March 19, 2018
www.usedcarnews.com
Franchise Chains Expand Used Operations
GROWING: This artist rendering shows a typical EchoPark store. Sonic Automotive executives said the standalone used-car stores are on track to become more than 20 percent of the chain’s pre-owned sales.
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The large, publicly traded franchise groups continue to invest more in their standalone used-car operations as they see potential for major growth. Sonic Automotive Inc. reports that its EchoPark stores grew their sales by over 2,800 units in the fourth quarter. The standalone used-car stores sold over 10,600 units for the year with nearly 4,500 units retailed in the fourth quarter. EchoPark brand has become nearly 20 percent of Sonic’s total preowned volume. “We fully expect EchoPark to eclipse the volume we currently produce in our Sonic franchised dealerships over the next few years,” said Jef Dyke, Sonic’s executive vice president of operations.
Sonic expects to open a third EchoPark store in San Antonio, two stores in the Charlotte market, and its irst EchoPark store in Houston during 2018. The vast majority of the company’s capital spending in 2018 will support the expansion of its EchoPark brand. Meanwhile, Penske Automotive Group Inc. expanded its standalone used vehicle supercenter business in January, acquiring one of the U.K.’s leading retailers of used vehicles called The Car People. The chain operates four large-scale retail locations in Northern England. “The acquisition of The Car People enables us to accelerate the expansion of our Used Car Supermarket Division and reinforces our commitment to signiicantly grow
our used car business,” said Warren Edwards, CEO of Penske Automotive Group’s U.K. operations, when the deal was announced in December. Last year, Penske bought the CarShop chain in the U.K. CarShop has been in operation since 1999 and has ive large-scale retail locations operating in Cardif, Swindon, Northampton, Norwich and Doncaster, plus a 15-acre vehicle preparation center in Leighton Buzzard. CarShop has received numerous awards, including being named U.K. Car Supermarket of the year for two years in a row. The overseas expansion follows Penske’s launch of a standalone used-car brand in the U.S. that included the acquisition of a group on the East Coast.
The Car People sells approximately 18,000 vehicles annually and is expected to generate estimated annualized revenues of approximately $300 million. On a combined basis, the U.S. and U.K. based supercenter operations are expected to retail more than 70,000 vehicles and generate approximately $1 billion in annualized revenues. A year ago, Penske completed the acquisition of CarSense, a standalone specialty retailer of used vehicles in the United States. CarSense has ive locations operating in the Philadelphia and Pittsburgh, Pennsylvania, market areas, including southern New Jersey. CarSense focuses on reconditioning and retailing high-quality, latemodel used vehicles at no-haggle prices.
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