coterminous, and use one month Term SOFR as a base rate with the same pricing grid.

Interest on the Mortgage Facility and Sidecar Facility is paid monthly in arrears. Amortizing principal payments are 1.875% of the cumulative amount drawn on the term loan portion of Mortgage Facility and Sidecar Facility each quarter end through September 30, 2027, with the remaining balances due on the November 17, 2027 maturity date. We have the right to prepay outstanding principal on either facility at any time without premium or penalty provided that the prepayment exceeds $0.5 million.

As of June 30, 2025, we had $347.3 million of outstanding borrowings and $95.0 million available for revolving loans under the Mortgage Facility. In addition, we had no outstanding borrowings and $149.1 million available for future term loans under the Sidecar Facility based upon the appraised value of the underlying pledged collateral.

Mortgage Notes to Finance Companies

Excluding the Mortgage Facility and Sidecar Facility, our mortgage notes had a weighted-average interest rate of 3.48% and a combined principal balance of $45.6 million as of June 30, 2025. These mortgage notes require monthly payments of principal and interest through their respective maturities, are secured by underlying properties or other collateral and contain certain cross-default provisions. Maturity dates for these mortgage notes range from 2025 to 2031.

Covenants

The Credit Facilities, Mortgage Facility and Sidecar Facility each contain covenants which could prohibit indebtedness, liens, the payment of excess dividends and other restricted payments, capital expenditures and material dispositions and acquisitions of assets. The facilities contain other covenants and default provisions, including cross defaults to other material indebtedness, change of control events and other events of default customary for commercial credit facilities. Upon the occurrence of an event of default, we could be required to repay all outstanding amounts under these facilities. The facilities permit quarterly cash dividends on our Class A and Class B Common Stock up to $0.18 per share so long as no continuing Event of Default (as defined within each facility) has occurred and provided that we remain in compliance with all financial covenants. Dividends greater than $0.18 per share are subject to the limitations on restricted payments set forth in the facilities. After giving effect to the applicable restrictions, as of June 30, 2025, we had approximately $390.4 million of net income and retained earnings free of such restrictions.

Financial covenants for the Credit Facilities, Mortgage Facility and Sidecar Facility facilities include a minimum Consolidated Fixed Charge Coverage Ratio (as defined) of 1.20 to 1.00 and a Consolidated Total Lease Adjusted Leverage Ratio (as defined) not to exceed 5.75 to 1.00. Similar financial covenants apply to our Senior Notes as well as to certain facility leases and their related guaranty agreements. We remain in compliance with all restrictive covenants as of June 30, 2025.

Derivative Instruments and Hedging Activities

As of June 30, 2025, we had interest rate cap agreements with the following notional amounts, cap rates and maturities to help limit our exposure to potentially increasing interest rates on the Floor Plan Facilities and Mortgage Facility. Settlements are evaluated monthly and paid by the counterparties when one-month Term SOFR exceeds the cap rate. Payments are calculated based on the notional amounts multiplied by the difference between one-month Term SOFR and the cap rates and are recognized as a reduction of interest expense. The total unamortized premium related to the caps was $2.6 million as of June 30, 2025 which will be amortized as interest expense over each cap’s remaining term. The fair value of the outstanding caps was $0.5 million at June 30, 2025 included in other assets in the accompanying consolidated balance sheet.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notional Amount

Cap Rate (1)

Receive Rate (1)

Start Date

Maturing Date

(In millions)

400.0

5.500%

one-month Term SOFR

March 13, 2025

December 31, 2026

200.0

5.500%

one-month Term SOFR

March 17, 2025

November 17, 2027

400.0

5.500%

one-month Term SOFR

March 13, 2025

December 29, 2028

(1) One-month Term SOFR was approximately 4.32% at June 30, 2025.

The interest rate caps qualify and have been designated as cash flow hedges. As a result, changes in their fair value are recorded in total other comprehensive income (loss) before taxes in the accompanying consolidated statements of comprehensive operations.

For further discussion, 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, 2024.

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 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 $1.5 million as of June 30, 2025 and $2.2 million as of December 31, 2024. 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 June 30, 2025.

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 vigorously defends itself in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of Sonic’s business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on Sonic’s business, financial condition, results of operations, cash flows or prospects.

There were no significant liabilities recorded related to legal matters as of June 30, 2025 and December 31, 2024.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Fair Value Measurements

Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024 were as follows:


	Fair Value Based on Significant Other Observable Inputs (Level 2)
	June 30, 2025		December 31, 2024
	(In millions)
Assets:
Cash surrender value of life insurance policies (1)	$	48.5	$	47.3
Interest rate caps designated as hedges (2)	0.5		—
Total assets	$	49.0	$	47.3

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

(2)As of June 30, 2025, approximately $0.5 million was included in other assets in the accompanying unaudited condensed consolidated balance sheet.

