EchoPark of Charlotte, which employs about 65 people, is just an eight-minute drive from a CarMax store. And Dyke said Sonic wants EchoPark to be compared to CarMax, the nation's largest used-vehicle retailer, which has more than 200 stores nationally.
"CarMax deserves a competitor and one that's gonna be good for the industry, one that's healthy," Dyke said. "And we believe we're that answer."
The Charlotte store, a medium-size EchoPark outlet, is selling about 400 units a month.
Sonic CEO David Smith believes each EchoPark store has room to grow sales, and he wants to focus on quality growth. Sales from the company's existing footprint of eight stores have grown. In June, the company said it had customers shopping at its stores from 121 U.S. markets. That's grown to more than 140 markets as of October.
Sonic plans to add four EchoPark outlets by the end of 2020, including one slated to open late this year in Signal Hill, Calif., near Los Angeles.
EchoPark has been profitable for three straight quarters this year, posting pretax profit of $2.1 million in the third quarter. It's taken EchoPark five years to find financial success.
"We knew from the beginning we would make mistakes," Smith said.
The company has shuttered some service centers in Colorado and decided for now to scrap service at EchoPark stores because of complexity and cost, instead pointing guests to franchise Sonic stores, Dyke said.
Most of EchoPark's profitability comes from the money it makes through finance and insurance products and services. Tables at EchoPark feature laminated Ally sheets discussing Premier Protection Guard products.
In the third quarter, EchoPark's total front-end and F&I gross profit per unit retailed was up 26 percent to $2,264. Jefferies analyst Bret Jordan, in a note to investors last month, said EchoPark's same-store total profit per car at $2,151 in the third quarter, included a $201 loss on the vehicle sale and $2,352 of F&I gross profit per car.
Stephens analyst Rick Nelson wrote in a note to investors in June that Sonic overhauled its strategy for EchoPark in the third quarter of 2018, looking to drive volume at the expense of used-vehicle gross profits and would focus on F&I. Nelson wrote that $600 to $800 of its gross profit per unit is generated through financing and $1,500 through service contracts.
"The EchoPark model targets GPU of $2,150," Nelson wrote. "Using this pricing strategy, the company believes it can price vehicles at a $2,000 to $2,500 discount to competitors, driving significant store traffic."
To serve its guests, Charlotte EchoPark hired people with good customer service experience, including people who previously worked for Apple, Verizon and Best Buy, said Karen Westervelt, head of sales for EchoPark in Charlotte. Turnover at the store is negligible, Dyke said.