SONIC AUTOMOTIVE INC (SAH)

CIK: 0001043509. SIC: 5500 Retail-Auto Dealers & Gasoline Stations. Latest 10-K as of: 2026-02-23.

SIC breadcrumb: Retail Trade > SIC Major Group 55 > SIC 5500 Retail-Auto Dealers & Gasoline Stations

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1043509. Latest filing source: 0001628280-26-010570.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001043509.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001043509.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001628280-26-028847.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-30. Report date: 2026-04-30.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto, as well as the consolidated financial statements and related notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless otherwise noted, we present the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. To the extent that we believe a discussion of the differences among reportable segments will enhance a reader’s understanding of our financial condition, cash flows and other changes in financial condition and results of operations, the differences are discussed separately. Certain amounts and percentages may not compute due to rounding.

Unless otherwise noted, all discussion of increases or decreases are for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a same market basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Overview

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of March 31, 2026: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of March 31, 2026, we operated 107 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 14 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 127 new vehicle franchises (representing 24 different brands of cars and light trucks) and 16 collision repair centers in 17 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 41 franchises at 14 locations (11 full-service dealerships and three authorized retail outlets) in three states.

The Franchised Dealerships Segment provides comprehensive sales and services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of third-party financing, extended warranties, service contracts, insurance and other aftermarket products (collectively, “F&I”) for our guests. The EchoPark Segment sells used cars and light trucks and arranges third-party F&I product sales for our guests in pre-owned vehicle specialty retail locations and does not offer customer-facing Fixed Operations services. The Powersports Segment offers guests: (1) sales of both new and used powersports vehicles (such as motorcycles, personal watercraft and all-terrain vehicles); (2) Fixed Operations activities; and (3) F&I services. All three segments generally operate independently of one another with the exception of certain shared back-office functions and corporate overhead costs.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Retail Automotive Industry Performance

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) seasonally adjusted annual rate of unit sales volume (the “total new vehicle SAAR”) decreased 7% for the three months ended March 31, 2026, to approximately 15.5 million vehicles, compared to approximately 16.6 million vehicles for the three months ended March 31, 2025, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.5 million vehicles (a decrease of 5% compared to 2025) and 16.0 million vehicles (a decrease of 2% compared to 2025). The effects of tariffs and trade policies, interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand as a result of economic conditions, geopolitical disruptions, energy prices, natural disasters or other unforeseen circumstances could cause the actual 2026 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR decreased 9% to approximately 12.8 million vehicles for the three months ended March 31, 2026, from approximately 14.0 million vehicles for the three months ended March 31, 2025.

Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores in 2025 and 2026, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

Same store retail new vehicle revenue decreased 8% during the three months ended March 31, 2026, driven primarily by a 10% decrease in retail new vehicle unit sales volume, partially offset by a 3% increase in average selling price per new retail unit for the three months ended March 31, 2026. Retail new vehicle gross profit decreased 14% during the three months ended March 31, 2026, due primarily to the effects of tariffs on inventory invoice cost and lower consumer demand as a result of pre-tariff demand in the first quarter of 2025, which combined to drive lower retail new vehicle gross profit per unit for the three months ended March 31, 2026. Retail new vehicle gross profit per unit decreased $133 per unit, or 4%, to $3,002 per unit during the three months ended March 31, 2026. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 58 days as of March 31, 2026, compared to 51 days as of March 31, 2025.

Same store retail used vehicle revenue increased 2% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales volume. Retail used vehicle gross profit decreased 1% during the three months ended March 31, 2026, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $59 per unit, or 4%, to $1,533 per unit during the three months ended March 31, 2026. Same store wholesale vehicle gross loss worsened by approximately $1.0 million, to a gross loss of approximately $1.7 million during the three months ended March 31, 2026, due primarily to a $239 per unit, or 168%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. We generally focus on maintaining Franchised Dealerships Segment used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 32 days as of March 31, 2026, compared to 31 days as of March 31, 2025.

Same store Fixed Operations revenue increased 5% during the three months ended March 31, 2026, driven primarily by increased service capacity as a result of additional technician headcount, and higher parts and labor costs that were passed along to consumers. Same store Fixed Operations gross profit increased 5% during the three months ended March 31, 2026, driven primarily by higher customer pay revenue contribution and higher internal, sublet and other gross margin contribution. Same store Fixed Operations gross margin increased 40 basis points, to 51.1%, during the three months ended March 31, 2026.

Same store F&I revenue increased 2% during the three months ended March 31, 2026, driven by a 6% increase in F&I gross profit per retail unit, partially offset by a 4% decrease in retail new and used vehicle unit sales volume, respectively. Same store F&I gross profit per retail unit increased $146 per unit, or 6%, to $2,594 per unit during the three months ended March 31, 2026.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EchoPark Segment

Same market total revenues increased 4% during the three months ended March 31, 2026, attributable to a 2% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles) in the three months ended March 31, 2026, and a 1% increase in average selling price per used retail unit in the three months ended March 31, 2026. Same market total gross profit increased 6% during the three months ended March 31, 2026, primarily driven by a 2% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles), and a 3% increase in combined retail used vehicle and F&I gross profit per unit.

Same market retail used vehicle revenue increased 4% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales volume, coupled with a 1% increase in average selling price per used retail unit in the three months ended March 31, 2026. F&I revenue increased 4% during the three months ended March 31, 2026, driven primarily by a 3% increase in retail used vehicle unit sales and a 1% increase in F&I gross profit per unit in the three months ended March 31, 2026. Same market combined retail used vehicle and F&I gross profit per unit increased $86 per unit, or 2.5%, to $3,518 for the three months ended March 31, 2026 due primarily to increases in retail used vehicle unit sales volume during the three months ended March 31, 2026.

Same market wholesale vehicle gross profit improved by approximately $0.4 million during the three months end

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-23. Report date: 2025-12-31.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and “Item 1A. Risk Factors” included in this Annual Report on Form 10-K. For comparison and discussion of our results of operations for the year ended December 31, 2024 (“2024”) to our results of operations for the year ended December 31, 2023 (“2023”), please refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for 2024.

Unless otherwise noted, we present the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. To the extent that we believe a discussion of the differences among reportable segments will enhance a reader’s understanding of our financial condition, cash flows and other changes in financial condition and results of operations, the differences are discussed separately.

Unless otherwise noted, all discussion of increases or decreases are for the year ended December 31, 2025 (“2025”) compared to 2024. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a reported basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Overview

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of December 31, 2025: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of December 31, 2025, we operated 111 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment, and 14 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 134 new vehicle franchises (representing 24 different brands of cars and light trucks) and 16 collision repair centers in 18 states. The EchoPark Segment consists of 18 stores operating in 10 states. The Powersports Segment consists of 41 franchises at 14 locations (11 full-service dealerships and three authorized retail outlets) in three states.

The Franchised Dealerships Segment provides comprehensive sales and services, including: (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of third-party financing, extended warranties, service contracts, insurance and other aftermarket products (collectively, “F&I”) for our guests. The EchoPark Segment sells used cars and light trucks and arranges third-party F&I product sales for our guests in pre-owned vehicle specialty retail locations and does not offer customer-facing Fixed Operations services. The Powersports Segment offers guests: (1) sales of both new and used powersports vehicles (such as motorcycles, personal watercraft and all-terrain vehicles); (2) Fixed Operations activities; and (3) F&I services. All three segments generally operate independently of one another with the exception of certain shared back-office functions and corporate overhead costs.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Retail Automotive Industry Performance

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) unit sales volume was approximately 16.3 million vehicles in 2025, an increase of 1%, compared to approximately 16.1 million vehicles in 2024, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.8 million vehicles (a decrease of 3% compared to 2025) and 16.5 million vehicles (an increase of 1% compared to 2025). The effects of interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand as a result of economic conditions, natural disasters or other unforeseen circumstances could cause the actual 2026 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR increased 4%, to approximately 13.6 million vehicles, in 2025, from approximately 13.1 million vehicles in 2024.

CDK Outage

On June 19, 2024, CDK Global (“CDK”), a third-party provider of certain information systems, notified us that CDK had suspended certain systems used by us in response to a cybersecurity incident impacting CDK (the “CDK outage”). This outage adversely affected our business and results of operations during the second and third quarters of 2024. We estimate the disruption from the CDK outage negatively impacted reported income before taxes by approximately $47.2 million during 2024 which includes approximately $13.4 million in additional compensation expenses incurred as a result of the incident. In connection with the CDK outage, we recognized $10.0 million in pre-tax income from cyber insurance proceeds during the three months ended December 31, 2024 and $40.0 million in pre-tax income from cyber insurance proceeds during 2025, which were recorded as a reduction to selling, general and administrative expenses.

Impairment Charges

Impairment charges were approximately $173.8 million and $3.9 million in 2025 and 2024, respectively. Impairment charges for 2025 included approximately $165.9 million in the Franchised Dealerships Segment related to indefinite lived franchise assets, approximately $0.2 million in the EchoPark Segment related to property held for sale, and approximately $7.6 million in the Powersports Segment related to indefinite lived franchise assets. Impairment charges for 2024 included approximately $2.7 million in the EchoPark Segment related to fixed assets, lease right-of-use assets, and other contractual obligations related to abandoned property as a result of our decisions to indefinitely suspend operations at certain EchoPark locations, and approximately $1.2 million of property and equipment impairment charges related to the Franchised Dealerships Segment.

Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of several franchised dealership stores in 2024 and 2025, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. Unless otherwise noted, all discussion of increases or decreases are for 2025 compared to 2024. The following discussion is on a same store basis (which excludes results from disposed stores), except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Same store retail new vehicle revenue increased 5% in 2025, primarily driven by a 2% increase in retail new vehicle unit sales volume, driven in part by an increase in consumer demand for electric vehicles ahead of expiration of the federal tax credit in the third quarter of 2025, combined with a 2% increase in retail new vehicle average selling price. Retail new vehicle gross profit decreased 7% in 2025, due primarily to increased price competition resulting from increasing levels of available inventory and higher inventory invoice cost, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $310 per unit, or 9%, to $3,094 per unit. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 48 days as of December 31, 2025, compared to 46 days as of December 31, 2024.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same store retail used vehicle revenue increased 3% in 2025, driven by a 3% increase in retail used vehicle average selling price. Retail used vehicle gross profit increased 2% in 2025, primarily due to higher retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit increased $25 per unit, or 2%, to $1,516 per unit in 2025, due primarily to higher retail used vehicle average selling price. Same store wholesale vehicle gross loss worsened by approximately $4.5 million, to a gross loss of $8.8 million during 2025, due primarily to a $188 per unit, or 91%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. We generally focus on maintaining used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 31 days as of both December 31, 2025 and 2024.

Same store Fixed Operations revenue increased 6%, driven primarily by increased service capacity as a result of additional technician headcount and higher parts and labor costs that were passed along to consumers. Fixed Operations gross profit increased 8% in 2025, driven primarily by higher warranty revenue contribution and higher warranty gross margin. Fixed Operations gross margin increased 60 basis points, to 51.0%, in 2025, driven primarily by an increase in warranty revenue contribution and higher warranty gross margin.

Same store F&I revenue increased 9% in 2025, driven by a 7% increase in F&I gross profit per retail unit and a 1% increase in retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $174 per unit, or 7%, to $2,551 per unit in 2025, driven by changes in the mix of F&I products sold.

EchoPark Segment

Unless otherwise noted, all discussion of increases or decreases are for 2025 compared to 2024. The following discussion is on a reported basis, except where otherwise noted as being on a same market basis. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition.

Reported total revenues decreased 3% in 2025, driven primarily by a 3% decrease in average retail used vehicle selling price and a 1% decrease in total vehicle unit sales volume (retail used vehicles and wholesale vehicles combined). Reported total gross profit increased 13% in 2025, primarily due to a 15% increase in combined retail used vehicle and F&I gross profit per unit.

Same market total revenues decreased 2% in 2025, attributable to a 2% decrease in retail used vehicle unit sales volume, coupled with a 3% decrease in average selling price per used retail unit. Same market total gross profit increased 12% in 2025, driven primarily by a 14% increase in combined retail used vehicle and F&I gross profit per unit.

Reported retail used vehicle revenue decreased 5%, due to a 3% decrease in average retail used vehicle unit selling prices and a 2% decrease in retail used vehicle unit sales volume. F&I revenue increased 13% in 2025, driven primarily by a 15% increase in F&I gross profit per retail unit, partially offset by a 2% decrease in total retail units in 2025. Reported combined retail used vehicle and F&I gross profit per unit increased $455 per unit, or 15%, to $3,484 per unit in 2025, primarily due to the increase in F&I revenue.

Reported wholesale vehicle gross loss worsened by approximately $0.5 million, to a gross loss of approximately $1.8 million in 2025, primarily due to a worsening in wholesale vehicle gross loss of $30 per unit, or 27%, during 2025. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported used vehicle inventory days’ supply in our EchoPark Segment was approximately 40 days as of December 31, 2025, as compared to 38 days as of December 31, 2024

Powersports Segment

Unless otherwise noted, all discussion of increases or decreases are for 2025 compared to 2024. The following discussion is on a reported basis, except where otherwise noted as being on a same store basis. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reported retail new vehicle revenue increased 29% in 2025, primarily driven by a 21% increase in retail new vehicle unit sales volume, coupled with a 6% increase in retail new vehicle average selling price. Reported retail new vehicle gross profit increased 37% in 2025, as a result of higher retail new vehicle unit sales volume and higher retail new vehicle gross profit per unit. Reported retail new vehicle gross profit per unit increased $337 per unit, or 12%, to $3,050 per unit, due primarily to higher retail new vehicle average selling price.

Same store retail new vehicle revenue increased 19% in 2025, primarily driven by a 11% increase in retail new vehicle unit sales volume, coupled with a 7% increase in retail new vehicle average selling price. Retail new vehicle gross profit increased 24% in 2025, as a result of the increase in retail new vehicle unit sales volume and increase in retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit increased $319 per unit, or 12%, to $3,032 per unit, due primarily to the increase in retail new vehicle unit sales volume. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 140 days as of December 31, 2025, compared to 178 days as of December 31, 2024, varying based on manufacturer production levels and consumer demand.