As of June 30, 2025 and December 31, 2024, 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 June 30, 2025 and December 31, 2024, the fair value and the carrying value of Sonic’s significant fixed rate long-term debt were as follows:


	June 30, 2025				December 31, 2024
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In millions)

4.875% Notes (1)	$	473.8	$	500.0	$	447.5	$	500.0
4.625% Notes (1)	$	628.9	$	650.0	$	594.8	$	650.0
Mortgage Notes (2)	$	43.9	$	45.6	$	93.4	$	96.1

(1)As determined by market quotations from similar securities as of June 30, 2025 and December 31, 2024, 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, 2024.

9. Segment Information

As of June 30, 2025, Sonic had three operating segments: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. 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, 2024 for additional discussion of our operating segments. 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. The chief operating decision makers evaluate segment performance and allocate resources using metrics such as segment gross profit and segment income. These segment profit metrics are consistent across all segments and align with the way we measure profit on a consolidated basis. The accounting policies applied to segments follow those for the Company as a whole.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reportable segment financial information for the three and six months ended June 30, 2025 and 2024 were as follows:

Franchised Dealerships Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Revenues:
Retail new vehicles	$	1,639.1	$	1,530.9	$	3,276.1	$	2,970.8
Fleet new vehicles	29.5		26.2		51.5		45.8

Used vehicles	744.9		732.1		1,490.6		1,461.4
Wholesale vehicles	57.8		48.4		112.2		96.9
Parts, service and collision repair	484.9		434.4		952.4		874.3
Finance, insurance and other, net	144.3		124.2		274.9		243.8

Cost of sales:
Retail new vehicles	(1,543.9)		(1,436.0)		(3,094.1)		(2,781.8)
Fleet new vehicles	(28.9)		(25.2)		(50.4)		(44.1)

Used vehicles	(705.4)		(693.4)		(1,411.2)		(1,381.8)
Wholesale vehicles	(58.7)		(48.9)		(114.1)		(97.6)

Parts, service and collision repair	(236.0)		(215.4)		(466.3)		(434.6)










Segment gross profit	$	527.6	$	477.3	$	1,021.6	$	953.1
Selling, general and administrative expenses:
Compensation	(232.3)		(221.9)		(458.7)		(438.3)
Advertising	(16.7)		(14.3)		(32.6)		(29.6)
Rent	(9.4)		(10.3)		(19.1)		(20.4)
Other (1)	(101.8)		(101.4)		(175.7)		(198.1)


Depreciation and amortization	(34.1)		(30.4)		(67.5)		(60.2)

Other income (expense):
Interest expense, floor plan	(15.3)		(18.0)		(31.6)		(34.0)
Interest expense, other, net	(26.3)		(27.8)		(52.9)		(55.6)
Other income (expense), net	(0.1)		(0.5)		0.1		(0.5)

Segment income	$	91.6	$	52.7	$	183.6	$	116.4

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including gain or loss on disposal of franchises, facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EchoPark Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Revenues:

Used vehicles	$	427.4	$	448.9	$	901.1	$	931.7
Wholesale vehicles	25.4		21.9		52.8		50.7


Finance, insurance and other, net	55.8		46.5		114.5		94.3

Cost of Sales:



Used vehicles	(420.5)		(444.2)		(888.8)		(921.7)
Wholesale vehicles	(26.0)		(22.0)		(53.6)		(51.3)










Segment gross profit	$	62.1	$	51.1	$	126.0	$	103.7
Selling, general and administrative expenses:
Compensation	(25.2)		(23.3)		(51.1)		(48.5)
Advertising	(7.3)		(7.0)		(15.1)		(13.6)
Rent	(0.7)		2.7		(1.4)		3.4
Other (1)	(9.0)		(9.6)		(19.4)		(24.1)


Depreciation and amortization	(5.2)		(5.6)		(10.5)		(11.1)

Other income (expense):
Interest expense, floor plan	(2.6)		(3.8)		(5.8)		(7.6)
Interest expense, other, net	(0.4)		(0.7)		(0.8)		(1.3)
Other income (expense), net	—		0.1		0.1		—

Segment income (loss)	$	11.7	$	3.9	$	22.0	$	0.9

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline, and insurance, training, legal and information technology expenses.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Powersports Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Revenues:
Retail new vehicles	$	26.9	$	21.7	$	46.3	$	37.5
Used vehicles	8.3		5.3		14.0		8.7
Wholesale vehicles	0.3		0.9		1.1		1.1

Parts, service and collision repair	10.6		9.7		17.6		16.5
Finance, insurance and other, net	2.0		2.0		3.4		3.5

Cost of Sales:
Retail new vehicles	(23.0)		(18.8)		(39.7)		(32.3)


Used vehicles	(6.7)		(4.0)		(11.3)		(6.5)
Wholesale vehicles	(0.3)		(1.0)		(1.1)		(1.2)

Parts, service and collision repair	(5.6)		(5.1)		(9.2)		(8.8)








Segment gross profit	$	12.5	$	10.7	$	21.1	$	18.5
Selling, general and administrative expenses:
Compensation	(7.3)		(5.7)		(13.5)		(11.4)
Advertising	(0.3)		(0.4)		(0.6)		(0.8)
Rent	0.3		(0.1)		0.4		(0.1)
Other (1)	(2.9)		(1.7)		(6.1)		(3.7)


Depreciation and amortization	(1.2)		(1.0)		(2.5)		(2.0)

Other income (expense):
Interest expense, floor plan	(0.4)		(0.5)		(0.9)		(1.0)
Interest expense, other, net	(0.7)		(0.8)		(1.4)		(1.3)
Other income (expense), net	—		—		—		0.1

Segment income (loss)	$	—	$	0.5	$	(3.5)	$	(1.7)

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including gain or loss on disposal of franchises, facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline, insurance, training, legal and information technology expenses.


