Sonic Automotive Inc. expects to rapidly grow its standalone used-only EchoPark brand to $14 billion in revenue and 575,000 sales in five years — from $1.2 billion and nearly 50,000 in sales in 2019 — as it adds 130 distribution points and dealerships to its current 11.
The quickened pace and breadth of Sonic’s EchoPark plan includes adding about 25 dealerships in five years, plus 20 delivery and buying centers annually for five years, Sonic President Jeff Dyke said.
“We just think it’s a great way to deliver a fantastic guest experience, customer experience, but also maintain a cost structure and the model that will allow us to do it profitably,” Sonic CEO David Smith told Automotive News.
The delivery and buying centers — where vehicles sold online can be picked up and customers can sell vehicles to EchoPark — are smaller than EchoPark stores. They cost $1 million to $2 million, compared with $7 million to $25 million to build a full EchoPark dealership, Sonic said.
The centers will have around seven staff members and are projected to each sell 300 vehicles a month. EchoPark stores average 750 to 1,500 sales monthly.
EchoPark’s first center opened July 24 in Greenville, S.C. It’s part of Sonic’s Century BMW-Mini dealership, but a separate building is planned, Dyke said.
Sonic also expects this year to open centers in Austin, Texas, and Columbia, S.C., Dyke said.
Sonic plans to add three to four EchoPark stores this year and four to six in 2021. The company had said it planned for 25 or more EchoPark locations through 2024.
Sonic, the nation’s sixth-largest new-vehicle retailer, said last week it has partnered with Cox Automotive and Darwin Automotive to create a digital retailing platform, in part, to quicken and grow EchoPark’s revenue expansion. The platform is expected to be available in the fourth quarter, also for Sonic’s franchised dealerships.
“A huge part of getting there is going to be having this omnichannel online experience where most of the cars are going to be sold online,” Smith said.
Omnichannel approaches allow a customer to seamlessly shop and buy vehicles through digital platforms and in stores.
Last month, AutoNation Inc., the nation’s largest new-vehicle retailer, said it plans to spend as much as $220 million to add 20 or more AutoNation USA used-only stores over the next three years, to its current five sites. AutoNation said the new locations will not have large service departments but will include reconditioning centers.
Meanwhile, Penske Automotive Group, the nation’s second-largest new-vehicle retailer, last week said it expects to open three used-only supercenter locations in 2021, and another store in early 2022. The company operates six supercenters in the U.S. and 10 in the United Kingdom, but said in May it had to halt supercenter construction plans this year because of the coronavirus pandemic.
Like Sonic, Penske also wants enhanced online omnichannel sales capabilities for used vehicles. That could include a separate brand, and more could be announced in the next few quarters, CEO Roger Penske told Automotive News.
Penske has U.S. supercenters under development in Phoenix and near Princeton, N.J., and plans to continue building three to four new centers annually.
“What we want to do is build stores that have service departments and also reconditioning capabilities,” Penske said. “And with that, we think the customer’s stickier. Because remember this is a $15,000 to $16,000 customer, and he needs a place to go. And we feel if he’s sticky and wants to do his work with us, and we have body shop capabilities, we have reconditioning and we have service, it’s a different strategy.”