Reported retail used vehicle revenue increased 70% in 2025, primarily driven by a 54% increase in retail used vehicle unit sales volume, coupled with a 10% increase in retail used vehicle average selling price. Reported retail used vehicle gross profit increased 28% in 2025, as a result of higher retail used vehicle unit sales volume. Reported retail used vehicle gross profit per unit decreased $417 per unit, or 17%, to $1,980 per unit, primarily due to higher inventory costs.

Same store used vehicle revenue increased 61% in 2025, primarily driven by a 49% increase in retail used vehicle unit sales volume, coupled with a 9% increase in retail used vehicle average selling price. Retail used vehicle gross profit increased 22% in 2025, as a result of higher retail used vehicle unit sales volume. Retail used vehicle gross profit per unit decreased $437 per unit, or 18%, to $1,982 per unit, primarily due to higher inventory costs. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 121 days as of December 31, 2025, compared to 139 days as of December 31, 2024. Going forward, we generally expect to maintain a used vehicle inventory days’ supply in our Powersports Segment in the 75- to 100-day range, depending on seasonality (typically the second and third quarter has more demand and lower days’ supply compared to the first and fourth quarters).

Reported Fixed Operations revenue increased 12% and Fixed Operations gross profit increased 15% in 2025, driven primarily by higher repair order volume as a result of acquisitions. Fixed Operations gross margin increased 150 basis points to 47.5% in 2025, driven primarily by an increase in warranty revenue contribution and customer pay gross margin.

Same store Fixed Operations revenue increased 7% and Fixed Operations gross profit increased 13% in 2025, driven primarily by higher repair order volume. Fixed Operations gross margin increased 240 basis points to 48.0% in 2025, driven primarily by an increase in customer pay gross margin.

Reported F&I revenue increased 15% in 2025, driven primarily by a 33% increase in combined retail new and used vehicle unit sales volume, slightly offset by a 12% decrease in F&I gross profit per retail unit. F&I gross profit per retail unit decreased $133 per unit, or 12%, to $959 per unit in 2025.

Same store F&I revenue increased 16% in 2025, driven primarily by a 24% increase in combined retail new and used vehicle unit sales volume, offset partially by a 5% decrease in F&I gross profit per retail unit. F&I gross profit per retail unit decreased $54 per unit, or 5%, to $1,019 per unit in 2025.

32

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table summarizes the percentages of total revenues represented by certain items reflected in our consolidated statements of operations:

Percentage of Total Revenues

Year Ended December 31,

2025

2024

2023

Revenues:

New vehicles

47.2 

%

46.4 

%

44.5 

%

Used vehicles

32.2 

%

33.6 

%

36.3 

%

Wholesale vehicles

2.1 

%

2.0 

%

2.2 

%

Parts, service and collision repair

13.3 

%

13.0 

%

12.2 

%

Finance, insurance and other, net

5.2 

%

5.0 

%

4.8 

%

Total revenues

100.0 

%

100.0 

%

100.0 

%

Cost of sales

84.3 

%

84.6 

%

84.4 

%

Gross profit

15.7 

%

15.4 

%

15.6 

%

Selling, general and administrative expenses

11.1 

%

11.1 

%

11.1 

%

Impairment charges

1.1 

%

— 

%

0.6 

%

Depreciation and amortization

1.1 

%

1.1 

%

1.0 

%

Operating income

2.4 

%

3.2 

%

2.9 

%

Interest expense, floor plan

0.6 

%

0.6 

%

0.5 

%

Interest expense, other, net

0.7 

%

0.8 

%

0.8 

%

Income (loss) before taxes

1.1 

%

1.8 

%

1.7 

%

Provision for income taxes - benefit (expense)

0.4 

%

0.3 

%

0.4 

%

Net income (loss)

0.8 

%

1.5 

%

1.2 

%

Note: Rounding may cause the sum of percentages to differ from the totals shown.

Results of Operations - Consolidated

As a result of the acquisition, disposition, termination or closure of several franchised dealership stores in 2024 and 2025, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

New Vehicles - Consolidated

New vehicle revenues include the sale of new vehicles, including new powersports vehicles, to retail customers, as well as the sale of fleet vehicles to businesses for use in their operations. New vehicle revenues and gross profit can be influenced by vehicle manufacturer incentives to consumers (which vary from cash-back incentives to low interest rate financing, among other things), the availability of consumer credit and the level and type of manufacturer-to-dealer incentives, as well as manufacturers providing adequate inventory allocations to our dealerships to meet consumer demand. The automobile manufacturing industry is cyclical and historically has experienced periodic downturns characterized by oversupply and weak demand, both within specific brands and in the industry as a whole. As an automotive retailer, we seek to mitigate the effects of this sales cycle by maintaining a diverse brand mix of dealerships. Our brand diversity allows us to offer a broad range of products at a wide range of prices from lower-priced economy automobiles to luxury automobiles and powersports vehicles.

The U.S. retail automotive industry’s new vehicle unit sales volume below reflects all brands marketed or sold in the U.S. This industry sales volume includes brands we do not sell and markets in which we do not operate, therefore changes in our new vehicle unit sales volume may not trend directly in line with changes in the industry new vehicle unit sales volume. We believe that the retail new vehicle industry sales volume is a more meaningful metric for comparing our new vehicle unit sales volume to the industry due to our minimal fleet vehicle business.

33

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

U.S. retail new vehicle industry volume, fleet new vehicle industry volume, and total new vehicle industry volume were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

% Change

(In millions of vehicles)

U.S. industry volume - Retail new vehicle (1)

13.6 

13.1 

4 

%

U.S. industry volume - Fleet new vehicle

2.7 

3.0 

(10)

%

U.S. industry volume - Total new vehicle (1)

16.3 

16.1 

1 

%

(1) Source: PIN from J.D. Power

We currently estimate the 2026 new vehicle industry volume will be between 15.8 million vehicles (a decrease of 3% compared to 2025) and 16.5 million vehicles (an increase of 1% compared to 2025). The effects of availability of new and used vehicle inventory, interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand as a result of economic conditions, natural disasters or other unforeseen circumstances could cause the actual 2026 new vehicle industry volume to vary from expectations.

Our consolidated reported new vehicle results (combined retail and fleet data) were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported new vehicle:

Retail new vehicle revenue

$

7,047.4 

$

6,507.5 

$

539.9 

8 

%

Fleet new vehicle revenue

101.5 

95.3 

6.2 

7 

%

Total new vehicle revenue

$

7,148.9 

$

6,602.8 

$

546.1 

8 

%

Retail new vehicle gross profit

$

383.3 

$

388.4 

$

(5.1)

(1)

%

Fleet new vehicle gross profit

1.7 

3.0 

(1.3)

(43)

%

Total new vehicle gross profit

$

385.0 

$

391.4 

$

(6.4)

(2)

%

Retail new vehicle unit sales

121,124 

115,694 

5,430 

5 

%

Fleet new vehicle unit sales

1,991 

1,805 

186 

10 

%

Total new vehicle unit sales

123,115 

117,499 

5,616 

5 

%

Revenue per new retail unit

$

58,184 

$

56,247 

$

1,937 

3 

%

Revenue per new fleet unit

$

50,971 

$

52,786 

$

(1,815)

(3)

%

Total revenue per new unit

$

58,067 

$

56,194 

$

1,873 

3 

%

Gross profit per new retail unit

$

3,165 

$

3,358 

$

(193)

(6)

%

Gross profit per new fleet unit

$

869 

$

1,636 

$

(767)

(47)

%

Total gross profit per new unit

$

3,127 

$

3,331 

$

(204)

(6)

%

Retail gross profit as a % of revenue

5.4 

%

6.0 

%

(60)

bps

Fleet gross profit as a % of revenue

1.7 

%

3.1 

%

(140)

bps

Total new vehicle gross profit as a % of revenue

5.4 

%

5.9 

%

(50)

bps

34

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For further analysis of new vehicle results on a segment basis, see the tables and discussion under the headings “New Vehicles - Franchised Dealerships Segment” and “New Vehicles - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

Used Vehicles - Consolidated

Used vehicle revenues include the sale of used vehicles, including used powersports vehicles, to retail customers and at wholesale. Used vehicle revenues are directly affected by a number of factors, including consumer demand for used vehicles, the pricing and level of manufacturer incentives on new vehicles, the number and quality of trade-ins and lease turn-ins available to our dealerships, the availability and pricing of used vehicles acquired at wholesale auction, and the availability of consumer credit. Depending on the mix of inventory sourcing (trade-ins or purchases from customers versus wholesale auction), the days’ supply of used vehicle inventory, and the pricing strategy employed by the dealership, retail used vehicle gross profit per unit and retail used vehicle gross profit as a percentage of revenue may vary significantly from historical levels given recent trends in the used vehicle environment.

Our consolidated reported retail used vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported retail used vehicle:

Revenue

$

4,872.6 

$

4,780.1 

$

92.5 

2 

%

Gross profit

$

181.1 

$

170.7 

$

10.4 

6 

%

Unit sales

175,280 

173,257 

2,023 

1 

%

Revenue per unit

$

27,799 

$

27,590 

$

209 

1 

%

Gross profit per unit

$

1,033 

$

985 

$

48 

5 

%

Gross profit as a % of revenue

3.7 

%

3.6 

%

10 

bps

For further analysis of used vehicle results on a segment basis, see the tables and discussion under the headings “Used Vehicles - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “Used Vehicles - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Wholesale Vehicles - Consolidated

Wholesale vehicle revenues are influenced by several factors, including retail new and used vehicle unit sales volume, associated trade-in volume, and short-term, temporary, and seasonal fluctuations in wholesale auction pricing. In recent years, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that the current wholesale vehicle price environment is not sustainable in the long term and expect that average wholesale vehicle pricing and related gross profit (loss) will continue to return toward long-term normalized levels in the long run, but may continue to experience volatility into 2026 or beyond. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

35

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported wholesale vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported wholesale vehicle:

Revenue

$

314.1 

$

287.1 

$

27.0 

9 

%

Gross profit (loss)

$

(11.2)

$

(6.0)

$

(5.2)

(87)

%

Unit sales

34,982 

32,223 

2,759 

9 

%

Revenue per unit

$

8,978 

$

8,910 

$

68 

1 

%

Gross profit (loss) per unit

$

(321)

$

(186)

$

(135)

(73)

%

Gross profit (loss) as a % of revenue

(3.6)

%

(2.1)

%

(150)

bps

For further analysis of wholesale vehicle results on a segment basis, see the tables and discussion under the headings “Wholesale Vehicles - Franchised Dealerships Segment,” “Wholesale Vehicles - EchoPark Segment” and “Wholesale Vehicles - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Fixed Operations - Consolidated

Parts, service and collision repair revenues consist of repairs and maintenance requested and paid by customers (“customer pay”), warranty repairs (manufacturer-paid), wholesale parts (sales of parts and accessories to third-party automotive repair businesses) and internal, sublet and other. Parts and service revenue is driven by the volume and mix of warranty repairs versus customer pay repairs, available service capacity (a combination of service bay count and technician availability), vehicle quality, manufacturer recalls, customer loyalty, and prepaid or manufacturer-paid maintenance programs. Internal, sublet and other primarily relates to preparation and reconditioning work performed on vehicles in inventory that are later sold to a third party and may vary based on used vehicle inventory and sales volume from period to period. When that work is performed by one of our dealerships or stores, the work is classified as internal. In the event the work is performed by a third party on our behalf, it is classified as sublet.

We believe that, over time, vehicle quality will continue to improve, but vehicle complexity and the associated demand for repairs by qualified technicians at manufacturer-affiliated dealerships may result in market share gains that could offset any revenue lost from improvement in vehicle quality. We also believe that, over the long term, we have the ability to continue to optimize service capacity and customer retention at our dealerships and stores to further increase Fixed Operations revenues. Manufacturers continue to extend new vehicle warranty periods (in particular for battery electric vehicles) and have also begun to include regular maintenance items in the warranty or complimentary maintenance program coverage. These factors, over the long term, combined with the extended manufacturer warranties on certified pre-owned vehicles, should facilitate growth in our parts and service business. Barriers to long-term growth may include reductions in the rate paid by manufacturers to dealers for warranty repair work performed, as well as the improved quality and design of vehicles that may affect the level and frequency of future customer pay or warranty-related repair revenues.

36

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported Fixed Operations results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Reported Fixed Operations:

Revenue

Customer pay

$

921.5 

$

846.8 

$

74.7 

9 

%

Warranty

356.4 

290.1 

66.3 

23 

%

Wholesale parts

193.0 

194.0 

(1.0)

(1)

%

Internal, sublet and other

548.2 

515.6 

32.6 

6 

%

Total revenue

$

2,019.1 

$

1,846.5 

$

172.6 

9 

%

Gross profit

Customer pay

$

514.3 

$

472.8 

$

41.5 

9 

%

Warranty

223.1 

178.0 

45.1 

25 

%

Wholesale parts

33.1 

34.5 

(1.4)

(4)

%

Internal, sublet and other

258.6 

243.6 

15.0 

6 

%

Total gross profit

$

1,029.1 

$

928.9 

$

100.2 

11 

%

Gross profit as a % of revenue

Customer pay

55.8 

%

55.8 

%

— 

bps

Warranty

62.6 

%

61.4 

%

120 

bps

Wholesale parts

17.2 

%

17.8 

%

(60)

bps

Internal, sublet and other

47.2 

%

47.2 

%

(3)

bps

Total gross profit as a % of revenue

51.0 

%

50.3 

%

70 

bps

For further analysis of Fixed Operations results on a segment basis, see the tables and discussion under the headings “Fixed Operations - Franchised Dealerships Segment” and “Fixed Operations - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

F&I - Consolidated

Finance, insurance and other, net revenues include commissions for arranging third-party vehicle financing and insurance, sales of third-party extended warranties and service contracts for vehicles, and sales of other aftermarket products. In connection with vehicle financing, extended warranties and service contracts, other aftermarket products and insurance contracts, we receive commissions from the third-party providers for originating these contracts. We do not have direct credit risk for the vehicle financing, extended warranties and service contracts that we sell. F&I revenues are recognized net of actual and estimated future chargebacks and other costs associated with originating contracts (as a result, reported F&I revenues and F&I gross profit are the same amount, resulting in a 100% gross margin for F&I). F&I revenues are affected by the level of new and retail used vehicle unit sales volume, the age and average selling price of vehicles sold, the level of manufacturer financing specials or leasing incentives, and our F&I penetration rates for each type of F&I product. The F&I penetration rate represents the number of finance contracts, extended warranties and service contracts, other aftermarket products or insurance contracts that we are able to originate per vehicle sold, expressed as a percentage.

