With the Consumer Financial Protection Bureau looming, Sonic Automotive Inc. has decided to slow down its already leisurely exploration whether to create its own captive finance company or possibly sign up a private-label finance provider.
“We’ve been evaluating captive finance for probably the last year,” said Sonic CFO Heath Byrd, in a conference call on Monday. “We’re cautiously looking at different alternatives, different partners, how we put that together from just doing a private label kind of financing, to all the way to securitization.”
Also on Monday, Sonic announced net income of $14.8 million for the second quarter, down from $27 million a year ago. Gross profit was $355.6 million, up from $346.9 million a year ago.
The second-quarter net results included a pre-tax impairment charge of $10.5 million, which Byrd said was related to a dealership the group acquired late last year. Sonic ultimately decided to close the Chevy franchise that was there and repurpose the property to expand a luxury franchise next door, Byrd said. Sonic also suffered hail damage to inventory during the quarter, he said.
Charlotte, N.C.-based Sonic said last summer it was exploring the possibility of creating its own captive finance company. Sonic is “slowing that down just a little bit,” Byrd said.
“One of the things you want to see play out is the CFPB,” he said, in a transcript posted on seekingalpha.com. “So, we’ll see what that is going play out because we don’t open ourselves up to compliance that would make it where you — it may — it looks like it makes money now, but may not in future.”
