Inventories and Related Notes Payable - Floor Plan |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Text Block] | Inventories and Related Notes Payable - Floor Plan Inventories consist of the following:
(1)Service loaner inventory includes approximately $22.7 million and $18.3 million as of December 31, 2023 and December 31, 2022, respectively, related to vehicles that are leased directly from the manufacturer on a short-term basis. A corresponding liability is included within notes payable, floor plan - trade on the accompanying consolidated balance sheets.
We finance all of our new and certain of our used vehicle inventory through standardized floor plan facilities with either: (1) certain manufacturer captive finance companies or (2) a syndicate of manufacturer-affiliated captive 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 currently bear interest at variable rates based on either one-month Term SOFR or prime plus an additional spread, depending on the lender arrangement. The weighted-average interest rate for our new vehicle floor plan facilities was 6.36%, 1.09% and 0.74% for 2023, 2022 and 2021, respectively. Our floor plan interest expense related to the new vehicle floor plan arrangements is partially offset by amounts received from manufacturers in the form of floor plan assistance capitalized in inventory and charged against cost of sales when the associated inventory is sold. For 2023, 2022 and 2021, we recognized a reduction in cost of sales of approximately $58.7 million, $51.5 million and $46.5 million, respectively, related to manufacturer floor plan assistance.
The weighted-average interest rate for our used vehicle floor plan facilities was 6.76%, 3.87% and 1.75% for 2023, 2022 and 2021, respectively.
The new and used vehicle floor plan facilities are collateralized by vehicle inventory and other assets, excluding goodwill and other intangible assets, of the relevant dealership subsidiary. The new and used vehicle floor plan facilities contain a number of covenants, including, among others, covenants restricting us with respect to the creation of liens and changes in ownership, officers and key management personnel. We were in compliance with all of these restrictive covenants as of December 31, 2023.
Sonic participates in a program with its syndicated floor plan lender wherein Sonic maintains a deposit balance with the lender that earns floor plan interest rebates based on an agreed upon rate. The deposit balance was $345.0 million and $272.0 million as of December 31, 2023 and 2022, respectively, and is included in other current assets in the Consolidated Balance Sheets. The interest rebate as a result of this deposit balance is classified as a reduction in interest expense, floor plan in the accompanying consolidated statements of income. In 2023, 2022 and 2021, the reduction in interest expense, floor plan was approximately $19.4 million, $4.1 million and $1.3 million, respectively.
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