By Gabrielle Coppola and Bloomberg
February 23, 2019

One of the largest U.S. auto dealers just had a rough quarter selling BMWs, and a top executive said Tesla Inc. played a major role.

Sonic Automotive Inc., the fifth-largest U.S. dealership group, reported fourth-quarter profit Wednesday that missed analysts’ estimates. Jeff Dyke, Sonic’s president, said “challenging” times for BMW AG and Honda Motor Co. were partly to blame. Many of Sonic’s stores selling those companies’ brands are in California, the home of Tesla’s headquarters and by far the largest market for the Model 3 sedan.

When asked by an analyst whether Tesla factored in BMW’s challenges, Dyke answered on Sonic’s earnings call: “There’s no question.”

“I’ve spent a lot of time in manufacturing meetings, and five years ago, Tesla was just not even a real big topic,” Dyke said. “Today, it’s at the top of everybody’s board, and it needs to be.”

Tesla has eschewed a traditional dealership network in favor of direct sales from its stores and through online ordering. While other retailers have criticized CEO Elon Musk’s approach and said it may be slowing the electric-car maker’s deliveries and repairs, Dyke gave the billionaire credit.

“You can say all that you want about their service problems and all, they’ll just keep selling more cars, and I don’t know if it’s more of a cult than anything else,” Dyke said. “My hat off to them — they’re selling a lot of cars, and there is no question in California that it’s getting in our shorts.”

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