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Segment Income (Loss) (1):
Franchised Dealerships Segment (2)	$	91.6	$	52.7	$	183.6	$	116.4
EchoPark Segment (3)	11.7		3.9		22.0		0.9
Powersports Segment (4)	—		0.5		(3.5)		(1.7)
Total segment income	$	103.3	$	57.1	$	202.1	$	115.6
Impairment charges (5)	(172.4)		(1.4)		(173.8)		(2.4)
Income before taxes	$	(69.1)	$	55.7	$	28.3	$	113.2

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(2)For the three months ended June 30, 2025, amount includes approximately $2.4 million of pre-tax loss related to the termination of a franchise, approximately $4.1 million of pre-tax charges related to storm damage, approximately $165.9 million of non-cash pre-tax franchise asset impairment charges, and $10.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024. For the three months ended June 30, 2024, amount includes approximately $11.2 million of pre-tax charges related to excess compensation related to the CDK outage and approximately $3.6 million of pre-tax charges related to storm damage. For the six months ended June 30, 2025, amount includes $40.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024, approximately $5.0 million of pre-tax charges related to storm damage, approximately $165.9 million of non-cash pre-tax franchise asset impairment charges, and approximately $2.7 million of pre-tax charges related to dispositions. For the six months ended June 30, 2024, amount includes approximately $11.2 million of pre-tax charges related to excess compensation related to the CDK outage, approximately $3.6 million of pre-tax charges related to storm damage, approximately $2.2 million of pre-tax charges for severance and long-term compensation expense and approximately $1.0 million of non-cash pre-tax impairment charges related to property and equipment. Due to rounding, segment level financial data may not sum to consolidated results.

(3)For the three months ended June 30, 2025, amount includes approximately $0.8 million of pre-tax gain on sale of real estate. For the three months ended June 30, 2024, amount includes approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $1.4 million of non-cash pre-tax impairment charges related to property and equipment, approximately $0.7 million of pre-tax charges for long-term compensation expense, approximately $0.6 million pre-tax gain on acquisitions and dispositions, and approximately $0.4 million of pre-tax charges related to excess compensation related to the CDK outage. For the six months ended June 30, 2025, amount includes approximately $1.0 million of pre-tax gain on sale of real estate and approximately $0.2 million of non-cash pre-tax property and equipment impairment charges for real estate held for sale. For the six months ended June 30, 2024, amount includes approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $2.7 million of pre-tax charges for severance and long-term compensation expense, approximately $2.2 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations, approximately $1.4 million of non-cash pre-tax impairment charges related to property and equipment, approximately $0.6 million of pre-tax gain on acquisitions and dispositions and approximately $0.4 million of pre-tax charges related to excess compensation related to the CDK outage. Due to rounding, segment level financial data may not sum to consolidated results.

(4)For the three months ended June 30, 2025, amount includes approximately $6.5 million of non-cash pre-tax franchise asset impairment charges. For the six months ended June 30, 2025, amount includes approximately $0.9 million of pre-tax charges related to dispositions, approximately $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges, and approximately $7.2 million of non-cash pre-tax franchise asset impairment charges. Due to rounding, segment level financial data may not sum to consolidated results.

(5)For the three months ended June 30, 2025, amount includes approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment and approximately $6.5 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment. For the three months ended June 30, 2024, amount includes approximately $1.4 million of non-cash pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment. For the six months ended June 30, 2025, amount includes approximately $0.2 million of non-cash pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment, approximately $7.2 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment, approximately $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges for the Powersports Segment, and approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment. For the six months ended June 30, 2024, amount includes approximately $1.4 million of non-cash pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment and approximately $1.0 million of non-cash pre-tax impairment charges for the Franchised Dealerships Segment. Due to rounding, segment level financial data may not sum to consolidated results.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In millions)
Segment Capital Expenditures:
Franchised Dealerships Segment	$	32.5	$	48.0	$	77.0	$	91.1
EchoPark Segment	0.3		0.2		0.5		0.6
Powersports Segment	1.3		0.6		1.6		0.9
Total capital expenditures	$	34.1	$	48.8	$	79.1	$	92.6


	June 30, 2025		December 31, 2024
	(In millions)
Segment Assets:
Franchised Dealerships Segment	$	4,927.8	$	4,704.5
EchoPark Segment	553.4		574.5
Powersports Segment	238.8		232.7
Corporate and other:
Cash and cash equivalents	110.4		44.0
Floor plan deposit balance	100.0		340.0



Total assets	$	5,930.4	$	5,895.7

SONIC AUTOMOTIVE, INC.

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, 2024.

