"That's causing a lot more competitive issues and pushing the prices up," Dyke said.
Vehicles that previously cost EchoPark $21,000 to buy in an auction lane now cost around $31,000, he said.
EchoPark, which launched in 2014 in Denver and now operates 38 locations nationwide, historically targeted pricing its used vehicles up to $3,000 below market to attract customers.
But the price surges, at both wholesale and retail, on late-model used vehicles have made it harder to keep EchoPark's typical customer in the fold. The resulting higher average monthly payments have driven some away and others into the new-vehicle market, Dyke said.
"Customers are either deciding they're gonna wait to see what happens if prices come back down or ... because it's so close to a new-car payment, they're moving to a new car," he said.
EchoPark already has expanded the top of its target vehicle age range to 8 years in San Antonio. About half of the inventory at the company's store there is on the older side, Dyke said.
Expanding EchoPark's inventory model is going to require the retailer to retool, Dyke said, in part to handle additional reconditioning requirements created by selling older vehicles.
"We've got to hire some different technicians, put in a few different parts processes in order to handle that," he said.
But the new approach will give EchoPark more opportunity to buy vehicles directly from consumers, which is a growing focus for most car retailers.
"We're going to be able to buy more cars off the street," Dyke said. "And that kind of fits into the glove of what we're trying to create now, in particular for the next few quarters and maybe ... on into the middle of next year as we figure out what's going to happen in the used-car inventory environment."
