Sonic Automotive Inc.'s strategic review of its EchoPark used-vehicle operation reveals just how much potential the retailer's leaders think the business has.
Growth projections provided by Sonic executives for EchoPark last week would put the size of that unit at 2 million vehicles sold annually a decade from now. That's more than twice the volume that used-car megaretailer CarMax sells now. One analyst covering Sonic speculated that the EchoPark review could be the precursor to a spinoff of the rapidly growing business.
Sonic launched EchoPark in 2014 as a used-vehicle store in the Denver market, and the business has since expanded to 29 locations nationwide. EchoPark sold 40,931 vehicles in the first half of 2021. The unit lost money in the second quarter but has broken even or turned a profit in some previous quarters starting with the first quarter of 2019.
Sonic, the nation's seventh-largest new-vehicle retailer, announced last week that it's "considering a full range of potential alternatives" for EchoPark and that it has hired investment bank Lazard and U.S. law firm Kirkland & Ellis as financial and legal advisers.
Sonic didn't provide possible outcomes of the EchoPark review but indicated that it's happening because of the unit's soaring sales and revenue. "No timetable has been established for the completion of the review, and the review may not result in any transaction," Sonic noted in its statement.