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 six months ended June 30, 2025 compared to the three and six months ended June 30, 2024. 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 or acquisition. 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. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

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 June 30, 2025: (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 June 30, 2025, we operated 111 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 14 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 136 new vehicle franchises (representing 25 different brands of cars and light trucks) and 16 collision repair centers in 18 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 41 franchises at 14 locations (11 full-service dealerships and three authorized retail outlets) in three states.

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.

SONIC AUTOMOTIVE, INC.

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 2% and 3% for the three and six months ended June 30, 2025, respectively, to approximately 16.0 million vehicles for both the three and six months ended June 30, 2025, compared to approximately 15.7 million and 15.6 million vehicles for the three and six months ended June 30, 2024, respectively, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2025 new vehicle industry volume will be between 15.6 million vehicles (a decrease of 3% compared to 2024) and 16.3 million vehicles (an increase of 1% compared to 2024). The effects of changes in trade policy and the imposition of tariffs, 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 economic conditions, natural disasters or other unforeseen circumstances could cause the actual 2025 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 6% and 4% to approximately 13.4 million and 13.2 million vehicles for the three and six months ended June 30, 2025, respectively, from approximately 12.7 million vehicles for both the three and six months ended June 30, 2024. We believe some of the increase in new vehicle SAAR during the three and six months ended June 30, 2025 is attributable to advanced purchases of new vehicles ahead of changes in U.S. tariff policy announced on April 2, 2025.

CDK Outage

On June 19, 2024, CDK Global (“CDK”), a third-party provider of certain information systems, notified us that CDK had suspended certain systems used by us in response to a cybersecurity incident impacting CDK (the “CDK outage”). This outage adversely affected our business and results of operations during the second and third quarters of 2024. In connection with the CDK outage, we recognized $10.0 million in pre-tax income from cyber insurance proceeds during the three months ended December 31, 2024, $30.0 million in pre-tax income from cyber insurance proceeds during the three months ended March 31, 2025, and $10.0 million in pre-tax income from cyber insurance proceeds during the three months ended June 30, 2025, which were each recorded as a reduction to selling, general and administrative expenses.

Franchised Dealerships Segment

Same store retail new vehicle revenue increased 6% and 10% during the three and six months ended June 30, 2025, driven primarily by a 5% and 8% increase in retail new vehicle unit sales volume, respectively, coupled with a 1% and 2% increase in retail new vehicle average selling price, respectively. Retail new vehicle gross profit decreased 1% and 5% during the three and six months ended June 30, 2025, respectively, due primarily to increased price competition as a result of increasing levels of available inventory and higher inventory invoice cost, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $212 per unit, or 6%, to $3,391 per unit during the three months ended June 30, 2025 and decreased $425 per unit, or 12%, to $3,245 per unit during the six months ended June 30, 2025. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 54 days as of June 30, 2025, compared to 59 days as of June 30, 2024.

SONIC AUTOMOTIVE, INC.

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

Same store retail used vehicle revenue increased 1% during both the three and six months ended June 30, 2025, driven primarily by a 5% and 4% increase in retail used vehicle average selling prices, respectively, partially offset by a 4% and 3% decrease in retail used vehicle sales volume, respectively. Retail used vehicle gross profit decreased 1% and 3% during the three and six months ended June 30, 2025, respectively, primarily due to lower retail used vehicle sales volume. Retail used vehicle gross profit per unit increased $49 per unit, or 3%, to $1,590 per unit during the three months ended June 30, 2025 and remained flat at $1,573 per unit during the six months ended June 30, 2025. Same store wholesale vehicle gross loss worsened by approximately $0.3 million, to a gross loss of approximately $0.8 million during the three months ended June 30, 2025, and worsened by approximately $1.0 million, to a gross loss of approximately $1.7 million during the six months ended June 30, 2025, due primarily to a $49 per unit, or 60%, increase in wholesale vehicle gross loss per unit, and a $83 per unit, or 148%, increase in wholesale vehicle gross loss per unit, respectively, as a result of changes in pricing and demand for vehicles at wholesale auction. 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 35 and 30 days as of June 30, 2025 and 2024, respectively.

Same store Fixed Operations revenue increased 10% and 8% during the three and six months ended June 30, 2025, respectively, driven primarily by increased service capacity as a result of additional technician headcount, and higher parts and labor costs that were passed along to consumers. Same store Fixed Operations gross profit increased 12% and 10% during the three and six months ended June 30, 2025, respectively, driven primarily by higher warranty revenue contribution and higher warranty gross margin. Same store Fixed Operations gross margin increased 90 basis points, to 51.3%, during the three months ended June 30, 2025, and increased 80 basis points, to 51.0%, during the six months ended June 30, 2025, primarily driven by an increase in warranty revenue contribution and higher warranty gross margin.

Same store F&I revenue increased 15% and 12% during the three and six months ended June 30, 2025, respectively, driven by a 14% and 9% increase in F&I gross profit per retail unit, respectively, and a 1% and 3% increase in retail new and used vehicle unit sales volume, respectively. Same store F&I gross profit per retail unit increased $335 per unit, or 14%, to $2,718 per unit during the three months ended June 30, 2025, and increased $213 per unit, or 9%, to $2,580 per unit during the six months ended June 30, 2025.

