REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") dated as of June
30, 1997, is entered into by and among SONIC AUTO WORLD, INC., a Delaware
corporation (the "COMPANY"), O. BRUTON SMITH, a resident of the State of North
Carolina, BRYAN SCOTT SMITH, a resident of the State of North Carolina, WILLIAM
S. EGAN, a resident of the State of South Carolina and SONIC FINANCIAL
CORPORATION, a North Carolina corporation (collectively, the "STOCKHOLDERS," and
each a "STOCKHOLDER").

         WHEREAS, this Agreement is made in connection with the reorganization
of the Company, which occurred as of June 30, 1997 (the "REORGANIZATION");

         WHEREAS, in order to induce the Stockholders to enter into certain
agreements with the Company that are a part of the Reorganization, the Company
has agreed to provide the Stockholders the registration rights set forth in this
Agreement;

         WHEREAS, O. Bruton Smith, Bryan Scott Smith, William S. Egan and Sonic
Financial Corporation are each the owners of record of shares of the Company's
Class B Common Stock, par value $.01 per share (the "CLASS B COMMON STOCK");

         WHEREAS, any shares of Class B Common Stock held by a Stockholder will
be converted into an equal number of shares of the Company's Class A Common
Stock, par value $.01 per share (the "CLASS A COMMON STOCK"), pursuant to the
terms of the Company's Amended and Restated Certificate of Incorporation, which
Amended and Restated Certificate of Incorporation shall be in substantially the
form of Exhibit A hereto and will be filed with the Secretary of the State of
Delaware subsequent to the execution of this Agreement (the "RESTATED
CERTIFICATE"), upon the exercise of any rights by the Stockholder granted under
this Agreement or as otherwise provided in the Restated Certificate; and

         WHEREAS, the Company desires to afford the Stockholder with
registration rights with respect to such shares of Class A Common Stock as may
be received by the Stockholder pursuant to any conversion of the Stockholder's
shares of Class B Common Stock owned as of the date hereof or hereafter acquired
(the "CONVERTED COMMON STOCK");

         NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:

1.       DEFINITIONS.

         REGISTRATION EXPENSES: Any and all reasonable expenses actually
incurred incident to performance of or compliance with this Agreement other than
underwriting discounts and commissions and transfer taxes, if any, incurred with
respect to the Registrable Securities.

         REGISTRABLE SECURITIES: All or part of the shares of Converted Common
Stock; provided, however, that specific shares of Converted Common Stock shall
not be Registrable Securities if and to the extent that (i) a Registration
Statement with respect to such Converted Common Stock





shall have been declared effective under the Securities Act and such shares of
Converted Common Stock shall have been disposed of in accordance with such
Registration Statement, (ii) such shares of Converted Common Stock shall have
been distributed to the public in accordance with Rule 144 (or any successor
provision) promulgated under the Securities Act, or (iii) such shares of
Converted Common Stock shall have been otherwise transferred to any person other
than a Stockholder and new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company.

         REGISTRATION STATEMENT: Any registration statement of the Company filed
with the SEC which applies to any of the Registrable Securities (in whole or in
part), including the prospectus included therein, all amendments and any
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.

         SEC:  The United States Securities and Exchange Commission.

         SECURITIES ACT: The Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations of the SEC
thereunder, all as in effect at the time.

2.       REGISTRATION UNDER THE SECURITIES ACT: "PIGGYBACK" REGISTRATIONS.

         (a) RIGHT TO "PIGGYBACK". Subject to subsection 2(d) hereof, if at any
time during the ten year period commencing upon the closing of the initial
public offering of the Class A Common Stock, the Company proposes to file a
Registration Statement under the Securities Act with respect to any offering of
the Class A Common Stock, by the Company for its own account and/or on behalf of
any of its security holders (other than (i) a registration on Form S-8 or S-4 or
any successor form, (ii) a registration relating to a transaction subject to
Rule 145 or any successor provision under the Securities Act, or (iii) any
registration of securities as it relates to an offering and sale to management
of the Company pursuant to any employee stock plan or other employee benefit
plan arrangement), then, as soon as practicable (but in no event less than
fifteen (15) days prior to the proposed date of filing such Registration
Statement), the Company shall give written notice of such proposed filing to the
Stockholder, and such notice shall offer the Stockholder the opportunity to
register such number of Registrable Securities as the Stockholder may request (a
"PIGGYBACK REGISTRATION"). Subject to subsection 2(d), the Company shall include
in such Registration Statement all Registrable Securities requested within ten
(10) days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by the Stockholder) to be
included in the registration for such offering pursuant to a Piggyback
Registration (the "STOCKHOLDER'S REQUEST"); provided, however, that if, at any
time after giving written notice of its intention to register Class A Common
Stock and prior to the effective date of the Registration Statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such Class A Common Stock, the
Company may, at its election, give written notice of such determination to the
holder of Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such Class A Common Stock; and provided further that the
Stockholder's Request

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shall become irrevocable ten (10) business days prior to the closing of the
offering relating to the Piggyback Registration unless otherwise agreed by the
Company.

