CHARLOTTE, N.C. –
Sonic Automotive said Thursday its board of directors has begun a review of “potential strategic alternatives” for its EchoPark Automotive standalone used-car store program, given the success in the program’s strategy and “our confidence in our runway for continued expansion.”
Sonic’s board is working with Lazard as its financial advisor in this process and Kirkland & Ellis, LLP as its legal advisor.
In a news release on Sonic’s latest quarterly earnings report, the retailer said it is, “considering a full range of potential alternatives with respect to its EchoPark business.”
Sonic has not set a timeline for the review to be completed and noted that it may not result in a transaction.
“The company does not intend to disclose further developments with respect to its review process unless and until its board approves a specific action or otherwise concludes the review,” Sonic said.
During the second quarter, EchoPark pulled an all-time record revenue of $595.6 million, beating year-ago figures by 88.9% and up 104.2% from Q2 2019.
EchoPark also had a best-ever sales volume, moving 21,261 units during the quarter for a 61.0% year-over-year gain. That also beats Q2 2019 figures by 68.9%.
EchoPark’s pre-tax loss came in at $14.4 million, which included a $6.6 million market expansion-related loss. Its adjusted EBITDA loss was $9.4 million for the quarter, which included a market expansion-related loss of $5.4 million
“EchoPark loss reflects expansion-related losses and the effect of strategic price management to grow top-line sales and market share amidst temporary used market pricing inversion,” the company said in a news release.
Sonic and EchoPark president Jeff Dyke said in the release that the company has completed half of its national EchoPark distribution network and digital expansion plan for the year. Sonic is projecting EchoPark to have population coverage of 25% by year’s end, with 90% coverage reached in the next four years.
“ At 10% share of our segment of the market, which we already exceed in our more mature markets, this represents a 2 million vehicle annual sales opportunity at maturity. Complementing this, we are making excellent progress with our new, proprietary digital retail platform and are on track for a fourth quarter 2021 launch,” Dyke said.
“In the meantime, our guest-centric EchoPark buying experience continues to drive market share gains and we anticipate our market penetration and brand recognition will continue to grow rapidly in tandem with our nationwide network.”
Auto Remarketing caught up with Dyke on Thursday afternoon following the earnings call. Stay tuned for more on EchoPark’s growth.