EchoPark Segment

Reported total revenues decreased 2% and 1% during the three and six months ended June 30, 2025, respectively, driven primarily by a 5% and 6% decrease in average retail used vehicle unit selling prices, respectively, partially offset by a 3% and 4% increase in total vehicle unit sales volume, respectively. Reported total gross profit increased 22% during both the three and six months ended June 30, 2025, respectively, driven primarily by a 47% and 23% increase in used vehicles gross profit, respectively.

Same market total revenues decreased 2% and remained flat during the three and six months ended June 30, 2025, respectively, attributable to a 5% and 6% decrease in average selling price per used retail unit, respectively, partially offset by a 3% and 5% increase in total vehicle unit sales volume, respectively. Same market total gross profit increased 19% during both the three and six months ended June 30, 2025, respectively, driven by a 19% and 15% increase in combined retail used vehicle and F&I gross profit per unit, respectively and a 3% and 5% increase in total vehicle unit sales volume, respectively.

Reported retail used vehicle revenue decreased 5% and 3% during the three and six months ended June 30, 2025, respectively, driven primarily by a 5% and 6% decrease in average retail used vehicle unit selling prices, respectively, partially offset by a 1% and 3% increase in retail used vehicle unit sales volume, respectively. F&I revenue increased 20% and 21% during the three and six months ended June 30, 2025, driven primarily by a 19% and 18% increase in F&I gross profit per unit. Reported combined retail used vehicle and F&I gross profit per unit increased $669 per unit, or 22%, to $3,747 per unit during the three months ended June 30, 2025, and increased $555 per unit, or 18%, to $3,569 for the six months ended June 30, 2025 due primarily to increases in F&I gross profit per unit during the three and six months ended June 30, 2025.

Reported wholesale vehicle gross loss worsened by approximately $0.5 million and $0.2 million during the three and six months ended June 30, 2025, respectively, primarily due to a 380% and 25% decline in wholesale vehicle gross loss per unit, respectively, partially offset by a 19% and 12% increase in wholesale vehicle unit sales volume during the three and six months ended June 30, 2025, respectively. 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 41 and 38 days as of June 30, 2025 and 2024, respectively.

SONIC AUTOMOTIVE, INC.

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

Powersports Segment

Reported retail new vehicle revenue increased by 24% and 23% during the during the three and six months ended June 30, 2025, respectively, primarily due to a 17% increase in retail new vehicle unit sales volume during both the three and six months ended June 30, 2025, coupled with a 6% and 5% increase in retail new vehicle average selling prices during the three and six months ended June 30, 2025, respectively. Retail new vehicle gross profit increased 34% and 27% during the three and six months ended June 30, 2025, respectively, as a result of the higher retail new vehicle unit sales volume. Retail new vehicle gross profit per unit increased $362 per unit, or 15%, to $2,828 per unit for the three months ended June 30, 2025 and increased $214 per unit, or 8%, to $2,767 per unit for the six months ended June 30, 2025.

Same store retail new vehicle revenue increased 13% and 11% during the three and six months ended June 30, 2025, respectively, driven by a 7% and 6% increase in retail new vehicle unit sales volume and a 6% and 5% increase in retail new vehicle average selling price during the three and six months ended June 30, 2025, respectively. Retail new vehicle gross profit increased 19% and 11% during the three and six months ended June 30, 2025, respectively, as a result of the increase in retail new vehicle unit sales volume and an increase in gross profit per unit. Retail new vehicle gross profit per unit increased $282 per unit, or 11%, to $2,771 for the three months ended June 30, 2025 and increased $132 per unit, or 5%, to $2,696 per unit for the six months ended June 30, 2025, due primarily to higher inventory invoice costs. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 135 and 187 days as of June 30, 2025 and 2024, respectively, varying based on manufacturer production levels and consumer demand.

Reported retail used vehicle revenue increased 57% and 62% during the three and six months ended June 30, 2025, respectively, primarily driven by a 57% and 50% increase in retail used vehicle unit sales volume, coupled with a 1% and 8% increase in used unit prices for the three and six months ended June 30, 2025, respectively. Retail used vehicle gross profit increased 30% and 25% during the three and six months ended June 30, 2025, respectively, as a result of higher retail used vehicle unit sales volume. Retail used vehicle gross profit per unit decreased $409 per unit, or 17%, to $2,014 per unit for the three months ended June 30, 2025, and decreased $383 per unit, or 17%, to $1,935 per unit for the six months ended June 30, 2025, primarily due to higher inventory costs.

Same store used vehicle revenue increased 43% and 44% during the three and six months ended June 30, 2025, respectively, primarily driven by a 46% and 37% increase in retail used vehicle unit sales volume for the three and six months ended June 30, 2025, respectively. Retail used vehicle gross profit increased 22% and 14% during the three and six months ended June 30, 2025, respectively. Retail used vehicle gross profit per unit decreased $415 per unit, or 17%, to $2,043, for the three months ended June 30, 2025 and decreased $387 per unit, or 17%, to $1,940 per unit for the six months ended June 30, 2025, primarily due to higher inventory costs. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 102 and 96 days as of June 30, 2025 and 2024, respectively.