         (b) "PIGGYBACK" EXPENSES. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in a Piggyback Registration.
Underwriting discounts and commissions and transfer taxes, if any, incurred with
respect to the Registrable Securities shall be borne by the Stockholder.

         (c) UNDERWRITER'S AND BOARD OF DIRECTORS' CUTBACK. Notwithstanding
subsection 2(a), if a Piggyback Registration is (1) an underwritten offering
being made on behalf of the Company, or (2) an offering that is not
underwritten, and the managing underwriter or underwriters advise the Company
that in their opinion, in the case of (1) above, or the Company's Board of
Directors makes a formal determination, such determination to be entered as a
finding in the Company's corporate records, in the case of (2) above, that in
their business judgment the number of shares of Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering or would be reasonably likely to adversely affect the price or
distribution of the Class A Common Stock offered in such offering or the timing
thereof, then the shares of Class A Common Stock to be included in such
registration shall be the number of shares of Class A Common Stock, adjusted on
a pro rata basis, that, in the opinion of such underwriter or underwriters or in
the judgment of the Board of Directors, as the case may be, can be sold without
an adverse effect on the price, distribution or timing of the Class A Common
Stock to be offered.

3.       HOLD-BACK AGREEMENTS.

         (a) RESTRICTIONS ON PUBLIC SALE BY THE STOCKHOLDER. During the period
from seven days prior to the effective date of any registration statement
involving an underwritten offering to 180 days after the effective date of such
registration statement effected pursuant to Section 2, each holder of
Registrable Securities will not, without the prior written consent of the
underwriters, (i) directly or indirectly, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Registrable Securities or any securities convertible
into or exercisable or exchangeable for Registrable Securities or file any
registration statement under the Securities Act (other than the Piggyback
Registration) with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Registrable
Securities or any securities convertible into or exchangeable for Registrable
Securities, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Registrable Securities or other securities, in
cash or otherwise.

         (b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company hereby
agrees that if it shall previously have received a request for registration
pursuant to Section 2, and if such previous registration shall have become
effective and shall not have been withdrawn or abandoned, the Company shall not
effect any registration of any of its securities under the Securities Act,
whether or not for sale for its own account, until a period of 180 days shall
have elapsed from the effective date of such previous registration; and the
Company shall so provide in any registration rights agreements hereafter entered
into with respect to any of its securities.

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4. REGISTRATION PROCEDURES. In connection with the Company's obligations under
Section 2 hereof, the Company shall use it best efforts to effect or cause to be
effected the registration of the Registrable Securities under the Securities Act
to permit offers and sales in accordance with the intended method or methods of
distribution thereof. The Company may require the Stockholder to use best
efforts to furnish to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request in writing. In addition, and as a condition to the Stockholder's right
pursuant to Section 2(a), the Stockholder shall execute such underwriting
agreement and otherwise sell the Registrable Securities on the same terms as
applicable to the offering of shares pursuant to such registration generally.

5.       INDEMNIFICATION.

         (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify, to
the extent permitted by law, each holder of Registrable Securities, its officers
and directors and each person who controls such holder (within the meaning of
the Securities Act) as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         Registration Statement (or any amendment thereto), including the
         omission or alleged omission therefrom of a material fact required to
         be stated therein or necessary to make the statements therein not
         misleading or arising out of any untrue statement or alleged untrue
         statement of a material fact included in any preliminary prospectus or
         prospectus contained in the Registration Statement (or any amendment or
         supplement thereto), or the omission or alleged omission therefrom of a
         material fact necessary in order to make the statements therein, in the
         light of the circumstances under which they were made, not misleading;

                  (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or omission; provided
         that (subject to Section (d) below) any such settlement is effected
         with the written consent of the Company; and

                  (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel), reasonably incurred
         in investigating, preparing or defending against any litigation, or any
         investigation or proceeding by any governmental agency or body,
         commenced or threatened or any claim whatsoever based upon any such
         untrue statement or omissions, or any such alleged untrue statement or
         omission to the extent that any such expense is not paid under (i) or
         (ii) above; provided, however, that this indemnity agreement shall not
         apply to any loss, liability, claim, damage or expense to the extent
         arising out of any untrue statement or omission or alleged untrue
         statement or omission made in reliance upon and in conformity with
         written information furnished to the Company by any indemnified party
         expressly for use in the Registration Statement

                                        4




         (or any amendment thereto), or in any preliminary prospectus or any
         prospectus contained in the Registration Statement (or any amendment or
         supplement thereto).