Yield spread premium is another term for the commission earned by our dealerships for arranging vehicle financing for consumers. The amount of the commission could be zero, a flat fee or an actual spread between the interest rate charged to the consumer and the interest rate provided by the third-party direct financing source (e.g., a commercial bank, credit union or manufacturer captive finance company). We have established caps on the potential yield spread premium our dealerships can earn with all finance sources. We believe the yield spread premium we earn for arranging vehicle financing represents value to the consumer in numerous ways, including the following:

•lower cost, below-market financing is often available only from the manufacturers’ captives and franchised dealers;

•ease of access to multiple high-quality lending sources;

•lease-financing alternatives are largely available only from manufacturers’ captives or other indirect lenders;

37

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•guests with substandard credit frequently do not have direct access to potential sources of sub-prime financing; and

•guests with significant “negative equity” in their current vehicle (i.e., the guest’s current vehicle is worth less than the balance of their vehicle loan or lease obligation) frequently are unable to pay off the loan on their current vehicle and finance the purchase or lease of a replacement new or used vehicle without the assistance of a franchised dealership’s network of lending sources.

Our consolidated reported F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported F&I:

Revenue

$

798.9 

$

707.8 

$

91.1 

13 

%

Total combined retail new and used vehicle unit sales

296,404 

288,951 

7,453 

3 

%

Gross profit per retail unit (excludes fleet)

$

2,695 

$

2,450 

$

245 

10 

%

For further analysis of F&I results on a segment basis, see the tables and discussion under the headings “F&I - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “F&I - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Results of Operations - Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of several franchised dealership stores in 2024 and 2025, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. Please refer to the tables and discussion on the following pages for a comparison and discussion of financial results on a comparable store basis.

38

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

New Vehicles - Franchised Dealerships Segment

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for new vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Retail new vehicle revenue:

Same store

$

6,696.7 

$

6,397.8 

$

298.9 

5 

%

Acquisitions, open points, dispositions and holding company

245.2 

27.7 

217.5 

NM

Total as reported

$

6,941.9 

$

6,425.5 

$

516.4 

8 

%

Fleet new vehicle revenue:

Same store

$

99.5 

$

94.9 

$

4.6 

5 

%

Acquisitions, open points, dispositions and holding company

2.0 

0.4 

1.6 

NM

Total as reported

$

101.5 

$

95.3 

$

6.2 

7 

%

Total new vehicle revenue:

Same store

$

6,796.2 

$

6,492.7 

$

303.5 

5 

%

Acquisitions, open points, dispositions and holding company

247.2 

28.1 

219.1 

NM

Total as reported

$

7,043.4 

$

6,520.8 

$

522.6 

8 

%

Retail new vehicle gross profit:

Same store

$

350.2 

$

377.0 

$

(26.8)

(7)

%

Acquisitions, open points, dispositions and holding company

17.4 

(0.1)

17.5 

NM

Total as reported

$

367.6 

$

376.9 

$

(9.3)

(2)

%

Fleet new vehicle gross profit:

Same store

$

1.8 

$

3.0 

$

(1.2)

(40)

%

Acquisitions, open points, dispositions and holding company

(0.1)

— 

(0.1)

NM

Total as reported

$

1.7 

$

3.0 

$

(1.3)

(43)

%

Total new vehicle gross profit:

Same store

$

352.0 

$

380.0 

$

(28.0)

(7)

%

Acquisitions, open points, dispositions and holding company

17.3 

(0.1)

17.4 

NM

Total as reported

$

369.3 

$

379.9 

$

(10.6)

(3)

%

Retail new vehicle unit sales:

Same store

113,181 

110,770 

2,411 

2 

%

Acquisitions, open points, dispositions and holding company

2,800 

680 

2,120 

NM

Total as reported

115,981 

111,450 

4,531 

4 

%

Fleet new vehicle unit sales:

Same store

1,972 

1,797 

175 

10 

%

Acquisitions, open points, dispositions and holding company

19 

8 

11 

NM

Total as reported

1,991 

1,805 

186 

10 

%

Total new vehicle unit sales:

Same store

115,153 

112,567 

2,586 

2 

%

Acquisitions, open points, dispositions and holding company

2,819 

688 

2,131 

NM

Total as reported

117,972 

113,255 

4,717 

4 

%

NM = Not Meaningful

39

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported new vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported new vehicle:

Retail new vehicle revenue

$

6,941.9 

$

6,425.5 

$

516.4 

8 

%

Fleet new vehicle revenue

101.5 

95.3 

6.2 

7 

%

Total new vehicle revenue

$

7,043.4 

$

6,520.8 

$

522.6 

8 

%

Retail new vehicle gross profit

$

367.6 

$

376.9 

$

(9.3)

(2)

%

Fleet new vehicle gross profit

1.7 

3.0 

(1.3)

(43)

%

Total new vehicle gross profit

$

369.3 

$

379.9 

$

(10.6)

(3)

%

Retail new vehicle unit sales

115,981 

111,450 

4,531 

4 

%

Fleet new vehicle unit sales

1,991 

1,805 

186 

10 

%

Total new vehicle unit sales

117,972 

113,255 

4,717 

4 

%

Revenue per new retail unit

$

59,854 

$

57,654 

$

2,200 

4 

%

Revenue per new fleet unit

$

50,971 

$

52,786 

$

(1,815)

(3)

%

Total revenue per new unit

$

59,704 

$

57,576 

$

2,128 

4 

%

Gross profit per new retail unit

$

3,170 

$

3,382 

$

(212)

(6)

%

Gross profit per new fleet unit

$

869 

$

1,636 

$

(767)

(47)

%

Total gross profit per new unit

$

3,131 

$

3,354 

$

(223)

(7)

%

Retail gross profit as a % of revenue

5.3 

%

5.9 

%

(60)

bps

Fleet gross profit as a % of revenue

1.7 

%

3.1 

%

(140)

bps

Total new vehicle gross profit as a % of revenue

5.2 

%

5.8 

%

(60)

bps

40

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store new vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store new vehicle:

Retail new vehicle revenue

$

6,696.7 

$

6,397.8 

$

298.9 

5 

%

Fleet new vehicle revenue

99.5 

94.9 

4.6 

5 

%

Total new vehicle revenue

$

6,796.2 

$

6,492.7 

$

303.5 

5 

%

Retail new vehicle gross profit

$

350.2 

$

377.0 

$

(26.8)

(7)

%

Fleet new vehicle gross profit

1.8 

3.0 

(1.2)

(40)

%

Total new vehicle gross profit

$

352.0 

$

380.0 

$

(28.0)

(7)

%

Retail new vehicle unit sales

113,181 

110,770 

2,411 

2 

%

Fleet new vehicle unit sales

1,972 

1,797 

175 

10 

%

Total new vehicle unit sales

115,153 

112,567 

2,586 

2 

%

Revenue per new retail unit

$

59,168 

$

57,758 

$

1,410 

2 

%

Revenue per new fleet unit

$

50,476 

$

52,798 

$

(2,322)

(4)

%

Total revenue per new unit

$

59,019 

$

57,678 

$

1,341 

2 

%

Gross profit per new retail unit

$

3,094 

$

3,404 

$

(310)

(9)

%

Gross profit per new fleet unit

$

909 

$

1,646 

$

(737)

(45)

%

Total gross profit per new unit

$

3,057 

$

3,376 

$

(319)

(9)

%

Retail gross profit as a % of revenue

5.2 

%

5.9 

%

(70)

bps

Fleet gross profit as a % of revenue

1.8 

%

3.1 

%

(130)

bps

Total new vehicle gross profit as a % of revenue

5.2 

%

5.9 

%

(70)

bps

Same store retail new vehicle revenue increased 5%, primarily due to a 2% increase in retail new vehicle unit sales volume and a 2% increase in retail new vehicle average selling price. Retail new vehicle gross profit decreased approximately $26.8 million, or 7%, as a result of lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $310 per unit, or 9%, to $3,094 per unit, primarily due to increased price competition as a result of higher levels of available inventory, particularly electric vehicles, than in the prior year and higher inventory invoice costs. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 48 and 46 days as of December 31, 2025 and 2024, respectively.

41

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Used Vehicles - Franchised Dealerships Segment

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for retail used vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Retail used vehicle revenue:

Same store

$

2,995.0 

$

2,902.3 

$

92.7 

3 

%

Acquisitions, open points, dispositions and holding company

92.0 

17.5 

74.5 

NM

Total as reported

$

3,087.0 

$

2,919.8 

$

167.2 

6 

%

Retail used vehicle gross profit:

Same store

$

154.0 

$

150.9 

$

3.1 

2 

%

Acquisitions, open points, dispositions and holding company

3.8 

(0.7)

4.5 

NM

Total as reported

$

157.8 

$

150.2 

$

7.6 

5 

%

Retail used vehicle unit sales:

Same store

101,587 

101,220 

367 

— 

%

Acquisitions, open points, dispositions and holding company

2,615 

756 

1,859 

NM

Total as reported

104,202 

101,976 

2,226 

2 

%

NM = Not Meaningful

Our Franchised Dealerships Segment reported retail used vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported retail used vehicle:

Revenue

$

3,087.0 

$

2,919.8 

$

167.2 

6 

%

Gross profit

$

157.8 

$

150.2 

$

7.6 

5 

%

Unit sales

104,202 

101,976 

2,226 

2 

%

Revenue per unit

$

29,625 

$

28,632 

$

993 

3 

%

Gross profit per unit

$

1,514 

$

1,473 

$

41 

3 

%

Gross profit as a % of revenue

5.1 

%

5.1 

%

— 

bps

42

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store retail used vehicle results were as follows: 

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store retail used vehicle:

Revenue

$

2,995.0 

$

2,902.3 

$

92.7 

3 

%

Gross profit

$

154.0 

$

150.9 

$

3.1 

2 

%

Unit sales

101,587 

101,220 

367 

— 

%

Revenue per unit

$

29,482 

$

28,674 

$

808 

3 

%

Gross profit per unit

$

1,516 

$

1,491 

$

25 

2 

%

Gross profit as a % of revenue

5.1 

%

5.2 

%

(10)

bps

Same Store Retail used vehicle revenue increased approximately $92.7 million, or 3%, driven primarily by a 3% increase in retail used vehicle average selling price. Retail used vehicle gross profit increased approximately $3.1 million, or 2%, primarily driven by a $25 per unit, or 2% increase in retail used vehicle gross profit per unit.

On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 31 days as of both December 31, 2025 and 2024.

Wholesale Vehicles - Franchised Dealerships Segment

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for wholesale vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Total wholesale vehicle revenue:

Same store

$

197.8 

$

187.7 

$

10.1 

5 

%

Acquisitions, open points, dispositions, and holding company

9.2 

1.2 

8.0 

NM

Total as reported

$

207.0 

$

188.9 

$

18.1 

10 

%

Total wholesale vehicle gross profit (loss):

Same store

$

(8.8)

$

(4.3)

$

(4.5)

(105)

%

Acquisitions, open points, dispositions, and holding company

(0.5)

(0.3)

(0.2)

NM

Total as reported

$

(9.3)

$

(4.6)

$

(4.7)

(102)

%

Total wholesale vehicle unit sales:

Same store

22,233 

20,809 

1,424 

7 

%

Acquisitions, open points, dispositions, and holding company

635 

209 

426 

NM

Total as reported

22,868 

21,018 

1,850 

9 

%

NM = Not Meaningful

43

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported wholesale vehicle results were as follows: 

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported wholesale vehicle:

Revenue

$

207.0 

$

188.9 

$

18.1 

10 

%

Gross profit (loss)

$

(9.3)

$

(4.6)

$

(4.7)

(102)

%

Unit sales

22,868 

21,018 

1,850 

9 

%

Revenue per unit

$

9,051 

$

8,987 

$

64 

1 

%

Gross profit (loss) per unit

$

(409)

$

(214)

$

(195)

(91)

%

Gross profit (loss) as a % of revenue

(4.5)

%

(2.4)

%

(210)

bps

Our Franchised Dealerships Segment same store wholesale vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store wholesale vehicle:

Revenue

$

197.8 

$

187.7 

$

10.1 

5 

%

Gross profit (loss)

$

(8.8)

$

(4.3)

$

(4.5)

(105)

%

Unit sales

22,233 

20,809 

1,424 

7 

%

Revenue per unit

$

8,899 

$

9,018 

$

(119)

(1)

%

Gross profit (loss) per unit

$

(395)

$

(207)

$

(188)

(91)

%

Gross profit (loss) as a % of revenue

(4.4)

%

(2.3)

%

(210)

bps

Same store wholesale vehicle revenue increased $10.1 million, or 5%, driven primarily by a 7% increase in wholesale vehicle unit sales volume, offset slightly by a 1% decrease in wholesale vehicle revenue per unit in 2025. Wholesale vehicle gross loss worsened by approximately $4.5 million, driven primarily by a $188 per unit worsening in wholesale vehicle gross loss per unit during 2025.

