New leadership pair will continue to expand EchoPark used-car stores
Sonic Automotive Executive Chairman Bruton Smith is flanked by sons Scott Smith, left, who resigned last week as CEO, and David Smith, the dealership group’s new CEO.
It’s business as usual for two of Sonic Automotive Inc.’s top executives promoted last week to lead the nation’s fifth-largest retailer, as they reiterated commitments to grow the company’s EchoPark brand of used-only stores.
The changes at Sonic, of Charlotte, N.C., propel David Smith, a younger son of co-founder and Executive Chairman Bruton Smith, 91, into the CEO role and elevate Jeff Dyke to president. The moves follow the resignation last week of former CEO Scott Smith from the top spot after three years.
Scott Smith, 50, David Smith’s brother who co-founded Sonic in 1997, will remain a Sonic employee despite resigning as CEO, president and member of the board.
David Smith, 44, said Sonic will keep moving forward on its growth strategy. He recalled starting in the dealership business at 12 or 13 washing cars at Town & Country Ford, the Charlotte store that has long housed his father’s office. David Smith sold vehicles after he graduated high school and during college before joining Sonic in 1998.
“I had a lot of amazing guidance from my dad, a lot of great business lessons from him as far back as I can remember,” David Smith told Automotive News. “There really hasn’t been anything else. I love our company.”
In March, David Smith was promoted to executive vice chairman and chief strategic officer. He has been a board director since October 2008 and has had a variety of roles with Sonic including senior vice president of corporate development and a dealer operator and general manager of company stores.
As the management team has worked together for years, it’s “just business as usual,” David Smith said.
The changes also give Dyke, 51, more responsibilities with the company he joined in October 2005. He had been executive vice president of operations since October 2008.
Dyke told Automotive News that Sonic had been grooming him to be president for several years and succession had been discussed more during the past few months.
More EchoPark stores
With his new role, Dyke said he also will oversee the financial side of the business. Sonic remains focused on growing EchoPark, with seven stores and new ones set to open Oct. 8 in Charlotte and Dec. 10 in Houston.
Dyke: Groomed to be president
“It gives me a great platform to grow the business from and I’m going to get in there and do the best job I can and hopefully improve upon what we’ve already built,” Dyke said.
Sonic did not immediately name replacements for Dyke or David Smith.
Analysts say the moves aren’t expected to change company operations. The Smith family and entities it controls own 31 percent of Sonic’s shares and control more than 80 percent of voting rights.
“Given David Smith’s long tenure and intimate knowledge of the company and Jeff Dyke’s continued responsibility of dealership operations, we do not expect any impact to the stock,” Rick Nelson, an analyst with Stephens Inc., wrote in a note to investors last week. “We also do not anticipate any changes to strategic initiatives.”
Sonic’s stock price slipped slightly under Scott Smith’s watch. When he became CEO in July 2015, the stock was trading at around $23 a share and is now trading around $19.40 a share.
Under Scott Smith’s tenure as president then CEO, Sonic launched EchoPark, which opened its first store in 2014, and developed its One Sonic-One Experience sales approach. The approach, which debuted at some stores in 2014, features no-haggle pricing and seeks to speed transactions by having one sales rep with an iPad handle a customer from beginning to end.
Scott Smith told Automotive News that nothing happened at the company to prompt his decision to step down. Instead, he wants to spend more time with his wife and three children. He will be available to work with the management team and lead projects, will maintain his office at headquarters and receive the same base salary. That base salary was $1,090,733 in 2017.
“I’ve been at this for a long time and it’s been a wonderful journey. I’ve really enjoyed it,” Scott Smith said. “And I think we’re at a great place with the company. … Really I just love my children and want to be more of a part of them growing up. I’m still there with the company, and it just frees me up from the day-to-day activities the CEO has to do.”
Sonic, in a regulatory filing, said: “Mr. Smith confirmed to the company that his resignation was not the result of any disagreement with the company or any matter relating to the company’s operations, policies or practices.”
Scott Smith said he has no plans to retire nor pursue any external projects outside of Sonic.
The management changes follow years of succession planning, said William Belk, Sonic’s lead independent director.
“The company’s independent directors have strong confidence in David and Jeff,” Belk said in a statement.
“We also are appreciative of Scott’s great work over the past two decades and know his continued role as an adviser to David, Jeff and the rest of the leadership team will be invaluable.”
Sonic ranks No. 5 on Automotive News’ list of the top 150 dealership groups based in the U.S., retailing 133,728 new vehicles in 2017.