By: James De Luca

Having made a very good living as an F&I Manager and for the last 17 years F&I trainer one might find it odd that I’ve chosen to write a column about Sonic Automotive, one of the largest dealer groups in the U.S. Sonic operates in 25 states with over 100 dealerships representing 25 different brands.

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Sonic is shaking up the automotive industry with a bold strategy to eliminate their F&I departments in favour of hybrid, no negotiation, sales/F&I process where one person handles the entire transaction, with an iPad. So to my many friends and clients in F&I, this is neither a recommendation nor an endorsement, it is simply insight into a rapidly growing movement in the U.S.

Sonic-One Experience
Sonic describes this revolutionary move as a “customer-centric sales process that’s speedy and offers transparent no-negotiation low pricing”. Sonics “Experience Guides” are there to "help you, not to sell you".

It’s a risky move, but it could solve a number of fundamental problems that dealerships struggle with today.

1. Pay inequity between managers and sales consultants: Average salespeople earn just under $40,000.00 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. This could make car sales a “go to” position as opposed to a “fall back” position.
2. A recent study found the 60% of Canadians don’t like current sales process and 80% don’t like the F&I process. Offering a faster, transparent and customer centric process could increase sales and brand loyalty if it works.

Sonic-One Experience is being piloted at 5 dealerships in Charlotte, NC. The first to implement the process was Town and Country Toyota, which began using it in October 2014.

Mystery Shop
To better understand the 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 center offering to book me an appointment, which I did. Then I received another email giving me the specs of the truck and confirming my appointment.

I arrive to see there are no salespeople peering out the windows, waiting to pounce on me as I park. My research indicates that this is part of their process, as Sonic 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 went inside.

Experience Guide
A young man carrying an iPad greets me and asks if I have an appointment, I say yes. He checks his iPad and asks me if my name is Jim. I say yes and he says great, then tells me he's going to introduce me to an "Experience Guide".

A cheerful, young man wearing a golf shirt introduces himself as Zigmond, he says that he’s my “Experience Guide” and asks for a moment to check me in on his iPad. He asks me if I’ve been there before and I tell him I haven’t. Later I learn the similarities to a high end hotel check in process are no coincidence. 

"We do things a differently at our dealership," Zigmond says. "Let me tell you a little about how our process works."

Zigmond takes me on a show room tour and explains the differences between his dealership a traditional one. I’m shown the "imagine bars," which are tall, slender tables with iPads attached. They’re for shoppers that want to do online research or price comparisons. Zigmond actually encourages this and sites Sonics desire to provide complete “transparency” and a “no pressure” environment. He also tells me that no one will bother me while I'm at an experience bar.

As a Mac guy, I can’t 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 4 comfortable leather chairs placed around them where Experience Guides talk to customers about cars, financing and F&I products. Gone are cubicles and desks where traditional and often confrontational negotiations take place.

Zigmond tells me that if I decide to buy, he'll be the only person I will deal with, from beginning to end. He says Sonics goal is to help me to buy 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 won’t apply pressure to make a sale.

Zigmond walks me to the Tundra and does a brief, but enthusiastic demonstration. He discloses the Toyota warranty and then tells me that 86% of their customers take advantage of an extended warranty. He refers to it as a “Lifestyle Product” meant to save me money and 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’m 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
After the demo drive, we sit at a coffee table and Zigmond tells me the Tundra retails for $45,528.00, then he tells me the Sonic True Price is $39,992.00.

Later, I find out Sonics 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, JD Powers and Polk guides to arrive at the Sonic-True price.

I tell Zigmond I’m going to finance and he offers me 3 terms and rates. I choose 48 months at .9% and he calculates a monthly payment of $925.82 on his iPad. He then emails me a worksheet.

Zigmond didn’t leave to talk to a manager and he doesn't 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’d like to go ahead and purchase the Tundra.

Mystery Revealed
Having worked in car dealerships for so long, I’m a little nervous about telling Zigmond that I was mystery shopping him, especially since it was month end. I tell Zigmond that I’m there doing research for my Canadian AutoWorld column and he smiles and says “No problem, this happens all the time!” and since he’s on a salary he doesn’t mind.

He says he’d like to introduce me to his manager Kendy, who turns out to be the same person the greeted me when I walked in. Kendy actually thanks me for mystery shopping them and says he’d like to meet his GM Sanjay Prakash, as he’s always interested in getting feedback from industry professionals.

Meeting the GM
Prakash, who’s Canadian arrives within minutes and introduces himself. He tells me Sonics primary goal is to “eliminate the pain points associated with buying a car”. He says “Sonic wants to make the experience 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 stresses that Sonic wants to eliminate the “linear sales process” that most dealerships use because they take too long and often times make customers uncomfortable. Prakash believes that their pricing model is only 10% of their equation and that doing the right thing for customers is key.

Sanjay also tells me that Sonic is a Fortune 500 company and they treat their employees like they work for one. Sonic 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.”

The Numbers
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.

Prakash says their market share of new Toyota sales grew from 12% to more than 21%. He attributes part of that growth to an increase in repeat and referral business from shoppers who enjoyed the Sonic-One Experience.

Prakash says CSI is also up and he believes it’s due to the two-month training program that Experience Guides go through 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.

Plus their F&I profit is up from $640.00 per car to over $900.00 with no F&I department.

The Benefits for Consumers
If the Sonic can deliver a 45-minute buying experience and offer no-negotiation pricing that’s below market average, it will please most customers. But, tough negotiators who are focused on getting the best deal regardless of the experience will probably take Sonics price and ask another dealer to beat it. Prakash say’s this is a risk they’re willing to take in order to act in the best interest of customers that prefer to have a streamlined process where negotiating isn’t necessary.

Sonic sold over 245,000 cars in 2014, so Sonics-One Experience will reach hundreds of thousand’s 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 experience.

It will also prompt them to become Sonic’s best advocates as they spread the word online via reviews and social media sites.

An Excellent Process
My experience from the moment I entered the showroom until I left was excellent. Perhaps the 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.

About I.C. Collins

I.C. Collins is grateful that he can pursue something that is both interesting and has value on several levels. For over three decades in the Automotive Sales Industry a bottom-line guy Collins doesn't shy away from telling the truth in ways that cut through the noise to deliver streetwise and corporate knowledge from someone who's been there and done that, many times over.

He aims to create “a long-lasting major brand that for generations is a company that is business-critical to the leading brands in the world. We are focused every day on creating something that’s valuable and has permanence.”

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