Fixed Operations - Franchised Dealerships Segment

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for Fixed Operations:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Total Fixed Operations revenue:

Same store

$

1,903.9 

$

1,794.8 

$

109.1 

6 

%

Acquisitions, open points, dispositions and holding company

66.3 

8.1 

58.2 

NM

Total as reported

$

1,970.2 

$

1,802.9 

$

167.3 

9 

%

Total Fixed Operations gross profit:

Same store

$

971.4 

$

903.9 

$

67.5 

7 

%

Acquisitions, open points, dispositions and holding company

34.5 

5.0 

29.5 

NM

Total as reported

$

1,005.9 

$

908.9 

$

97.0 

11 

%

NM = Not Meaningful

44

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment reported Fixed Operations results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Reported Fixed Operations:

Revenue

Customer pay

$

912.8 

$

839.0 

$

73.8 

9 

%

Warranty

351.1 

286.3 

64.8 

23 

%

Wholesale parts

192.4 

193.2 

(0.8)

— 

%

Internal, sublet and other

513.9 

484.4 

29.5 

6 

%

Total revenue

$

1,970.2 

$

1,802.9 

$

167.3 

9 

%

Gross profit

Customer pay

$

510.7 

$

470.0 

$

40.7 

9 

%

Warranty

219.6 

175.1 

44.5 

25 

%

Wholesale parts

33.0 

34.2 

(1.2)

(4)

%

Internal, sublet and other

242.6 

229.6 

13.0 

6 

%

Total gross profit

$

1,005.9 

$

908.9 

$

97.0 

11 

%

Gross profit as a % of revenue

Customer pay

55.9 

%

56.0 

%

(10)

bps

Warranty

62.5 

%

61.2 

%

130 

bps

Wholesale parts

17.1 

%

17.7 

%

(60)

bps

Internal, sublet and other

47.2 

%

47.4 

%

(19)

bps

Total gross profit as a % of revenue

51.1 

%

50.4 

%

70 

bps

45

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store Fixed Operations results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Same store Fixed Operations:

Revenue

Customer pay

$

886.0 

$

835.9 

$

50.1 

6 

%

Warranty

333.8 

284.5 

49.3 

17 

%

Wholesale parts

184.7 

192.7 

(8.0)

(4)

%

Internal, sublet and other

499.4 

481.7 

17.7 

4 

%

Total revenue

$

1,903.9 

$

1,794.8 

$

109.1 

6 

%

Gross profit

Customer pay

$

494.5 

$

468.4 

$

26.1 

6 

%

Warranty

208.8 

174.3 

34.5 

20 

%

Wholesale parts

31.4 

34.1 

(2.7)

(8)

%

Internal, sublet and other

236.7 

227.1 

9.6 

4 

%

Total gross profit

$

971.4 

$

903.9 

$

67.5 

8 

%

Gross profit as a % of revenue

Customer pay

55.8 

%

56.0 

%

(20)

bps

Warranty

62.6 

%

61.3 

%

130 

bps

Wholesale parts

17.0 

%

17.7 

%

(70)

bps

Internal, sublet and other

47.4 

%

47.1 

%

25 

bps

Total gross profit as a % of revenue

51.0 

%

50.4 

%

60 

bps

Fixed Operations revenue increased approximately $109.1 million, or 6%, and Fixed Operations gross profit increased approximately $67.5 million, or 8%. Customer pay gross profit increased approximately $26.1 million, or 6%, warranty gross profit increased approximately $34.5 million, or 20%, wholesale parts gross profit decreased approximately $2.7 million, or 8%, and internal, sublet and other gross profit increased approximately $9.6 million, or 4%. Results have been positively impacted by increased capacity realized through our efforts to hire and retain additional service technicians. As a result, we expect to continue to see growth in Fixed Operations revenues and gross profit in 2026.

46

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

F&I - Franchised Dealerships Segment

The following table provides a reconciliation of Franchised Dealerships Segment reported basis and same store basis for F&I:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Total F&I revenue:

Same store

$

547.8 

$

503.8 

$

44.0 

9 

%

Acquisitions, open points, dispositions and holding company

23.7 

3.0 

20.7 

NM

Total as reported

$

571.5 

$

506.8 

$

64.7 

13 

%

Total F&I gross profit per retail unit (excludes fleet):

Same store

$

2,551 

$

2,377 

$

174 

7 

%

Reported

$

2,596 

$

2,374 

$

222 

9 

%

Total combined retail new and used vehicle unit sales:

Same store

214,768 

211,990 

2,778 

1 

%

Acquisitions, open points, dispositions and holding company

5,415 

1,436 

3,979 

NM

Total as reported

220,183 

213,426 

6,757 

3 

%

NM = Not Meaningful

Our Franchised Dealerships Segment reported F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported F&I:

Revenue

$

571.5 

$

506.8 

$

64.7 

13 

%

Total combined retail new and used vehicle unit sales

220,183 

213,426 

6,757 

3 

%

Gross profit per retail unit (excludes fleet)

$

2,596 

$

2,374 

$

222 

9 

%

47

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Franchised Dealerships Segment same store F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store F&I:

Revenue

$

547.8 

$

503.8 

$

44.0 

9 

%

Total combined retail new and used vehicle unit sales

214,768 

211,990 

2,778 

1 

%

Gross profit per retail unit (excludes fleet)

$

2,551 

$

2,377 

$

174 

7 

%

Same store F&I revenue increased $44.0 million, or 9%, primarily due to a 7% increase in F&I gross profit per retail unit and a 1% increase in combined retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $174 per unit, or 7%, to $2,551 per unit, primarily due to higher gross profit per finance contract and per service contract and increased penetration rates for finance, service and other aftermarket contracts.

Same store finance contract revenue increased 8%, primarily due to a 6% increase in gross profit per finance contract and a 2% increase in finance contract volume. The increase in finance contract volume is due to a 1% increase in total retail unit sales and a 30 basis point increase in the finance contract penetration rate. Service contract revenue increased 7%, primarily due to a 3% increase in gross profit per service contract and a 4% increase in service contract volume. The increase in service contract volume is due to a 1% increase in total retail unit sales and a 100 basis point increase in the service contract penetration rate. Other aftermarket contract revenue increased 2%, driven primarily by a 2% increase in other aftermarket contract volume. The increase in other aftermarket contract volume is due to a 1% increase in total retail unit sales and a 70 basis point increase in the other aftermarket contract penetration rate.

Results of Operations - EchoPark Segment

All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. Same market results may vary significantly from reported results due to the closure of stores that are no longer included in same market results.

In January 2024, we closed the remaining seven Northwest Motorsport stores within the EchoPark Segment. In light of these closures, we believe the following discussion of EchoPark Segment results on a same market basis provides a meaningful year-over-year comparison.

Used Vehicles and F&I - EchoPark Segment

Our EchoPark operating strategy focuses on maximizing total used vehicle-related gross profit (based on a combination of retail used vehicle unit sales volume, front-end retail used vehicle gross profit (loss) per unit and F&I gross profit per retail unit sold) rather than realizing traditional levels of front-end retail used vehicle gross profit per unit. As such, we believe the best per unit measure of gross profit performance at our EchoPark stores is a combined total gross profit (loss) per retail unit, which includes both front-end retail used vehicle gross profit (loss) and F&I gross profit per retail unit sold. See the discussion under the heading “Results of Operations - Consolidated” for additional discussion of the macro drivers of used vehicle revenues and F&I revenues.

All Fixed Operations activity at our EchoPark stores supports our used vehicle inventory reconditioning operations and EchoPark stores do not currently perform customer pay repairs or maintenance work and are not permitted to perform manufacturer-paid warranty repairs. As such, reconditioning amounts that are classified as Fixed Operations revenues and cost of sales in our Franchised Dealerships Segment are presented as used vehicle cost of sales for the EchoPark Segment.

48

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table provides a reconciliation of EchoPark Segment reported basis, same market basis and new market/closed market basis for retail used vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Total retail used vehicle revenue:

Same market

$

1,747.8 

$

1,828.3 

$

(80.5)

(4)

%

New markets/closed markets

— 

9.7 

(9.7)

NM

Total as reported

$

1,747.8 

$

1,838.0 

$

(90.2)

(5)

%

Total retail used vehicle gross profit (loss):

Same market

$

16.5 

$

15.8 

$

0.7 

4 

%

New markets/closed markets

— 

(0.6)

0.6 

NM

Total as reported

$

16.5 

$

15.2 

$

1.3 

9 

%

Total retail used vehicle unit sales:

Same market

67,636 

68,690 

(1,054)

(2)

%

New markets/closed markets

— 

363 

(363)

NM

Total as reported

67,636 

69,053 

(1,417)

(2)

%

NM = Not Meaningful

The following table provides a reconciliation of EchoPark Segment reported basis, same market basis and new market/ closed market basis for F&I:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Total F&I revenue:

Same market

$

220.3 

$

195.5 

$

24.8 

13 

%

New markets/closed markets

(1.1)

(1.5)

0.4 

27 

%

Total as reported

$

219.2 

$

194.0 

$

25.2 

13 

%

Our EchoPark Segment reported retail used vehicle and F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported retail used vehicle and F&I:

Retail used vehicle revenue

$

1,747.8 

$

1,838.0 

$

(90.2)

(5)

%

Retail used vehicle gross profit (loss)

$

16.5 

$

15.2 

$

1.3 

9 

%

Retail used vehicle unit sales

67,636 

69,053 

(1,417)

(2)

%

Retail used vehicle revenue per unit

$

25,841 

$

26,617 

$

(776)

(3)

%

F&I revenue

$

219.2 

$

194.0 

$

25.2 

13 

%

Combined retail used vehicle gross profit and F&I revenue

$

235.7 

$

209.2 

$

26.5 

13 

%

Total retail used vehicle and F&I gross profit per unit

$

3,484 

$

3,029 

$

455 

15 

%

49

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our EchoPark Segment same market retail used vehicle and F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same market retail used vehicle and F&I:

Retail used vehicle revenue

$

1,747.8 

$

1,828.3 

$

(80.5)

(4)

%

Retail used vehicle gross profit (loss)

$

16.5 

$

15.8 

$

0.7 

4 

%

Retail used vehicle unit sales

67,636 

68,690 

(1,054)

(2)

%

Retail used vehicle revenue per unit

$

25,842 

$

26,617 

$

(775)

(3)

%

F&I revenue

$

220.3 

$

195.5 

$

24.8 

13 

%

Combined retail used vehicle gross profit and F&I revenue

$

236.8 

$

211.3 

$

25.5 

12 

%

Total retail used vehicle and F&I gross profit per unit

$

3,501 

$

3,077 

$

424 

14 

%

Same market retail used vehicle revenue decreased approximately $80.5 million, or 4%, due to a 2% decrease in retail used vehicle unit sales volume, and a 3% decrease in used vehicle revenue per unit. Same market combined used vehicle gross profit and F&I revenue increased approximately $25.5 million, or 12%, due to a $424, or 14%, increase in total used vehicle and F&I gross profit per unit. The increase in combined retail used vehicle and F&I gross profit per unit was due primarily to higher F&I penetration rates, an improvement in inventory acquisition costs as a result of sourcing a higher percentage of inventory from non-auction sources.

Within same market F&I revenue, finance contract gross profit increased approximately $1.5 million, or 3%, due to a 3% increase in gross profit per finance contract. Service contract gross profit increased approximately $6.7 million, or 9%, due to a 10% increase in gross profit per service contract, partially offset by a 1% decrease in total service contracts. Other aftermarket product contract gross profit increased approximately $9.0 million, or 13%, due to an 11% increase in total aftermarket contracts, a 1% increase in gross profit per aftermarket contract, and a 2,390 basis point increase in other aftermarket product contract penetration rate as a result of our efforts to offer a wider range of F&I products to our guests.

On a trailing quarter cost of sales basis, our reported used vehicle inventory days’ supply in our EchoPark Segment was approximately 40 and 38 days as of December 31, 2025 and 2024, respectively. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility.

Wholesale Vehicles - EchoPark Segment

See the discussion under the heading “Results of Operations - Consolidated” for additional discussion of the macro drivers of wholesale vehicle revenues.

50

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table provides a reconciliation of EchoPark Segment reported basis, same market basis and new market/closed market basis for wholesale vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Total wholesale vehicle revenue:

Same market

$

104.6 

$

92.7 

$

11.9 

13 

%

New markets/closed markets

— 

3.1 

(3.1)

NM

Total as reported

$

104.6 

$

95.8 

$

8.8 

9 

%

Total wholesale vehicle gross profit (loss):

Same market

$

(1.7)

$

(0.6)

$

(1.1)

(183)

%

New markets/closed markets

(0.1)

(0.7)

0.6 

NM

Total as reported

$

(1.8)

$

(1.3)

$

(0.5)

(38)

%

Total wholesale vehicle unit sales:

Same market

11,836 

10,850 

986 

9 

%

New markets/closed markets

— 

209 

(209)

NM

Total as reported

11,836 

11,059 

777 

7 

%

NM = Not Meaningful

Our EchoPark Segment reported wholesale vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported wholesale vehicle:

Revenue

$

104.6 

$

95.8 

$

8.8 

9 

%

Gross profit (loss)

$

(1.8)

$

(1.3)

$

(0.5)

(38)

%

Unit sales

11,836 

11,059 

777 

7 

%

Revenue per unit

$

8,842 

$

8,663 

$

179 

2 

%

Gross profit (loss) per unit

$

(143)

$

(113)

$

(30)

(27)

%

Gross profit (loss) as a % of revenue

(1.6)

%

(1.3)

%

(30)

bps

Our EchoPark Segment same market wholesale vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same market wholesale vehicle:

Revenue

$

104.6 

$

92.7 

$

11.9 

13 

%

Gross profit (loss)

$

(1.7)

$

(0.6)

$

(1.1)

(183)

%

Unit sales

11,836 

10,850 

986 

9 

%

Revenue per unit

$

8,842 

$

8,537 

$

305 

4 

%

Gross profit (loss) per unit

$

(143)

$

(61)

$

(82)

(134)

%

Gross profit (loss) as a % of revenue

(1.6)

%

(0.7)

%

(90)

bps

Same market wholesale vehicle revenue increased 13%, driven primarily by a 9% increase in same market wholesale vehicle unit sales volume, and a $305, or 4%, increase in same market wholesale vehicle revenue per unit. Same market wholesale vehicle gross profit decreased approximately $1.1 million, due primarily to a decrease in same market wholesale vehicle gross profit per unit of $82 per unit. As we adjust the inventory mix of nearly-new versus older model year vehicles sold at retail going forward, the levels of wholesale vehicle revenue and gross profit may vary.

