Businessmodel of Sonic Automotive

Customer Segments

Sonic has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at anyone who wants to buy or sell a car.

Value Proposition

Sonic offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by providing a wide variety of options. Its dealerships offers a comprehensive range of services, including sales of used and new cars and light trucks; sales of replacement parts; vehicle maintenance, warranty, paint and collision repair services, and arrangement of extended warranty contracts; and  financing and insurance.

The company offers convenience by making life simpler for customers, as follows:

Online Research – Consumers shopping for cars on Sonic’s website can create an account that they can use to save cars of interest and set up e-mail alerts for new offers, price changes, and vehicle sales. Also, if they do not see a particular vehicle of interest, they can fill out a form to receive a notification when a matching car comes in stock.

In-Store Purchases – Consumers shopping for cars at any of Sonic’s locations in Charlotte, North Carolina receive the Sonic Guest Experience. They are assigned a dedicated Experience Guide who walks them through the entire shopping and buying process. The Guide carries an iPad so that any information necessary for the customer is immediately available. The entire experience can go by in as quickly as an hour. The company plans to roll out the program to other locations.

Customers shopping at any of Sonic’s locations can save time thanks to its pricing method. It assigns each of its vehicles a “Sonic Price“, which is determined based on fair market value (the selling price of similar vehicles in the community). This helps avoid the time-consuming negotiation process.

In-Store Sales – Consumers seeking to sell their vehicles at one of Sonic’s locations can have it undergo a quick and interactive appraisal (utilizing advanced technological resources) so they can determine its actual market value. If all goes smoothly they can leave with a check in hand the same day. They do not need to purchase a car in order to sell theirs. If they desire, they can also complete a preliminary appraisal on the company’s website by providing information about the vehicle.

The company has established a strong brand due to its success. It is one of the largest automotive retailers in the U.S. in terms of total revenues. It operates more than 114 dealerships across 14 states and 25 major metropolitan markets. It possesses over 30,000 new and pre-owned vehicles representing 25 automotive brands, with the majority of its dealerships being import and luxury brands.  Lastly, it is a Fortune 500 company and a member of the Russell 2000 Index.

Channels

Sonic’s main channel is its direct sales team. It also sells its vehicles through a set of authorized and preferred vendors. The company promotes its offering through its website and social media pages.

Customer Relationships

Sonic’s customer relationship is primarily of a personal assistance nature. The company’s employees give customers one-on-one guidance when they visit its dealerships to make a purchase or sale. That said, there is a self-service component in that customers can browse vehicles online first.

Key Activities

Sonic’s business model entails designing, developing, and delivering its services for customers.

Key Partners

Sonic’s key partners are the authorized and preferred vendors that promote and sell its vehicles in order to extend its reach.

Key Resources

Sonic’s main resources are its physical resources, which primarily include its network of 144 dealerships and 18 collision centers across 14 states and 24 metropolitan markets. It also depends on human resources in the form of its dealership representatives who assist visitors.

Cost Structure

Sonic has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent service enhancements. Its biggest cost driver is cost of sales, a variable cost. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

Sonic has two revenue streams: revenues it generates from the sales of its vehicles and related services to customers.