In connection with an underwritten offering, the Company will indemnify and hold
harmless each underwriter and each person, if any, who controls any underwriter
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended) to the same extent as provided
above with respect to the indemnification of the holders of Registrable
Securities.

         (b) INDEMNIFICATION OF THE COMPANY AND ITS DIRECTORS AND OFFICERS. In
connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder will furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with any such registration statement or prospectus and, to the
extent permitted by law, will indemnify the Company, its directors and officers
and each Person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify will be several, not joint and
several, among such holders of Registrable Securities and the liability of each
such holder of Registrable Securities will be in proportion to and limited to
the net amount received by such holder from the sale of Registrable Securities
pursuant to such registration statement.

         (c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to subsection 5(a) above,
counsel to the indemnified parties shall, subject to the terms of any applicable
underwriting agreement, be selected by the Company with the consent of the
indemnified parties, such consent not to be unreasonably withheld and, in the
case of parties indemnified pursuant to subsection 5(b) above, counsel to the
indemnified parties shall be selected by the indemnifying parties with the
consent of the indemnified parties, such consent not to be unreasonably
withheld. An indemnified party may participate at its own expense in the defense
of any such action. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of judgment with respect
to any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 5 (whether or
not the indemnified parties are actual or potential parties

                                        5




thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

         (d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
subsection 5(a)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

         (e) CONTRIBUTION. If for any reason the foregoing indemnity is
unavailable or is insufficient to hold harmless an indemnified party under
Sections 5(a) or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any claim in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, with respect to such offering of securities. The relative fault shall be
determined by reference to, among other things: whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. If, however, the allocation provided in the second preceding sentence
is not permitted by applicable law, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative faults but also
the relative benefits of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
subsection 5(e) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the preceding sentences of this subsection 5(e). The amount paid
or payable in respect of any claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything in this subsection 5(e)
to the contrary, no indemnifying party (other than the Company) shall be
required pursuant to this Section 5 to contribute any amount in excess of the
net proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the losses, claims, damages or liabilities
of the indemnified parties relate, less the amount of any indemnification
payment made pursuant to Sections 5(a) and (b).

         (f) SURVIVAL OF INDEMNIFICATION OBLIGATIONS. The indemnification
provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on

                                        6




behalf of the indemnified party or any officer, director or controlling person
or such indemnified party and will survive the transfer of securities and the
termination of this Agreement.

6.       MISCELLANEOUS.

         (a) NO INCONSISTENT AGREEMENTS. The Company has not entered into and
will not on or after the date of this Agreement enter into any agreement with
respect to the Class A Common Stock which is inconsistent with the rights
granted in this Agreement to the Stockholders or otherwise conflicts with the
provisions hereof.

         (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent to such amendment,
modification, or supplement or waiver or consents to the departure of the
Stockholders.

         (c) NOTICES. All notices and other communications provided for or
permitted under this Agreement shall be in writing and given by personal
delivery, or, if mailed, by certified first-class mail, postage prepaid, or by
telex or telecopier with transmission confirmed by telephone:

                  (i) if to a Stockholder, at the most current address given by
         the Stockholder to the Company by means of a notice given in accordance
         with the provisions of this Section 6(c).

                  (ii) if to the Company, at the most current address given by
         the Company to the Stockholder by means of a notice given in accordance
         with the provisions of this Section 6(c).

         (d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         (e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

         (f) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina.

         (g) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

         (h) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective

                                        7




permitted successors and assigns of the parties hereto whether so expressed or
not. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the holders of
Registrable Securities are also for the benefit of, and enforceable by, any
subsequent permitted holder of Registrable Securities. The Stockholders are
expressly permitted hereunder to assign their rights under this Agreement to any
member of the Smith Group, as defined in the Company's Restated Certificate.




                    [Signatures begin on the following page]




                                        8



         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                  SONIC AUTO WORLD, INC.


                                  By:    /s/
                                           Theodore M. Wright, Vice President




                                      /s/
                                  O. BRUTON SMITH




                                      /s/
                                  BRYAN SCOTT SMITH




                                      /s/
                                  WILLIAM S. EGAN



                                  SONIC FINANCIAL CORPORATION


                                  By:     /s/
                                           William R. Brooks, Vice President

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