51

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations - Powersports Segment

As a result of the acquisition and termination of certain powersports stores in 2024 and 2025, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. The following discussion of new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a reported basis, except where otherwise noted. Our Powersports Segment results are subject to seasonal variations, such that the second and third quarters are generally expected to contribute higher revenues and segment income than the first and fourth quarters.

New Vehicles - Powersports Segment

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for retail new vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Total retail new vehicle revenue:

Same store

$

93.8 

$

79.0 

$

14.8 

19 

%

Acquisitions, open points, and terminations

11.7 

3.0 

8.7 

NM

Total as reported

$

105.5 

$

82.0 

$

23.5 

29 

%

Total retail new vehicle gross profit:

Same store

$

13.9 

$

11.2 

$

2.7 

24 

%

Acquisitions, open points, and terminations

1.8 

0.3 

1.5 

NM

Total as reported

$

15.7 

$

11.5 

$

4.2 

37 

%

Total retail new vehicle unit sales:

Same store

4,583 

4,115 

468 

11 

%

Acquisitions, open points, and terminations

560 

129 

431 

NM

Total as reported

5,143 

4,244 

899 

21 

%

NM = Not Meaningful

Our Powersports Segment reported retail new vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported retail new vehicle:

Revenue

$

105.5 

$

82.0 

$

23.5 

29 

%

Gross profit

$

15.7 

$

11.5 

$

4.2 

37 

%

Unit sales

5,143 

4,244 

899 

21 

%

Revenue per unit

$

20,517 

$

19,313 

$

1,204 

6 

%

Gross profit per unit

$

3,050 

$

2,713 

$

337 

12 

%

Gross profit as a % of revenue

14.9 

%

14.0 

%

90 

bps

52

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Powersports Segment same store new vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store new vehicle:

Revenue

$

93.8 

$

79.0 

$

14.8 

19 

%

Gross profit

$

13.9 

$

11.2 

$

2.7 

24 

%

Unit sales

4,583 

4,115 

468 

11 

%

Revenue per unit

$

20,473 

$

19,202 

$

1,271 

7 

%

Gross profit per unit

$

3,032 

$

2,713 

$

319 

12 

%

Gross profit as a % of revenue

14.8 

%

14.1 

%

70 

bps

Same store retail new vehicle revenue increased 19%, due to a 11% increase in retail new vehicle unit sales volume and a 7% increase in retail new vehicle average selling price. Same store retail new vehicle gross profit increased approximately $2.7 million, or 24%, as a result of higher retail new vehicle unit sales volume and higher retail new vehicle gross profit per unit. Same store retail new vehicle gross profit per unit increased $319 per unit, or 12%, to $3,032 per unit.

On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 140 and 178 days as of December 31, 2025 and 2024 respectively. We believe that in a normal production environment, the level of new vehicle inventory days’ supply in our Powersports Segment should be in the 90 to 120-day range, depending on seasonality (typically the second and third quarters have more demand and lower days’ supply compared to the first and fourth quarters).

Used Vehicles - Powersports Segment

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for retail used vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Retail used vehicle revenue:

Same store

$

33.7 

$

20.9 

$

12.8 

61 

%

Acquisitions, open points, and terminations

4.2 

1.4 

2.8 

NM

Total as reported

$

37.9 

$

22.3 

$

15.6 

70 

%

Retail used vehicle gross profit:

Same store

$

6.1 

$

5.0 

$

1.1 

22 

%

Acquisitions, open points, and terminations

0.7 

0.3 

0.4 

NM

Total as reported

$

6.8 

$

5.3 

$

1.5 

28 

%

Retail used vehicle unit sales:

Same store

3,101 

2,087 

1,014 

49 

%

Acquisitions, open points, and terminations

341 

141 

200 

NM

Total as reported

3,442 

2,228 

1,214 

54 

%

NM = Not Meaningful

53

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Powersports Segment reported retail used vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported retail used vehicle:

Revenue

$

37.9 

$

22.3 

$

15.6 

70 

%

Gross profit

$

6.8 

$

5.3 

$

1.5 

28 

%

Unit sales

3,442 

2,228 

1,214 

54 

%

Revenue per unit

$

10,997 

$

10,011 

$

986 

10 

%

Gross profit per unit

$

1,980 

$

2,397 

$

(417)

(17)

%

Gross profit as a % of revenue

18.0 

%

23.9 

%

(590)

bps

Our Powersports Segment same store retail used vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same store retail used vehicle:

Revenue

$

33.7 

$

20.9 

$

12.8 

61 

%

Gross profit

$

6.1 

$

5.0 

$

1.1 

22 

%

Unit sales

3,101 

2,087 

1,014 

49 

%

Revenue per unit

$

10,877 

$

9,996 

$

881 

9 

%

Gross profit per unit

$

1,982 

$

2,419 

$

(437)

(18)

%

Gross profit as a % of revenue

18.2 

%

24.2 

%

(600)

bps

Same store retail used vehicle revenue increased 61%, due primarily to a 49% increase in retail used vehicle unit sales volume and a 9% increase in retail used vehicle average selling price. Same store retail used vehicle gross profit increased approximately $1.1 million, or 22%, due primarily to higher retail used vehicle unit sales volume, offset partially by lower retail used vehicle gross profit per unit. Same store retail used vehicle gross profit per unit decreased $437 per unit, or 18%, to $1,982 per unit, due primarily to changes in inventory mix and variations between wholesale and retail market pricing.

On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 121 days as of December 31, 2025. Going forward, we generally expect to maintain a used vehicle inventory days’ supply in our Powersports Segment in the 75 to 100-day range, depending on seasonality (typically the second and third quarters have more demand and lower days’ supply compared to the first and fourth quarters).

54

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Wholesale Vehicles - Powersports Segment

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for wholesale vehicles:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit data)

Total wholesale vehicle revenue:

Same store

$

2.5 

$

2.1 

$

0.4 

19 

%

Acquisitions, open points, and terminations

(0.1)

0.2 

(0.3)

NM

Total as reported

$

2.4 

$

2.3 

$

0.1 

4 

%

Total wholesale vehicle gross profit (loss):

Same store

$

(0.1)

$

(0.3)

$

0.2 

66.7 

%

Acquisitions, open points, and terminations

— 

— 

— 

NM

Total as reported

$

(0.1)

$

(0.3)

$

0.2 

67 

%

Total wholesale vehicle unit sales:

Same store

275 

146 

129 

88 

%

Acquisitions, open points, and terminations

3 

— 

3 

NM

Total as reported

278 

146 

132 

90 

%

NM = Not Meaningful

Our Powersports Segment reported wholesale vehicle results were as follows: 

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported wholesale vehicle:

Revenue

$

2.4 

$

2.3 

$

0.1 

4 

%

Gross profit (loss)

$

(0.1)

$

(0.3)

$

0.2 

67 

%

Unit sales

278 

146 

132 

90 

%

Revenue per unit

$

8,728 

$

16,430 

$

(7,702)

(47)

%

Gross profit (loss) per unit

$

(597)

$

(1,647)

$

1,050 

64 

%

Gross profit (loss) as a % of revenue

(6.8)

%

(10.0)

%

320 

bps

55

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Powersports Segment same store wholesale vehicle results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except per unit data)

Same store wholesale vehicle:

Revenue

$

2.5 

$

2.1 

$

0.4 

19 

%

Gross profit (loss)

$

(0.1)

$

(0.3)

$

0.2 

67 

%

Unit sales

275 

146 

129 

88 

%

Revenue per unit

$

8,799 

$

14,750 

$

(5,951)

(40)

%

Gross profit (loss) per unit

$

(541)

$

(1670)

$

1,129 

68 

%

Gross profit (loss) as a % of revenue

(6.2)

%

(11.3)

%

510 

bps

Same store wholesale vehicle revenue increased approximately $0.4 million, and same store wholesale vehicle gross profit (loss) improved approximately $0.2 million, driven by changes in wholesale unit sales volume and wholesale gross profit per unit.

Fixed Operations - Powersports Segment

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for Fixed Operations:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Total Fixed Operations revenue:

Same store

$

44.7 

$

41.6 

$

3.1 

7 

%

Acquisitions, open points, and terminations

4.2 

2.0 

2.2 

NM

Total as reported

$

48.9 

$

43.6 

$

5.3 

12 

%

Total Fixed Operations gross profit:

Same store

$

21.5 

$

19.0 

$

2.5 

13 

%

Acquisitions, open points, and terminations

1.7 

1.1 

0.6 

NM

Total as reported

$

23.2 

$

20.1 

$

3.1 

15 

%

NM = Not Meaningful

56

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Powersports Segment reported Fixed Operations results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Reported Fixed Operations:

Revenue

Customer pay

$

8.8 

$

7.8 

$

1.0 

13 

%

Warranty

5.3 

3.8 

1.5 

39 

%

Wholesale parts

0.6 

0.8 

(0.2)

(25)

%

Internal, sublet and other

34.2 

31.2 

3.0 

10 

%

Total revenue

$

48.9 

$

43.6 

$

5.3 

12 

%

Gross profit

Customer pay

$

3.6 

$

2.8 

$

0.8 

29 

%

Warranty

3.5 

2.9 

0.6 

21 

%

Wholesale parts

0.1 

0.2 

(0.1)

(50)

%

Internal, sublet and other

16.0 

14.2 

1.8 

13 

%

Total gross profit

$

23.2 

$

20.1 

$

3.1 

15 

%

Gross profit as a % of revenue

Customer pay

41.6 

%

35.4 

%

620 

bps

Warranty

66.7 

%

75.9 

%

(920)

bps

Wholesale parts

22.8 

%

26.5 

%

(370)

bps

Internal, sublet and other

46.8 

%

45.5 

%

127 

bps

Total gross profit as a % of revenue

47.5 

%

46.0 

%

150 

bps

57

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Powersports Segment same store Fixed Operations results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Same store Fixed Operations:

Revenue

Customer pay

$

7.4 

$

7.1 

$

0.3 

4 

%

Warranty

4.4 

3.7 

0.7 

19 

%

Wholesale parts

0.5 

0.7 

(0.2)

(29)

%

Internal, sublet and other

32.4 

30.1 

2.3 

8 

%

Total revenue

$

44.7 

$

41.6 

$

3.1 

7 

%

Gross profit

Customer pay

$

3.2 

$

2.5 

$

0.7 

28 

%

Warranty

3.1 

2.8 

0.3 

11 

%

Wholesale parts

0.1 

0.2 

(0.1)

(50)

%

Internal, sublet and other

15.1 

13.5 

1.6 

12 

%

Total gross profit

$

21.5 

$

19.0 

$

2.5 

13 

%

Gross profit as a % of revenue

Customer pay

42.6 

%

35.0 

%

760 

bps

Warranty

69.2 

%

76.2 

%

(700)

bps

Wholesale parts

23.0 

%

28.9 

%

(590)

bps

Internal, sublet and other

46.6 

%

44.9 

%

175 

bps

Total gross profit as a % of revenue

48.0 

%

45.6 

%

240 

bps

Same store Fixed Operations revenue increased approximately $3.1 million and same store Fixed Operations gross profit increased approximately $2.5 million. Same store customer pay revenue increased approximately $0.3 million and same store customer pay gross profit increased approximately $0.7 million. Same store warranty revenue increased approximately $0.7 million and same store warranty gross profit increased approximately $0.3 million. Same store wholesale parts revenue decreased approximately $0.2 million and same store wholesale parts gross profit decreased approximately $0.1 million. Same store internal, sublet and other revenue increased approximately $2.3 million and same store internal, sublet and other gross profit increased approximately $1.6 million.

58

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

F&I - Powersports Segment

The following table provides a reconciliation of Powersports Segment reported basis and same store basis for F&I:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Total F&I revenue:

Same store

$

7.8 

$

6.7 

$

1.1 

16 

%

Acquisitions, open points, and terminations

0.4 

0.4 

— 

NM

Total as reported

$

8.2 

$

7.1 

$

1.1 

15 

%

Total F&I gross profit per retail unit (excludes fleet):

Same store

$

1,019 

$

1,073 

$

(54)

(5)

%

Reported

$

959 

$

1,092 

$

(133)

(12)

%

Total combined retail new and used vehicle unit sales:

Same store

7,684 

6,202 

1,482 

24 

%

Acquisitions, open points, and terminations

901 

270 

631 

NM

Total as reported

8,585 

6,472 

2,113 

33 

%

NM = Not Meaningful

Our Powersports Segment reported F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Reported F&I:

Revenue

$

8.2 

$

7.1 

$

1.1 

15 

%

Total combined retail new and used vehicle unit sales

8,585 

6,472 

2,113 

33 

%

Gross profit per retail unit (excludes fleet)

$

959 

$

1,092 

$

(133)

(12)

%

Our Powersports Segment same store F&I results were as follows:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions, except unit and per unit data)

Same Store F&I:

Revenue

$

7.8 

$

6.7 

$

1.1 

16 

%

Total combined retail new and used vehicle unit sales

7,684 

6,202 

1,482 

24 

%

Gross profit per retail unit (excludes fleet)

$

1,019 

$

1,073 

$

(54)

(5)

%

59

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same store F&I revenue increased approximately $1.1 million, or 16%, primarily due to a 24% increase in total combined retail new and used vehicle unit sales volume, offset partially by a 5% decrease in F&I gross profit per retail unit. F&I gross profit per retail unit decreased $54 per unit, or 5%, to $1,019 per unit, primarily due to lower gross profits per finance and service contracts and decreased penetration rates for service and aftermarket contracts, offset partially by higher gross profit per aftermarket contract and an increase in finance contract penetration rate.

