August 21, 2017
www.usedcarnews.com
Sonic Speeds up EchoPark Stores Roll Out
BOOMING ECHO: Sonic Automotive Inc. shows off an artist’s depiction of its EchoPark concept. The franchise dealer group continues to roll out these used-car superstores across the country.
By Ted Craig
Rush - Dated Material
Two of the nation’s largest franchise dealership groups are headed in opposite directions with their used-car operations. Sonic Automotive Inc. announced plans to accelerate the expansion of its EchoPark used-car superstores. At the same time, Asbury Automotive Group Inc. said it would shut down its Q stores and focus on growing its digital marketing. Sonic’s EchoPark stores retailed 2,049 units, up 80.4 percent over the prior year quarter. The Colorado EchoPark stores were cash low positive in the sec-
ond quarter. Sonic now plans to accelerate expansion of an additional 15 EchoPark stores by the end of 2018. The company has purchased property in San Antonio, Houston, Austin and Dallas. Some of the stores for these markets are already under construction, with openings expected in the next 12 months. Sonic is also in the process of buying property in the Carolinas, including a former shopping center, and converting an existing store in Florida that it purchased last year. All this growth does come with a price. The existing EchoPark stores
created a net after-tax loss from operations of $4.7 million. For Asbury, the costs of operating stand-alone used-car operations outweighed any gains. Asbury is changing its focus to “alternative paths of marketing to consumers,” meaning digital. “We made an investment in an initiative to see if we could generate an additional line business that produced an attractive ROI,” said Asbury CEO Craig Monaghan. “We weren’t successful, but we don’t regret it.” Monaghan said that in the end it came down to the basics of the used-car business – inventory and
inancing. Monaghan said Asbury found itself having to pay too much at auction to stock its used-car stores. He said the company was better of selling its trades at the existing franchise stores than moving them to an of-site location. Asbury also found that many of the customers the Q stores were attracting were subprime buyers. It provides too challenging to serve these customers without a captive inance company. “We decided strategically that we did not want to be in the business of lending money to used-car buyers,” Monaghan said.
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