CHARLOTTE, N.C. -

Sonic Automotive president Scott Smith pointed out the company has posted 14 consecutive quarters of revenue growth without adding any dealerships to its network.

Could Sonic be ready to add some stores in hopes of boosting the bottom line even more?

Smith reiterated Sonic’s position Tuesday when the company reported its first-quarter performance and conducted a conference call with investment analysts.

“Our strategy really hasn’t changed,” Smith said. “We’re still continuing to invest in our base business, invest in our infrastructure and tools to be more efficient, invest in our real estate and strengthen our balance sheet. We do have considerable amount of flexibility on stock repurchase, which our aim is to be strategic and opportunistic.”

Smith acknowledged Sonic is posting record performances even though it sold a cluster of dealerships in Oklahoma last year.

“We are actively looking to replace those revenues,” Smith said. “We have been out in the market looking. We don’t have anything to announce. We don’t have any definitive agreements or anything like that. We are looking in the market and will be opportunistic there, as well.”

Analysts returned to the topic later in Tuesday’s call, and chief financial officer Heath Byrd again emphasized Sonic’s strategy.

“We’re going to stay focused on the core business, and the No. 2 priority is owning our own properties,” Byrd said. “It’s all about timing. Those opportunities come once a lease comes to its term, then we’ll either negotiate to purchase or move the dealership. In priorities, those two stay at the top.

“Then you get into making decision on stock repurchase, acquisitions and other growth opportunities. We’re treating those very opportunistically,” Byrd said. “We want to have the right balance. Each opportunity we evaluate, then make our decision.”

Incentives by Japanese OEMs

Another analyst wondered what trends Sonic is seeing in connection with incentives offered by Japanese automakers in light of the yen’s position in the global finance market.

“The incentives for Honda certainly were not as aggressive in the first quarter as they were last year. We have yet to see the big, big Honda press like we’ve had the past couple of years, especially with the Accord program they had last year,” Sonic executive vice president of operations Jeff Dyke said.

“Incentives, year-over-year, when you add them all up, they’re down just a tad bit, but not enough to slow us down. But for Japanese brands, they were not as aggressive with Toyota being more aggressive than Honda,” Dyke continued.

Impact of CFPB Guidance on F&I Performance

Sonic indicated that its first-quarter F&I revenue increase to $65.5 million, up from $57.6 million a year earlier. Analysts inquired about the company’s potential in this department going forward in connection with the Consumer Financial Protection Bureau releasing guidance regarding indirect auto financing.

Auto Remarketing published details here about how legal experts see the guidance as an attack on dealer participation. Sonic shared that about 40 percent of its F&I income derives from dealer participation and the remainder from selling products such as extended service contracts.

“I don’t see any risk whatsoever,” Dyke said. “Our F&I business has been growing nicely. We’ve been very pleased with the growth in F&I. Our team has been doing a really nice job. We feel real comfortable with where we are; no risk whatsoever.”

National Brand Strategy

Tuesday’s call wrapped up with a question about whether Sonic would follow AutoNation’s lead and roll out a national branding strategy.

Earlier this year, AutoNation said all 210 franchises that fall under its domestic and import business segments will be marketed under the AutoNation brand. AutoNation has three business segments: domestic, import and premium luxury.

The transition, which began in South Florida, involves 23 brands. AutoNation aims to have it complete throughout all markets by end of the second quarter.

Could Sonic-branded stores be next?

“AutoNation has obviously blazed a trail in their import and domestic stores,” Dyke said. “We think that’s great for the industry. We’ve been working on internal branding for a long time in terms of our culture. If that translates into external at some point in the future, that’s not something that we’re ruling out, but certainly not ready to comment and say, ‘Hey, this is what we’re going to go do.’”

Nick Zulovich can be reached at nzulovich@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.