Same store finance contract revenue increased 20%, primarily due to a 28% increase in finance contract volume, offset partially by a 6% decrease in gross profit per finance contract. The increase in finance contract volume is driven by a 24% increase in total retail unit sales volume and a 140 basis point increase in the finance contract penetration rate. Service contract revenue increased 5%, primarily due to a 21% increase in service contract volume, offset partially by a 13% decrease in gross profit per service contract. The increase in service contract unit sales volume is driven by a 24% increase in total retail unit sales volume, offset partially by a 60 basis point decrease in the service contract penetration rate. Other aftermarket contract revenue increased 45%, primarily due to a 20% increase in aftermarket contract volume and a 21% increase in gross profit per other aftermarket contract. The increase in aftermarket contract volume is driven by a 24% increase in total retail unit sales volume, offset partially by a 110 basis point decrease in aftermarket contract penetration rate.

60

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results Summary

In the following table of financial data, total segment income (loss) of the reportable segments is reconciled to consolidated income (loss) before taxes and impairment charges. See above for tables and discussion of results by reportable segment.

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

Segment Revenues:

(In millions, except unit data)

Franchised Dealerships Segment Revenues:

Retail new vehicles

$

6,941.9 

$

6,425.5 

$

516.4 

8 

%

Fleet new vehicles

101.5 

95.3 

6.2 

7 

%

Total new vehicles

$

7,043.4 

$

6,520.8 

$

522.6 

8 

%

Used vehicles

3,087.0 

2,919.8 

167.2 

6 

%

Wholesale vehicles

207.0 

188.9 

18.1 

10 

%

Parts, service and collision repair

1,970.2 

1,802.9 

167.3 

9 

%

Finance, insurance and other, net

571.5 

506.8 

64.7 

13 

%

Franchised Dealerships Segment revenues

$

12,879.1 

$

11,939.2 

$

939.9 

8 

%

EchoPark Segment Revenues:

Used vehicles

$

1,747.8 

$

1,838.0 

$

(90.2)

(5)

%

Wholesale vehicles

104.6 

95.8 

8.8 

9 

%

Finance, insurance and other, net

219.2 

194.0 

25.2 

13 

%

EchoPark Segment revenues

$

2,071.6 

$

2,127.8 

$

(56.2)

(3)

%

Powersports Segment Revenues:

Retail new vehicles

$

105.5 

$

82.0 

$

23.5 

29 

%

Used vehicles

37.9 

22.3 

15.6 

70 

%

Wholesale vehicles

2.4 

2.3 

0.1 

4 

%

Parts, service and collision repair

48.9 

43.6 

5.3 

12 

%

Finance, insurance and other, net

8.2 

7.1 

1.1 

15 

%

Powersports Segment revenues

$

202.9 

$

157.3 

$

45.6 

29 

%

Total consolidated revenues

$

15,153.6 

$

14,224.3 

$

929.3 

7 

%

Segment Income (Loss) (1):

Franchised Dealerships Segment (2)

$

316.1 

$

257.6 

$

58.5 

23 

%

EchoPark Segment (3)

28.1 

3.5 

24.6 

703 

%

Powersports Segment (4)

2.3 

(1.1)

3.4 

309 

%

Total consolidated income (loss)

$

346.5 

$

260.0 

$

86.5 

33 

%

Impairment charges (5)

(173.8)

(3.9)

(169.9)

NM

Income (loss) before taxes

$

172.8 

$

256.1 

$

(83.3)

(33)

%

Segment Retail New and Used Vehicle Unit Sales Volume:

Franchised Dealerships Segment

220,183 

213,426 

6,757 

3 

%

EchoPark Segment

67,636 

69,053 

(1,417)

(2)

%

Powersports Segment

8,585 

6,472 

2,113 

33 

%

Total consolidated retail new and used vehicle unit sales volume

296,404 

288,951 

7,453 

3 

%

(1)Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(2)For 2025, amount includes approximately $40.0 million of pre-tax benefit from cyber insurance proceeds related to the CDK outage, approximately $5.0 million of pre-tax charges related to storm damage, approximately $5.5 million of pre-tax loss related to dispositions, and approximately $0.7 million of pre-tax legal expenses. For 2024, amount includes approximately $13.0 million of pre-tax charges related to excess compensation as a result of the CDK outage, approximately $8.3 million of pre-tax charges related to storm damage, approximately $3.5 million of pre-tax gain related to the acquisition of the remaining equity interest in a joint venture, $10.0 million of pre-tax gain related to the CDK outage cyber claim payment, and approximately $2.2 million of pre-tax charges related to severance and long-term compensation expense.

(3)For 2025, amount includes approximately $0.9 million of pre-tax gain on dispositions. For 2024, amount includes approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $2.9 million of pre-tax charges for severance and long-term compensation expense, approximately $2.1 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations, approximately $2.1 million of pre-tax gain on real estate dispositions, and approximately $0.4 million of pre-tax charges related to excess compensation as a result of the CDK outage.

(4)For 2025, amount includes approximately $1.1 million of pre-tax charges related to dispositions. For 2024, amount includes approximately $0.5 million of pre-tax charges related to severance and long-term compensation expense.

(5)For 2025, amount includes approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment, approximately $0.2 million of non-cash pre-tax property and equipment impairment charges for real estate held for sale in the EchoPark Segment, approximately $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges, and approximately $7.2 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment. For 2024, amount includes approximately $1.2 million of pre-tax franchise asset and property and equipment impairment charges for the Franchised Dealerships Segment and approximately $2.7 million of pre-tax property and equipment charges for real estate held for sale in the EchoPark Segment.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses are comprised of four major groups: compensation expense, advertising expense, rent expense and other expense. Compensation expense primarily relates to store personnel who are paid a commission or a salary plus commission and support personnel who are generally paid a fixed salary. Commissions paid to store personnel typically vary depending on gross profits realized and sales volume objectives. Due to the salary component for certain store and corporate personnel, gross profits and compensation expense do not change in direct proportion to one another. Advertising expense and other expense vary based on the level of actual or anticipated business activity and the number of dealerships in operation. Rent expense typically varies with the number of store locations owned, investments made for facility improvements and interest rates. Other expense includes various fixed and variable expenses, including gain on disposal of franchises, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses, which may not change in proportion to gross profit levels.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth information related to our consolidated reported SG&A expenses:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

SG&A expenses:

Compensation

$

1,087.4 

$

1,013.9 

$

(73.5)

(7)

%

Advertising

101.2 

84.5 

(16.7)

(20)

%

Rent

46.4 

36.6 

(9.8)

(27)

%

Other

443.2 

442.0 

(1.2)

— 

%

Total SG&A expenses

$

1,678.2 

$

1,577.0 

$

(101.2)

(6)

%

SG&A expenses as a % of gross profit:

Compensation

45.6 

%

46.2 

%

60 

bps

Advertising

4.2 

%

3.9 

%

(30)

bps

Rent

1.9 

%

1.7 

%

(20)

bps

Other

18.7 

%

20.1 

%

140 

bps

Total SG&A expenses as a % of gross profit

70.4 

%

71.9 

%

150 

bps

Consolidated total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to a decrease in compensation expense as a percent of gross profit as a result of higher gross profit contribution from Fixed Operations and F&I activities, which generally leverage SG&A expenses more effectively. Compensation expense increased in dollar amount due primarily to acquisitions, an increase in overall retail activity and higher medical expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to the increase in leased dealerships as a result of acquisitions from the fourth quarter of 2024 as well as newly acquired leased dealerships during 2025. Other SG&A expenses increased in dollar amount primarily due to higher information technology and maintenance expenses. However, other SG&A expenses decreased as a percentage of gross profit as a result of higher overall gross profit levels.

63

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth information related to our Franchised Dealerships Segment reported SG&A expenses:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

SG&A expenses:

Compensation

$

956.9 

$

892.4 

$

(64.5)

(7)

%

Advertising

69.9 

55.1 

(14.8)

(27)

%

Rent

44.3 

39.2 

(5.1)

(13)

%

Other

392.5 

388.7 

(3.8)

(1)

%

Total SG&A expenses

$

1,463.6 

$

1,375.4 

$

(88.2)

(6)

%

SG&A expenses as a % of gross profit:

Compensation

45.7 

%

46.0 

%

30 

bps

Advertising

3.3 

%

2.8 

%

(50)

bps

Rent

2.1 

%

2.0 

%

(10)

bps

Other

18.8 

%

20.1 

%

130 

bps

Total SG&A expenses as a % of gross profit

69.9 

%

70.9 

%

100 

bps

The Franchised Dealerships Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher levels of gross profit that better leverage fixed expenses. Compensation expense increased in dollar amount due primarily to acquisitions, an increase in overall retail activity and higher medical expenses, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in Fixed Operations and F&I. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to the increase in leased properties as a result of acquisitions of franchised dealerships. Other SG&A expenses increased in dollar amount primarily due to higher IT expenses. However, other SG&A expenses decreased as a percentage of gross profit as a result of higher overall gross profit levels.

For the Franchised Dealerships Segment, SG&A expenses for 2025 include approximately $40.0 million of pre-tax benefit from cyber insurance proceeds related to the CDK outage, approximately $5.0 million of pre-tax charges related to storm damage, approximately $5.5 million of pre-tax loss related to dispositions, and approximately $0.7 million of pre-tax legal expenses. For the Franchised Dealerships Segment, SG&A expenses for 2024 included approximately $11.0 million of pre-tax charges related to excess compensation as a result of the CDK outage, approximately $8.3 million of pre-tax charges related to storm damage, approximately $3.5 million of pre-tax gain related to the acquisition of the remaining equity interest in a joint venture, $10.0 million of pre-tax gain related to the CDK outage cyber claim payment, and approximately $2.2 million of pre-tax charges related to severance and long-term compensation expense.

64

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth information related to our EchoPark Segment reported SG&A expenses:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

SG&A expenses:

Compensation

$

100.6 

$

95.8 

$

(4.8)

(5)

%

Advertising

30.2 

27.7 

(2.5)

(9)

%

Rent

3.0 

(1.7)

(4.7)

(276)

%

Other

39.0 

43.9 

4.9 

11 

%

Total SG&A expenses

$

172.8 

$

165.7 

$

(7.1)

(4)

%

SG&A expenses as a % of gross profit:

Compensation

43.0 

%

46.1 

%

310 

bps

Advertising

12.9 

%

13.3 

%

40 

bps

Rent

1.3 

%

(0.8)

%

(210)

bps

Other

16.6 

%

21.1 

%

450 

bps

Total SG&A expenses as a % of gross profit

73.8 

%

79.7 

%

590 

bps

The EchoPark Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher gross profit contribution from F&I activities, which generally leverage SG&A expenses more effectively. Compensation expense increased in dollar amount due primarily to an increase in overall retail activity, and decreased as a percentage of gross profit as a result of higher overall gross profit. Advertising expense increased in dollar amount and decreased and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions and higher overall gross profit. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to a decrease in rental income and an increase in overall gross profit. Other SG&A expenses decreased in both dollar amount and as a percentage of gross profit primarily due to a decrease in outside contractor expenses.

For the EchoPark Segment, SG&A expenses for 2025 include approximately $0.9 million of pre-tax gain on dispositions. For the EchoPark Segment, SG&A expenses for 2024 included approximately $3.0 million of pre-tax gain on exit of leased properties, approximately $2.9 million of pre-tax charges for severance and long-term compensation expense, approximately $2.1 million of pre-tax charges related to closed store accrued expenses related to the indefinite suspension of operations at certain EchoPark locations, approximately $2.1 million of pre-tax gain on real estate dispositions, and approximately $0.4 million of pre-tax charges related to excess compensation as a result of the CDK outage.

65

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth information related to our Powersports Segment reported SG&A expenses:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

SG&A expenses:

Compensation

$

29.9 

$

25.7 

$

(4.2)

(16)

%

Advertising

1.1 

1.7 

0.6 

35 

%

Rent

(0.9)

(0.9)

— 

— 

%

Other

11.7 

9.4 

(2.3)

(24)

%

Total SG&A expenses

$

41.8 

$

35.9 

$

(5.9)

(16)

%

SG&A expenses as a % of gross profit:

Compensation

55.6 

%

58.7 

%

310 

bps

Advertising

2.1 

%

3.9 

%

180 

bps

Rent

(1.6)

%

(2.1)

%

(50)

bps

Other

21.6 

%

21.5 

%

(10)

bps

Total SG&A expenses as a % of gross profit

77.7 

%

82.0 

%

430 

bps

The Powersports Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, driven by an increase in other SG&A expenses and compensation expenses, coupled with higher gross profit levels. Compensation expense increased in dollar amount due primarily to acquisitions and an increase in overall retail activity, and decreased as a percentage of gross profit as a result of higher overall gross profit. Advertising expense decreased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense remained flat in dollar amount and increased as a percentage of gross profit, primarily due to a decrease in rental income. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to expenses related to the termination of Powersports franchises.

For the Powersports Segment, SG&A expenses for 2025 include approximately $1.1 million of pre-tax charges related to dispositions. For the Powersports Segment, SG&A expenses for 2024 included approximately $0.5 million of pre-tax charges related to severance and long-term compensation expense.

Impairment Charges - Consolidated

Impairment charges were approximately $173.8 million and $3.9 million in 2025 and 2024, respectively. Impairment charges for 2025 include approximately $173.1 million of franchise asset impairment charges, of which approximately $165.9 million is related to the Franchised Dealerships Segment and approximately $7.2 million is related to the Powersports Segment. Additional impairment charges of approximately $0.2 million are related to pre-tax property and equipment impairment charges for real estate held for sale in the EchoPark Segment, and approximately $0.4 million related to pre-tax property, equipment and right-of-use asset impairment charges in the Powersports Segment. Impairment charges for 2024 primarily related to fixed assets, lease right-of-use assets, and other contractual obligations related to abandoned property as a result of our decisions to indefinitely suspend operations at certain EchoPark locations and to close certain Northwest Motorsport stores.

Depreciation and Amortization - Consolidated

Depreciation expense increased approximately $13.0 million, or 8.6%, in 2025, due primarily to acquisitions and completed construction projects and purchases of fixed assets for use in our franchised dealerships and EchoPark stores.

Interest Expense, Floor Plan - Consolidated

66

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We typically maintain a floor plan deposit balance (as shown in the table below under the heading “Liquidity and Capital Resources”) that earns interest income based on the used floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense. The floor plan deposit balance was $300.0 million as of December 31, 2025 and $340.0 million as of December 31, 2024. Our interest expense, floor plan fluctuates with changes in our outstanding borrowings and associated interest rates, which are variable based on one-month Term SOFR or the U.S. prime rate, plus credit spreads specified in the applicable agreements.

