Jim De Luca
Sonic Automotive is one of the largest dealership groups in the U.S.
It operates over 100 rooftops in 25 states representing 25 different brands.
Sonic is shaking up the industry with a bold strategy to eliminate its F&I departments in favour of hybrid sales/F&I process where one person handles the entire transaction with an iPad. The group spent millions creating what it calls the One Sonic-One Experience.
Sonic describes this revolutionary move as a “customer-centric sales process that is speedy and offers transparent, no-negotiation, low pricing.” Sonic’s Experience Guides are there to “help you, not to sell you.”
It is a risky move, but it could solve a number of challenges that dealerships struggle with today.
Average salespeople earn just under $40,000 per year. This makes it difficult for dealers to attract great people to the position. A hybrid has much higher earning potential, which will enable dealers to attract and keep better qualified, career-minded professionals.
A recent study found the 60 per cent of Canadians do not like current sales process and 80 per cent do not like the F&I process. Offering a faster, transparent and customer-centric process could increase sales and brand loyalty – if it works.
The One Sonic-One Experience is being piloted at five dealerships in Charlotte, N.C. Town and Country Toyota was the first to implement it last October.
To better understand the One Sonic-One Experience, I went to Town and Country Toyota to mystery shop them. I selected a 2015 Toyota Tundra LTD from their website and emailed an inquiry.
Within minutes I received a response from their call centre offering to book me an appointment, which I did. Then I received an email giving me the specs of the truck and confirming my appointment.
I arrived to see there are no salespeople peering out the windows, waiting to pounce on me as I park. Sonic says it prefers to give shoppers time to get comfortable before someone greets them. I take a few minutes to check out the Tundra and then I go inside.
A young man carrying an iPad welcomes and asks if I have an appointment.
He checks his iPad and asks me if my name is Jim. I say yes and he calls for an Experience Guide.
A cheerful, young man wearing a golf shirt introduces himself as Zigmond and says he is my Experience Guide. He asks for a moment to check me in on his iPad. He asks me if I have been there before and I tell him I have not.
“We do things a differently at our dealership,” Zigmond says. “Let me tell you a little about how our process works.”
He offers me a tour and explains the differences between his dealership a traditional one.
I am shown the “imagine bars,” which are tall, slender tables with iPads attached. They are for shoppers that want to do online research or price comparisons. He actually encourages this and cites Sonic’s desire to provide complete transparency and a “no pressure” environment.
I cannot help but notice the similarities to an Apple Store. The showroom features comfortable seating areas that are more reminiscent of a hotel lobby than car dealership.
There are coffee tables, with four leather chairs placed around them where Experience Guides talk to customers about cars and financing. Gone are cubicles and desks where traditional negotiations take place.
Zigmond tells me that if I decide to buy, he will be the only person I will deal with from beginning to end. He says Sonic’s goal is to help me to buy a car and complete the transaction in less than 45 minutes. He also tells me that he is on a salary and unlike his commissioned competitors he will not apply pressure to make a sale.
He walks me to the Tundra and does a brief but enthusiastic demonstration.
He discloses the Toyota warranty and then tells me that 86 per cent of their customers take advantage of an extended warranty. He refers to it as a “lifestyle product” meant to give me long-term piece of mind.
He says that once I buy the Tundra, he will review other lifestyle products meant to enhance my ownership experience. Then he asks if I am ready for a demo drive.
I say yes and he guides me along a 10-minute course that allows me to see how the truck performs in both city and highway driving.
Sonic True Price
We sit at a coffee table following the drive and Zigmond tells me the Tundra retails for $45,528 but the Sonic True Price is $39,992.
Later, I find out Sonic’s True Price changes on the first of each month to reflect fair market value. They use proprietary software to scrape the web in conjunction with Toyota PVR, J.D. Power data and Polk guides to arrive at the Sonic True price.
I tell him I plan to finance and he offers me three terms and rates. I choose 48 months at 0.9 per cent and he calculates a monthly payment of $925.82 on his iPad. He then emails me the worksheet below.
Zigmond did not leave to talk to a manager and he does not ask me to sign anything. At no time, does he apply any pressure or use clever trial closes in order to feel me out. He simply asks me if I would like to go ahead and purchase the Tundra.
Having worked in car dealerships for years, I am nervous to tell Zigmond I am mystery shopping him, especially since it was month end.
I tell him I am doing research for column and he smiles and says, “No problem, this happens all the time!”
And since he is on a salary he does not mind.
He asks to introduce me to his manager, Kendy, who turns out to be the same person who greeted me when I walked in. He thanks me for mystery shopping them and says he would like to introduce his general manager Sanjay Prakash, as he is always interested in getting feedback from industry professionals.
Prakash, who is Canadian, arrives within minutes.
He says Sonic’s primary goal is to eliminate the pain points associated with buying a car.
“Sonic wants to make the experience is easy and as transparent as possible, by offering everything to consumers when they want it as opposed to when the dealership is ready to give it,” he says.
He stresses the goal is to eliminate the linear sales process most dealerships use. Prakash believes their pricing model is only 10 per cent of their equation and that doing the right thing for customers is key.
Sanjay says Sonic is a Fortune 500 company and they treat their employees like they work for one.
It offers ongoing training, benefits, job security and a clear path for advancement to their employees who choose to pursue one.
I ask about employee turn over and Prakash says “employee turnover has been virtually zero since they implemented the process.”
In the first quarter of 2014, before Town and Country implemented the process, they averaged 171 new car deals per month. After the implementation it rose to 231 deals per month for the same quarter in 2015.
Market share of new Toyota sales grew from 12 per cent to more than 21 per cent. He attributes part of that growth to an increase in repeat and referral business from shoppers who enjoyed the One Sonic-One Experience.
CSI is also up thanks largely to a two-month training program Experience Guides complete before engaging customers. They also receive daily training from a team of former F&I and sales managers to ensure they are on top of both vehicles' features and the process.
F&I profit is up from $640 per car to over $900 with no F&I department.
The Benefits for Consumers
If Sonic can deliver a 45-minute buying experience and offer no-negotiation pricing that is below market average, it will please most customers. But, tough negotiators focused on getting the best deal will probably take Sonic’s price and ask another dealer to beat it.
Prakash says this is a risk they are willing to take in order to act in the best interest of customers who prefer to have a streamlined process where negotiating is not necessary.
Sonic sold over 245,000 cars in 2014; the One Sonic-One Experience will eventually reach hundreds of thousands of buyers when it goes national.
This will prompt a lot of people to question why they should tolerate the old process when presented with this new one. It will also prompt them to become Sonic’s best advocates as they spread the word online via review and social media sites.
An Excellent Process
My experience from the moment I entered the showroom until I left was excellent.
Perhaps, the One Sonic-One Experience is the way of the future for dealers with the courage to embark on a customer-centric, transparent and profit-driven process.
Jim De Luca is the V-P of Digital Road to a Sale. He can be reached at 905-865-8734 or via email at firstname.lastname@example.org. Follow him on Twitter @jimdelucasells.