Reported Fixed Operations revenue increased 9% and 7% during the three and six months ended June 30, 2025, respectively, and Fixed Operations gross profit increased 9% during both the three and six months ended June 30, 2025, driven primarily by higher repair order volume as a result of acquisitions. Fixed Operations gross margin increased 30 basis points to 47.1% and increased 70 basis points to 47.7% during the three and six months ended June 30, 2025, respectively, driven primarily by an increase in customer pay and warranty revenue contribution and customer pay gross margin.

Same store Fixed Operations revenue increased 2% and Fixed Operations gross profit increased 5% for the three months ended June 30, 2025, driven primarily by higher repair order volume during the quarter. Same store Fixed Operations revenue decreased 3% and Fixed Operations gross profit remained flat during the six months ended June 30, 2025, driven by lower repair order volume for the year-to-date period. Fixed Operations gross margin increased 70 basis points, to 48% and increased 160 basis points to 49% during the three and six months ended June 30, 2025, respectively, driven primarily by an increase in customer pay revenue contribution and customer pay gross margin.

Reported F&I revenue remained flat and decreased 1% during the three and six months ended June 30, 2025, respectively, driven primarily by a 23% and 22% decrease in F&I gross profit per retail unit in the three and six months ended June 30, 2025, respectively, offset by a 29% and 27% increase in combined retail new and used vehicle unit sales volume in the three and six months ended June 30, 2025, respectively. F&I gross profit per retail unit decreased $264 per unit, or 23%, to $889 per unit during the three months ended June 30, 2025 and decrease $260 per unit, or 22%, to $912 per unit during the six months ended June 30, 2025.

SONIC AUTOMOTIVE, INC.

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

Same store F&I revenue increased 3% and remained flat during the three and six months ended June 30, 2025, respectively, driven primarily by a 19% and 15% increase in combined retail new and used vehicle unit sales volume for the three and six months ended June 30, 2025, respectively, offset by a 13% decrease in F&I gross profit per retail unit during both the three and six months ended June 30, 2025. F&I gross profit per retail unit decreased $147 per unit, or 13%, to $948 per unit during the three months ended June 30, 2025 and decreased $141 per unit, or 13%, to $984 per unit for the six months ended June 30, 2025.

Results of Operations – Consolidated

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores, EchoPark stores, and Powersports stores in 2024 and 2025, 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 automobiles to luxury automobiles and powersports vehicles.

SONIC AUTOMOTIVE, INC.

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 six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
New Vehicle Brand	2025		2024		2025		2024
Luxury:
BMW	23	%	25	%	23	%	25	%
Mercedes	13	%	13	%	14	%	13	%
Lexus	6	%	6	%	6	%	6	%
Audi	5	%	5	%	5	%	5	%
Land Rover	5	%	5	%	5	%	5	%
Porsche	4	%	5	%	4	%	4	%
Cadillac	4	%	2	%	3	%	2	%
Volvo	1	%	1	%	1	%	1	%
MINI	1	%	—	%	1	%	1	%
Other Luxury (1)	—	%	—	%	—	%	—	%
Total Luxury	61	%	62	%	62	%	62	%
Mid-line Import:
Honda	12	%	11	%	12	%	11	%
Toyota	9	%	10	%	9	%	9	%
Volkswagen	1	%	2	%	1	%	2	%
Hyundai	1	%	1	%	1	%	1	%
Other Mid-line Import (2)	1	%	—	%	1	%	1	%
Total Mid-line Import	24	%	24	%	24	%	24	%
Domestic:
General Motors (3)	7	%	6	%	6	%	6	%
Chrysler	3	%	3	%	3	%	4	%
Ford	5	%	5	%	5	%	4	%
Total Domestic	15	%	14	%	14	%	14	%
Total	100	%	100	%	100	%	100	%

(1)Includes Jaguar and Polestar.

(2)Includes Mazda, Nissan and Subaru.

(3)Includes Buick, Chevrolet and GMC.

The U.S. retail automotive industry’s new vehicle unit sales volume below 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 June 30,		Better / (Worse)		Six Months Ended June 30,		Better / (Worse)
	2025	2024	% Change		2025	2024	% Change
	(In millions of vehicles)
U.S. Retail new vehicle SAAR (1)	13.4	12.7	6	%	13.2	12.7	4	%
U.S. Fleet new vehicle SAAR	2.6	3.0	(13)	%	2.8	2.9	(3)	%
U.S. Total new vehicle SAAR (1)	16.0	15.7	2	%	16.0	15.6	3	%

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

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 June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	1,666.1		$	1,552.6		$	113.5	7	%
Fleet new vehicle revenue	29.4			26.2			3.2		12	%
Total new vehicle revenue	$	1,695.5		$	1,578.8		$	116.7	7	%

Retail new vehicle gross profit	$	99.2		$	97.8		$	1.4	1	%
Fleet new vehicle gross profit	0.5			1.0			(0.5)		(50)	%
Total new vehicle gross profit	$	99.7		$	98.8		$	0.9	1	%