Interest expense, floor plan for new vehicles decreased $6.0 million. The average interest rate applied to the new vehicle floor plan decreased in the 12 months ended December 31, 2025, driving $13.0 million of the overall decrease. The average new vehicle floor plan notes payable balance increased $111.4 million, offsetting $7.0 million of the overall decrease.

Interest expense, floor plan for used vehicles increased $3.7 million, including the effect of interest income earned on the floor plan deposit balance, driving $7.8 million of the increase. Excluding the effect of the floor plan deposit balance, interest expense, floor plan for used vehicles decreased $4.1 million. The average interest rate applied to the used vehicle floor plan decreased in the 12 months ended December 31, 2025, driving $3.8 million of that decrease. The average used vehicle floor plan notes payable balance decreased $4.2 million, driving $0.3 million of that decrease.

Interest Expense, Other, Net - Consolidated

Interest expense, other, net is summarized in the table below:

Year Ended December 31,

Better / (Worse)

2025

2024

Change

% Change

(In millions)

Stated/coupon interest

$

81.5 

$

91.0 

$

9.5 

10 

%

Deferred loan cost amortization

5.6 

5.7 

0.1 

2 

%

Interest rate hedge expense (benefit)

0.1 

0.6 

0.5 

83 

%

Capitalized interest

(2.2)

(2.6)

(0.4)

(15)

%

Interest on finance lease liabilities

24.5 

22.4 

(2.1)

(9)

%

Other interest

0.6 

0.9 

0.3 

33 

%

Total interest expense, other, net

$

110.1 

$

118.0 

$

7.9 

7 

%

Interest expense, other, net decreased $7.9 million, or 7%, primarily related to lower outstanding balances on our mortgage notes and a lower interest rate environment throughout 2025 as compared to 2024.

Provision for Income Taxes - Consolidated

The overall effective tax rate was 31.3% and 15.7% for 2025 and 2024, respectively. Income tax expense for 2025 includes a $7.6 million charge related to nondeductible executive compensation, a $5.3 million charge related to adjustments of deferred tax items and a $0.6 million charge related to changes in uncertain tax positions, partially offset by a $3.5 million benefit related to vested or exercised stock compensation awards. Income tax expense for 2024 includes the effect of an out of period adjustment related to franchise assets of $31.0 million, a $1.6 million charge related to charges in uncertain tax positions, and a $4.7 million charge related to non-deductible executive compensation, partially offset by a $1.4 million benefit related to vested or exercised stock compensation awards. Our effective tax rate varies from year to year based on the level of taxable income, the distribution of taxable income between states in which the Company operates and other tax adjustments.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires Sonic’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the accompanying consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

67

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Goodwill and Other Intangible Assets

In accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other,” we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary.

For purposes of goodwill impairment testing, we have three reporting units, which consist of (1) our traditional franchised dealerships, (2) our EchoPark stores and (3) our powersports stores (these reporting units also represent our reportable segments). The carrying value of our goodwill totaled approximately $421.8 million at December 31, 2025, approximately $394.5 million of which was related to our franchised dealerships reporting unit and approximately $27.3 million of which was related to our powersports reporting unit. In evaluating goodwill for impairment, if the fair value of a reporting unit is less than its carrying value, the difference would represent the amount of the required goodwill impairment. We evaluated our Franchised Dealership Segment reporting unit on a qualitative basis as substantial cushion existed between the calculated fair value and associated carrying values in the prior year evaluation and there were not any meaningful events or trends which would significantly erode this cushion. We evaluated our Powersports Segment reporting unit on a quantitative basis. In performing the quantitative test in the Powersports Segment reporting unit for impairment of goodwill, we primarily used the income approach method of valuation that includes the discounted cash flow (“DCF”) method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation. As a result of our April 30, 2025 annual test, we determined no impairment existed for any of our reporting units as of April 30, 2025. See Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the accompanying consolidated financial statements for further discussion.

In accordance with ASC Topic 350, “Intangibles - Goodwill and Other,” we evaluate franchise assets for impairment annually (as of April 30 of each year) or more frequently if indicators of impairment exist. We estimate the fair value of our franchise assets using a multi-period excess earnings method (“MPEEM”) model. The MPEEM model used contains inherent uncertainties, including significant estimates and assumptions related to projected revenue, projected operating margins, a discount rate (and estimates in the discount rate inputs) and residual growth rates. We are subject to financial risk to the extent that our franchise assets become impaired due to deterioration of the underlying businesses. The risk of a franchise asset impairment charge may increase to the extent the underlying businesses’ actual earnings or projected earnings experience a significant decline, or the required discount rate increases (reducing the fair value of expected future cash flows). As a result of our impairment testing as of April 30, 2025, we determined that several of our franchise assets’ fair values did not exceed the carrying values, resulting in a non-cash pre-tax franchise asset impairment charge of $172.4 million to reduce the carrying value to fair value as of April 30, 2025. After the effect of impairment charges, the carrying value of our franchise assets totaled approximately $454.1 million at December 31, 2025, and is included in other intangible assets, net, in the accompanying consolidated balance sheet as of such date. See Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the accompanying consolidated financial statements for further discussion. More recently acquired franchise assets are at a greater risk of impairment than older franchise assets which have significant clearance between fair value and recorded balances. Many factors affect the valuation of franchise assets such as the discount rate and projected revenue amounts. Unfavorable changes in these factors increases the risk of future impairments.

68

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Finance, Insurance and Service Contracts

We arrange financing for our guests through various financial institutions and receive a commission from the financial institution either in a flat fee amount or in an amount equal to the difference between the interest rates charged to our guests and the predetermined interest rates set by the financial institution. We also receive commissions from the sale of various insurance contracts and non-recourse third-party extended service contracts. Under these contracts, the applicable manufacturer or third-party warranty company is directly liable for all warranties provided within the contract. Retrospective finance and insurance revenues (“F&I retro revenues”) are recognized when the product contract has been executed with the end customer and the transaction is estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues can vary based on a variety of factors, including numbers of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Receivables, net in the accompanying consolidated balance sheets as of December 31, 2025 and 2024 include approximately $7.0 million and $8.0 million, respectively, related to contract assets from F&I retro revenue recognition. Changes in contract assets from December 31, 2024 to December 31, 2025 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. Historically, our actual F&I retro revenue amounts earned have not been materially different from our recorded estimates.

In the event a customer terminates a financing, insurance or extended service contract prior to the scheduled maturity date, we may be required to return a portion of the commission revenue originally recorded as income by Sonic to the third-party provider (known as a “chargeback”). The commission revenue for the sale of these products and services is recorded net of estimated future chargebacks in the period in which the product or service was sold. Our estimate of future chargebacks is established based on our historical chargeback rates, termination provisions of the applicable contracts and data provided by the third-party underwriter of the contracts. While expected chargeback rates vary depending on the type of contract sold, a 100 basis point change in the estimated chargeback rates used in determining our estimates of future chargebacks would have changed our estimated reserve for chargebacks at December 31, 2025 by approximately $5.0 million. Our estimate of chargebacks was approximately $67.1 million as of December 31, 2025, compared to approximately $62.9 million as of December 31, 2024, with the increase primarily driven by higher F&I revenues and higher projected cancellation rates. Our chargeback reserve estimate is influenced by the level of F&I revenues and the timing and number of early contract termination events, such as vehicle repossessions, loan refinancing, and early pay-offs. If these events become more or less common, or if there is a shift in the timing of these cancellations, the resulting impact could affect our estimated reserve for chargebacks and could have a material adverse impact on our operating results, financial position and cash flows. Historically, our actual chargeback experience has not been materially different from our recorded estimates.

Income Taxes

As a matter of course, we are regularly audited by various taxing authorities and, from time to time, these audits result in proposed assessments where the ultimate resolution may result in us owing additional taxes. Management believes that our tax positions comply, in all material respects, with applicable tax law and that we have adequately provided for any reasonably foreseeable outcome related to these matters. From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty. Examples of such transactions include business acquisitions and disposals, including consideration paid or received in connection with such transactions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. A tax position that does not meet the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the consolidated financial statements. The tax position is measured at the largest amount of benefit that is likely to be realized upon ultimate settlement. We adjust our estimates periodically because of ongoing examinations by and settlements with the various taxing authorities, as well as changes in tax laws, regulations and precedent.

At December 31, 2025, there were approximately $6.1 million in reserves that we had provided for these matters (including estimates related to possible interest and penalties) recorded in other long-term liabilities in the accompanying consolidated balance sheet as of such date. The effects on our consolidated financial statements of income tax uncertainties are discussed in Note 7, “Income Taxes,” to the accompanying consolidated financial statements.

69

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We periodically review all deferred tax asset positions (including state net operating loss carryforwards) to determine whether it is more likely than not that the deferred tax assets will be realized. Certain factors considered in evaluating the potential for realization of deferred tax assets include the time remaining until expiration (related to state net operating loss carryforwards) and various sources of taxable income that may be available under the tax law to realize a tax benefit related to a deferred tax asset. This evaluation requires management to make certain assumptions about future profitability, the execution of tax strategies that may be available to us and the likelihood that these assumptions or execution of tax strategies would occur. This evaluation is highly judgmental. The results of future operations, regulatory framework of the taxing authorities and other related matters cannot be predicted with certainty. Therefore, actual realization of these deferred tax assets may be materially different from management’s estimate.

As of December 31, 2025 and 2024, we had recorded a valuation allowance amount of approximately $6.5 million and $6.2 million, respectively, related to certain state net operating loss carryforward deferred tax assets as we determined that we would not be able to generate sufficient state taxable income in the related entities to realize the accumulated net operating loss carryforward balances.

We make certain estimates, judgments and assumptions in the calculation of our provision for income taxes, in the resulting tax liabilities and in the recoverability of deferred tax assets. These estimates, judgments and assumptions are updated quarterly by our management based on available information and take into consideration estimated income taxes based on prior year income tax returns, changes in income tax law, our income tax strategies and other factors. If our management receives information which causes us to change our estimate of the year-end liability, the amount of expense or expense reduction required to be recorded in any particular quarter could be material to our operating results, financial position and cash flows.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (ASC Topic 740): Improvements to Income Tax Disclosures.” The amendments require the disclosure of a reconciliation between income tax expense from continuing operations and the amount computed by multiplying income from continuing operations before income taxes by the applicable statutory rate as well as an annual disaggregation of the income tax rate reconciliation between certain specified categories by both percentage and reported amounts, along with other changes to income tax disclosure requirements. The standard will be effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. We have implemented the provisions of ASU 2023-09. See Note 7, “Income Taxes,” to the accompanying consolidated financial statements for the additional disclosures required by ASC Topic 740.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)”, and in January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.” The amendments require the disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas producing activities. It also requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The standard, as clarified by ASU 2025-01, will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact that the adoption of the provisions of the ASU will have on our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The bill contains a range of tax reforms affecting businesses, including the immediate expensing of research and development expenditures, 100% bonus depreciation on qualified property, and various other provisions effective in tax years 2026 through 2029. After evaluating the OBBBA’s provisions, we have determined that the impact of these changes on the consolidated financial statements for the current reporting period is immaterial. Provisions taking effect in 2026 will affect the deductibility of executive compensation and charitable contributions and will contribute to a higher overall income tax rate. We will continue to monitor future guidance and assess any additional potential implications for subsequent periods.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

We require cash to service debt, meet lease obligations, manage working capital requirements, make facility and other capital improvements, pay dividends on our common stock, finance acquisitions and otherwise invest in our business. We rely on cash flows from operations, borrowings under our revolving credit and floor plan facilities, real estate mortgage financing, asset sales and offerings of debt and equity securities to meet these requirements. However, our liquidity could be negatively affected by business performance that results in a failure to comply with the financial covenants in our existing debt obligations or lease arrangements. After giving effect to the applicable restrictions on the payment of dividends under our debt agreements, as of December 31, 2025, we had $391.1 million of net income and retained earnings free of such restrictions. Cash flows provided by our dealerships are derived from various sources including individual consumers, automobile manufacturers, automobile manufacturers’ captive finance subsidiaries and other financial institutions. Disruptions in these cash flows could have a material adverse impact on our operations and overall liquidity.

Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

We had the following liquidity resources available as of December 31, 2025 and 2024:

December 31, 2025

December 31, 2024

(In millions)

Cash and cash equivalents

$

6.3 

$

44.0 

Floor plan deposit balance

300.0 

340.0 

Availability under the Revolving Credit Facility

300.3 

338.5 

Availability under the Mortgage Facility and Sidecar Facility

95.0 

139.1 

Total available liquidity resources

$

701.6 

$

861.6 

We maintain a floor plan deposit balance (as shown in the table above) that offsets interest based on the agreed upon floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense. This deposit balance is not designated as a prepayment of notes payable - floor plan, nor is it our intent to use this amount to settle principal amounts owed under notes payable - floor plan in the future, although we have the right and ability to do so. The deposit balances of $300.0 million as of December 31, 2025 and $340.0 million as of December 31, 2024 are classified as other current assets in the accompanying consolidated balance sheets as of December 31, 2025 and 2024.

Long-Term Debt and Credit Facilities

See Note 6, “Long-Term Debt,” to the accompanying condensed consolidated financial statements for a discussion of our senior notes, mortgage notes, credit facilities and compliance with debt covenants.

Floor Plan Facilities

We finance all of our new and certain of our used vehicle inventory through standardized floor plan facilities with manufacturer captive finance companies and a syndicate of manufacturer-affiliated finance companies and commercial banks. We also use these floor plan facilities to finance the acquisition of new and certain used vehicle inventory as part of acquisitions of dealerships. These floor plan facilities are due on demand and bear interest at variable rates based on either one-month Term SOFR or prime plus an additional spread, specified in the applicable agreements. The weighted-average interest rate for our new and used vehicle floor plan facilities was 5.57% and 6.51% for 2025 and 2024, respectively.

