Sonic Automotive Inc. is negotiating with auto lenders and F&I product administrators to provide private-label retail financing and F&I products for its new EchoPark stand-alone used-car dealerships, says Jeff Dyke, Sonic’s executive vice president of operations.
He also says the EchoPark stores will receive flat fees from lenders.
Sonic has already said it will open its first used-car store late this fall in the Denver suburb of Thornton, Colo. That main hub will be followed by satellite stores in Centennial, Highlands Ranch and two other suburbs of Denver. Sonic, of Charlotte, N.C., ranks fourth on Automotive News’ list of the top 125 U.S. dealership groups with retail sales of 132,363 new vehicles in 2013.
Last week Dyke discussed Sonic’s F&I plans for the EchoPark dealerships as well as for its new-car stores with Automotive News Special Correspondent Jim Henry.
You’re hunting for preferred lenders right now. Is that just for the EchoPark used-car stores, or is that for all of Sonic Automotive?
Right now, it’s just for EchoPark. We are developing a Sonic Financial Services plan, but [we are] a couple of years away from that.
How many lenders are you talking to, and can you say who they are?
We’re getting close. We’re talking to five possibilities, but I can’t tell you their names yet.
Are you looking for a full-spectrum lender that will cover all risk tiers from prime to subprime, or are you looking at specialists?
It’s hard to find somebody who buys and understands both.
Will you have more than one preferred lender?
It’s most likely going to be one or two -- three, at the most. It can take a bunch of different lenders.
When you say preferred lender, does that mean you’re looking for a private-label arrangement?
It will be private-label. Our brand will be on the financing.
What brand is that -- EchoPark, Sonic, or something else?
For EchoPark, it will be EchoPark-branded.
That’s for the financing. Are you also working with an F&I administrator?
Service contracts will be private-label as well.
You have a lot going on with the One Sonic-One Experience program -- in which there’s no haggling and the aim is to do the whole sales process in under an hour. Are you trying new things to speed customers along at EchoPark stores, too? A shorter F&I menu, maybe?
It won’t be a menu like you traditionally see today. We have an algorithm where -- based on lifestyle questions we ask early in the process, before a customer gets to F&I -- we can determine a menu for that customer based on what products are most likely to be bought. It will rank, probably, three products.
On the financing options, EchoPark is going to be a flat fee. We will receive flat fees from the lenders. There is not going to be a commission structure. We pay our associates a salary plus a bonus for customer satisfaction and store performance. It’s going to be as simple and straightforward as possible for the customer.
You can reach Jim Henry at firstname.lastname@example.org