Retail new vehicle unit sales	29,478			27,705			1,773		6	%
Fleet new vehicle unit sales	571			514			57		11	%
Total new vehicle unit sales	30,049			28,219			1,830		6	%

Revenue per new retail unit	$	56,519		$	56,039		$	480	1	%
Revenue per new fleet unit	$	51,607		$	51,006		$	601	1	%
Total revenue per new unit	$	56,425		$	55,947		$	478	1	%

Gross profit per new retail unit	$	3,365		$	3,531		$	(166)	(5)	%
Gross profit per new fleet unit	$	918		$	1,885		$	(967)	(51)	%
Total gross profit per new unit	$	3,318		$	3,501		$	(183)	(5)	%

Retail gross profit as a % of revenue	6.0		%	6.3		%	(30)		bps
Fleet gross profit as a % of revenue	1.8		%	3.7		%	(190)		bps
Total new vehicle gross profit as a % of revenue	5.9		%	6.3		%	(40)		bps

SONIC AUTOMOTIVE, INC.

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



	Six Months Ended June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	3,322.4		$	3,008.4		$	314.0	10	%
Fleet new vehicle revenue	51.5			45.8			5.7		12	%
Total new vehicle revenue	$	3,373.9		$	3,054.2		$	319.7	10	%

Retail new vehicle gross profit	$	188.6		$	194.2		$	(5.6)	(3)	%
Fleet new vehicle gross profit	1.1			1.7			(0.6)		(35)	%
Total new vehicle gross profit	$	189.7		$	195.9		$	(6.2)	(3)	%

Retail new vehicle unit sales	58,553			53,847			4,706		9	%
Fleet new vehicle unit sales	954			893			61		7	%
Total new vehicle unit sales	59,507			54,740			4,767		9	%

Revenue per new retail unit	$	56,741		$	55,869		$	872	2	%
Revenue per new fleet unit	$	53,980		$	51,304		$	2,676	5	%
Total revenue per new unit	$	56,697		$	55,794		$	903	2	%

Gross profit per new retail unit	$	3,221		$	3,607		$	(386)	(11)	%
Gross profit per new fleet unit	$	1,129		$	1,809		$	(680)	(38)	%
Total gross profit per new unit	$	3,187		$	3,578		$	(391)	(11)	%

Retail gross profit as a % of revenue	5.7		%	6.5		%	(80)		bps
Fleet gross profit as a % of revenue	2.1		%	3.5		%	(140)		bps
Total new vehicle gross profit as a % of revenue	5.6		%	6.4		%	(80)		bps

For further analysis of new vehicle results on a segment basis, 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. 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 recent trends in the used vehicle environment.

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 June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	1,180.7		$	1,186.2		$	(5.5)	—	%
Gross profit	$	48.1		$	44.7		$	3.4	8	%
Unit sales	42,512			42,831			(319)		(1)	%
Revenue per unit	$	27,773		$	27,695		$	78	—	%
Gross profit per unit	$	1,131		$	1,044		$	87	8	%
Gross profit as a % of revenue	4.1		%	3.8		%	30		bps



	Six Months Ended June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	2,405.7		$	2,401.8		$	3.9	—	%
Gross profit	$	94.4		$	91.7		$	2.7	3	%
Unit sales	87,329			86,887			442		1	%
Revenue per unit	$	27,547		$	27,643		$	(96)	—	%
Gross profit per unit	$	1,081		$	1,056		$	25	2	%
Gross profit as a % of revenue	3.9		%	3.8		%	10		bps

For further analysis of used vehicle results on a segment basis, 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 influenced by several factors, including retail new and used vehicle unit sales volume, associated trade-in volume, and short-term, temporary, and seasonal fluctuations in wholesale auction pricing. In recent years, 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 long run, but may continue to experience volatility during 2025 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.

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 June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	83.3		$	71.3		$	12.0	17	%
Gross profit (loss)	$	(1.6)		$	(0.6)		$	(1.0)	(167)	%
Unit sales	9,368			7,859			1,509		19	%
Revenue per unit	$	8,900		$	9,073		$	(173)	(2)	%
Gross profit (loss) per unit	$	(165)		$	(78)		$	(87)	(112)	%
Gross profit (loss) as a % of revenue	(1.9)		%	(0.9)		%	(100)		bps


	Six Months Ended June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	166.1		$	148.6		$	17.5	12	%
Gross profit (loss)	$	(2.7)		$	(1.3)		$	(1.4)	(108)	%
Unit sales	18,773			15,971			2,802		18	%
Revenue per unit	$	8,850		$	9,305		$	(455)	(5)	%
Gross profit (loss) per unit	$	(146)		$	(84)		$	(62)	(74)	%
Gross profit (loss) as a % of revenue	(1.7)		%	(0.9)		%	(80)		bps

For further analysis of wholesale vehicle results on a segment basis, 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 relates 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) 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.