We receive floor plan assistance in the form of direct payments or credits from certain manufacturers. Floor plan assistance received is capitalized in inventory and recorded as a reduction of cost of sales when the associated inventory is sold. We received approximately $66.2 million and $65.6 million in manufacturer assistance in 2025 and 2024, respectively, and recognized in cost of sales approximately $65.6 million and $64.2 million in manufacturer assistance in 2025 and 2024, respectively. Interest payments under each of our floor plan facilities are due monthly and we are generally not required to make principal repayments prior to the sale of the associated vehicles. The total notes payable - floor plan balance of approximately $1.9 billion as of December 31, 2025 is classified as current liabilities in the accompanying consolidated balance sheet as of such date.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Acquisitions and Dispositions

During 2025, we acquired five businesses in our Franchised Dealerships and were awarded one franchise in our Powersports Segment. The businesses in our Franchise Dealerships Segment were acquired for approximately $440.3 million, including inventory acquired and subsequently funded by floor plan notes payable. We disposed of one mid-line import franchised dealership and terminated one domestic franchised dealership and one powersports dealership during 2025. See Note 2, “Business Acquisitions and Dispositions,” to the accompanying consolidated financial statements for further discussion.

Capital Expenditures

Our capital expenditures include the purchase of land and buildings, the construction of new franchised dealerships, EchoPark and powersports stores and collision repair centers, building improvements and equipment purchased for use in our franchised dealerships and EchoPark and powersports stores. We selectively construct new or improve existing franchised dealership facilities to maintain compliance with manufacturers’ image requirements. We typically finance these projects through cash flows from operations, new mortgages or our credit facilities.

Capital expenditures for 2025 were approximately $149.9 million, including approximately $145.8 million related to our Franchised Dealerships Segment, approximately $1.2 million related to our EchoPark Segment and approximately $2.9 million related to our Powersports Segment. Of the total capital expenditures, approximately $79.8 million was related to facility construction projects, approximately $19.8 million was related to acquisitions of real estate (land and buildings), and approximately $50.3 million was for other fixed assets utilized in our operations.

All of the $149.9 million in gross capital expenditures in 2025 was funded through existing cash balances. As of December 31, 2025, commitments for facility construction projects and aircraft totaled approximately $20.9 million, nearly all of which is expected to be completed or paid in the next 12 months.

Share Repurchase Program

Our Board of Directors has authorized us to repurchase shares of our Class A Common Stock. Historically, we have used our share repurchase authorization to offset dilution caused by the exercise of stock options or the vesting of equity compensation awards and to maintain our desired capital structure. During 2025, we repurchased approximately 1.3 million shares of our Class A Common Stock for approximately $82.4 million in open-market transactions at prevailing market prices and in connection with tax withholding on the vesting of equity compensation awards. As of December 31, 2025, our total remaining repurchase authorization was approximately $169.9 million. Under the Credit Facilities, share repurchases are permitted to the extent that no event of default exists and we do not exceed the restrictions set forth in our debt agreements. After giving effect to the applicable restrictions on share repurchases and certain other transactions under our debt agreements, as of December 31, 2025, we had approximately $391.1 million of net income and retained earnings free of such restrictions.

Our share repurchase activity is subject to the business judgment of our Board of Directors and management, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, the current economic environment and other factors considered by our Board of Directors and management to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors and management determine our share repurchase policy in the future.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Dividends

Our Board of Directors approved four quarterly cash dividends on all outstanding shares of Class A and Class B Common Stock totaling $1.46 per share during 2025. Subsequent to December 31, 2025, our Board of Directors approved a cash dividend on all outstanding shares of Class A and Class B Common Stock of $0.38 per share for stockholders of record on March 13, 2026 to be paid on April 15, 2026. The Credit Facilities permit quarterly cash dividends on our Class A and Class B Common Stock up to $0.18 per share so long as no Event of Default has occurred and is continuing and provided that we remain in compliance with all financial covenants under the Credit Facilities. In addition, dividends greater than $0.18 per share are permitted subject to the limitations on restricted payments set forth in the Credit Facilities. The indentures governing the 4.625% and 4.875% Senior Notes also contain restrictions on our ability to pay dividends. After giving effect to the applicable restrictions on share repurchases and certain other transactions under our debt agreements, as of December 31, 2025, we had approximately $391.1 million of net income and retained earnings free of such restrictions. The declaration and payment of any future dividend is subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, share repurchases, the current economic environment and other factors considered by our Board of Directors to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors determines our dividend policy in the future. There is no guarantee that additional dividends will be declared and paid at any time in the future. See Note 6, “Long-Term Debt,” to the accompanying consolidated financial statements for a description of restrictions on the payment of dividends.

Cash Flows

Cash Flows from Operating Activities - Net cash provided by operating activities was approximately $567.4 million for 2025. The cash provided by operations for 2025 consisted primarily of net income (less non-cash items), a decrease in receivables and other assets, and an increase in notes payable - floor plan - trade. Net cash provided by operating activities was approximately $109.2 million for 2024. The cash provided by operations for 2024 consisted primarily of net income (less non-cash items) and an increase in other assets and trade accounts payable, partially offset by a decrease in inventories.

We arrange our inventory floor plan financing through both manufacturer captive finance companies and a syndicate of manufacturer-affiliated captive finance companies and commercial banks. Our floor plan financed with manufacturer captives is recorded in the consolidated balance sheets as notes payable - floor plan - trade (with the change in balance being reflected in operating cash flows). Our dealerships that obtain floor plan financing from a syndicate of manufacturer-affiliated captive finance companies and commercial banks record their obligation in the consolidated balance sheets as notes payable - floor plan - non-trade (with the change in balance being reflected in financing cash flows).

Net cash provided by combined trade and non-trade floor plan financing was approximately $33.4 million for 2025. Net cash used in combined trade and non-trade floor plan financing was approximately $269.6 million for 2024. Accordingly, if all changes in floor plan notes payable were classified as an operating activity (to align changes in floor plan liability balances with the associated changes in inventory balances for cash flow classification), the result would have been net cash provided by operating activities of approximately $581.8 million and $367.3 million for 2025 and 2024, respectively.

Cash Flows from Investing Activities - Net cash used in investing activities was approximately $499.0 million and $178.3 million for 2025 and 2024, respectively. The use of cash during 2025 was comprised primarily of the purchase of five businesses, net of cash acquired, and purchases of land, property and equipment. The use of cash during 2024 was comprised primarily of the purchase of land, property, and equipment and the purchase of three businesses (including real property), net of cash acquired, offset partially by the proceeds from the sale of two franchised dealerships.

Cash Flows from Financing Activities - Net cash used in financing activities was approximately $106.1 million for 2025. Net cash provided by financing activities was approximately $84.3 million for 2024. For 2025, cash used in financing activities was comprised primarily of payments on long-term debt, purchases of treasury stock and payments of dividends, offset partially by proceeds from the issuance of long-term debt. For 2024, cash provided by financing activities was comprised primarily of net borrowings on notes payable - floor plan - non-trade, offset partially by scheduled principal payments of long-term debt.

Proceeds from mortgage financing (excluding the effects of any refinancing with zero net proceeds) were $149.1 million and $78.0 million in 2025 and 2024, respectively, as required under the Mortgage Facility and Sidecar Facility in order to achieve full term loan utilization.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

One metric that management uses to measure operating performance is Adjusted EBITDA (a non-GAAP financial measure) for each of our reportable segments and on a consolidated basis. We believe Adjusted EBITDA enables our operating performance to be compared across reporting periods on a consistent basis by excluding non-floor plan financing costs, non-cash items such as depreciation and amortization, stock-based compensation expense, and impairment charges, and other items that may affect the comparability of reporting periods, including, but not limited to, gains or losses from acquisitions or dispositions, facility exit costs, severance and long-term compensation charges, and storm damage charges. This non-GAAP financial measure is reconciled to net income (loss) (the nearest comparable GAAP financial measure) in the table below:

Year Ended December 31, 2025

Year Ended December 31, 2024

Franchised Dealerships Segment

EchoPark Segment

Powersports Segment

Total

Franchised Dealerships Segment

EchoPark Segment

Powersports Segment

Total

(In millions)

Net income (loss)

$

118.7 

$

216.0 

Income tax (benefit) expense

54.1 

40.1 

Income (loss) before taxes

$

150.2 

$

27.9 

$

(5.3)

$

172.8 

$

256.4 

$

0.8 

$

(1.1)

$

256.1 

Non-floor plan interest (1)

99.1 

1.6 

2.8 

103.5 

107.0 

2.6 

2.6 

112.2 

Depreciation & amortization (2)

144.4 

20.4 

5.3 

170.1 

130.0 

21.6 

4.3 

155.9 

Stock-based compensation expense

23.1 

— 

— 

23.1 

21.3 

— 

— 

21.3 

Gain on exit of leased dealerships

— 

— 

— 

— 

— 

(3.0)

— 

(3.0)

Impairment charges

165.9 

0.2 

7.6 

173.8 

1.2 

2.7 

— 

3.9 

Loss on debt extinguishment

— 

— 

— 

— 

0.6 

— 

— 

0.6 

Severance and long-term compensation charges

— 

— 

— 

— 

2.2 

2.9 

0.5 

5.6 

Acquisition and disposition related loss (gain)

5.5 

(0.9)

1.1 

5.6 

(3.8)

(2.5)

— 

(6.3)

Closed store accrued expenses

— 

— 

— 

— 

— 

2.1 

— 

2.1 

Storm damage charges

5.0 

— 

— 

5.0 

8.3 

— 

— 

8.3 

Excess compensation related to CDK outage

— 

— 

— 

— 

13.0 

0.4 

— 

13.4 

Cyber insurance proceeds

(40.0)

— 

— 

(40.0)

(10.0)

— 

— 

(10.0)

Loss on legal settlements

0.7 

— 

— 

0.7 

— 

— 

— 

— 

Adjusted EBITDA (3)

$

553.9 

$

49.2 

$

11.5 

$

614.6 

$

526.2 

$

27.6 

$

6.3 

$

560.1 

Note: Due to rounding, segment level financial data may not sum to consolidated results.

(1)Includes interest expense, other, net in the accompanying consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in (2) below.

(2)Includes the following line items from the accompanying consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium amortization.

(3)Adjusted EBITDA is a non-GAAP financial measure.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Future Liquidity Outlook

Our future contractual obligations are as follows, based on the earlier of stated contractual obligation or possible expected payment date:

2026

Thereafter

(In millions)

Notes payable - floor plan

$

1,932.7 

$

— 

Long-term debt (1)

52.4 

1,582.8 

Letters of credit

11.2 

— 

Estimated interest payments on floor plan facilities (2)

17.3 

— 

Estimated interest payments on long-term debt

78.2 

232.1 

Operating leases (net of sublease proceeds)

59.3 

402.2 

Construction contracts

20.9 

— 

Other purchase obligations (3)

81.9 

35.8 

Liability for uncertain tax positions (4)

— 

6.1 

Total

$

2,253.9 

$

2,259.0 

(1)Long-term debt amounts consist only of principal obligations, excluding debt issuance costs.

(2)Floor plan facility balances are correlated with the amount of vehicle inventory and are generally due at the time that a vehicle is sold. Estimated interest payments were calculated using the December 31, 2025 floor plan facility balance, the weighted-average interest rate for the three months ended December 31, 2025 of 5.33% and the assumption that floor plan balances at December 31, 2025 would be relieved within 60 days in connection with the sale of the associated vehicle inventory.

(3)Other purchase obligations include contracts for real estate purchases, office supplies, utilities, acquisition-related obligations and various other items or other services.

(4)Amount represents recorded liability, including interest and penalties, related to “Accounting for Uncertain Income Tax Positions” in the ASC. See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 7, “Income Taxes,” to the accompanying consolidated financial statements.

We believe our best sources of liquidity for operations and debt service remain cash flows generated from operations combined with availability under our Credit Facilities (including the Floor Plan Facilities), Mortgage Facility and Sidecar Facility (or any replacements thereof), real estate mortgage financing, selected dealership and other asset sales, along with our ability to raise funds in the capital markets through offerings of debt or equity securities. Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

Seasonality

Our operations are subject to seasonal variations. Due in part to our franchised dealerships brand mix, the first quarter historically has contributed less operating profit than the second and third quarters, while the fourth quarter historically has contributed the highest operating profit of any quarter. Weather conditions and the timing of manufacturer incentive programs and model changeovers cause seasonality and may adversely affect vehicle demand and, consequently, our profitability. Comparatively, parts and service demand has historically remained stable throughout the year.

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SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Guarantees and Indemnification Obligations

In connection with the operation and disposition of our dealerships, we have entered into various guarantees and indemnification obligations. When we sell dealerships, we attempt to assign any related lease to the buyer of the dealership to eliminate any future liability. However, if we are unable to assign the related leases to the buyer, we will attempt to sublease the leased properties to the buyer at a rate equal to the terms of the original leases. In the event we are unable to sublease the properties to the buyer with terms at least equal to our leases, we may be required to record lease exit accruals. As of December 31, 2025, our future gross minimum lease payments related to properties subleased to buyers of sold dealerships totaled approximately $2.3 million. Future sublease payments expected to be received related to these lease payments were approximately $2.4 million at December 31, 2025.

In accordance with the terms of agreements entered into for the sales of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $3.0 million as of December 31, 2025 and $2.2 million as of December 31, 2024. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at December 31, 2025.

We expect the aggregate amount of the obligations we guarantee to fluctuate based on dealership disposition activity. Although we seek to mitigate our exposure in connection with these matters, these guarantees and indemnification obligations, including environmental exposures and the financial performance of lease assignees and sublessees, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on our liquidity and capital resources. See Note 12, “Commitments and Contingencies,” to the accompanying consolidated financial statements for further discussion regarding these guarantees and indemnification obligations.

Legal Proceedings

We are involved, and expect to continue to be involved, in various legal and administrative proceedings arising out of the conduct of our business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although we vigorously defend ourselves in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of our business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.

There were no significant liabilities related to legal matters as of December 31, 2025 and December 31, 2024.

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SONIC AUTOMOTIVE, INC.