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 June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	229.5		$	208.6		$	20.9	10	%
Warranty	84.6			64.0			20.6		32	%
Wholesale parts	45.4			47.2			(1.8)		(4)	%
Internal, sublet and other	136.1			124.3			11.8		9	%
Total revenue	$	495.6		$	444.1		$	51.5	12	%

Gross profit
Customer pay	$	128.6		$	116.5		$	12.1	10	%
Warranty	53.2			39.4			13.8		35	%
Wholesale parts	7.9			8.5			(0.6)		(7)	%
Internal, sublet and other	64.2			59.2			5.0		8	%
Total gross profit	$	253.9		$	223.6		$	30.3	14	%

Gross profit as a % of revenue
Customer pay	56.1		%	55.9		%	20		bps
Warranty	63.0		%	61.5		%	150		bps
Wholesale parts	17.4		%	17.9		%	(50)		bps
Internal, sublet and other	47.2		%	47.6		%	(43)		bps
Total gross profit as a % of revenue	51.2		%	50.3		%	90		bps



	Six Months Ended June 30,						Better / (Worse)
	2025			2024			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	444.8		$	418.8		$	26.0	6	%
Warranty	170.9			128.5			42.4		33	%
Wholesale parts	92.1			98.0			(5.9)		(6)	%
Internal, sublet and other	262.2			245.5			16.7		7	%
Total revenue	$	970.0		$	890.8		$	79.2	9	%

Gross profit
Customer pay	$	249.3		$	234.6		$	14.7	6	%
Warranty	107.3			77.9			29.4		38	%
Wholesale parts	16.0			17.4			(1.4)		(8)	%
Internal, sublet and other	121.9			117.5			4.4		4	%
Total gross profit	$	494.5		$	447.4		$	47.1	11	%

Gross profit as a % of revenue
Customer pay	56.0		%	56.0		%	—		bps
Warranty	62.8		%	60.6		%	220		bps
Wholesale parts	17.4		%	17.8		%	(40)		bps
Internal, sublet and other	46.5		%	47.9		%	(141)		bps
Total gross profit as a % of revenue	51.0		%	50.2		%	80		bps

For further analysis of Fixed Operations results on a segment basis, 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.

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 June 30,				Better / (Worse)
	2025		2024		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	202.1	$	172.6	$	29.5	17	%
Total combined retail new and used vehicle unit sales	71,990		70,536		1,454		2	%
Gross profit per retail unit (excludes fleet)	$	2,807	$	2,447	$	360	15	%


	Six Months Ended June 30,				Better / (Worse)
	2025		2024		Change		% Change
	(In thousands, except per unit data)
Reported F&I:
Revenue	$	392.8	$	341.6	$	51.2	15	%
Total combined retail new and used vehicle unit sales	145,882		140,734		5,148		4	%
Gross profit per retail unit (excludes fleet)	$	2,693	$	2,428	$	265	11	%

For further analysis of F&I results on a segment basis, 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.

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 in 2024 and 2025, 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 a more meaningful comparison and discussion of financial results on a comparable store basis.

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 June 30,				Better / (Worse)
	2025		2024		Change		% Change
	(In millions, except unit data)
Retail new vehicle revenue:
Same store	$	1,625.4	$	1,527.3	$	98.1	6	%
Acquisitions, open points, dispositions and holding company	13.7		3.6		10.1		NM
Total as reported	$	1,639.1	$	1,530.9	$	108.2	7	%

Fleet new vehicle revenue:
Same store	$	29.5	$	26.2	$	3.3	13	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	$	29.5	$	26.2	$	3.3	13	%

Total new vehicle revenue:
Same store	$	1,654.9	$	1,553.5	$	101.4	7	%
Acquisitions, open points, dispositions and holding company	13.7		3.6		10.1		NM
Total as reported	$	1,668.6	$	1,557.1	$	111.5	7	%

Retail new vehicle gross profit:
Same store	$	94.5	$	95.2	$	(0.7)	(1)	%
Acquisitions, open points, dispositions and holding company	0.7		(0.3)		1.0		NM
Total as reported	$	95.2	$	94.9	$	0.3	—	%

Fleet new vehicle gross profit:
Same store	$	0.5	$	1.0	$	(0.5)	(50)	%
Acquisitions, open points, dispositions and holding company	0.1		—		0.1		NM
Total as reported	$	0.6	$	1.0	$	(0.4)	(40)	%

Total new vehicle gross profit:
Same store	$	95.0	$	96.2	$	(1.2)	(1)	%
Acquisitions, open points, dispositions and holding company	0.8		(0.3)		1.1		NM
Total as reported	$	95.8	$	95.9	$	(0.1)	—	%

Retail new vehicle unit sales:
Same store	27,867		26,432		1,435		5	%
Acquisitions, open points, dispositions and holding company	217		80		137		NM
Total as reported	28,084		26,512		1,572		6	%

Fleet new vehicle unit sales:
Same store	571		514		57		11	%
Acquisitions, open points, dispositions and holding company	—		—		—		NM
Total as reported	571		514		57		11	%

Total new vehicle unit sales:
Same store	28,438		26,946		1,492		6	%
Acquisitions, open points, dispositions and holding company	217		80		137

SONIC AUTOMOTIVE INC 10-Q