One hundred stores would only be the “tip of the iceberg” for the pre-owned retail specialty store program announced Monday morning by Sonic Automotive.

“Think bigger than that, is what I would tell you,” said Jeff Dyke, Sonic’s executive vice president of retail operations, when asked by an analyst about the potential size of its new program during a conference call Monday.

“This is a huge opportunity and this is a team that we’ve put together on the pre-owned side that has a ton of experience in doing this. Think bigger; we’re thinking bigger,” Dyke continued.

As detailed here on Auto Remarketing.com, Sonic said it plans to begin opening  stand-alone pre-owned specialty retail sales locations next year.  This pre-owned business will be run separately from Sonic’s existing new and used dealership sales operations, the company said.

Sonic is planning to open its first pre-owned specialty retail store in the Denver market late next year, and intends on taking it national in coming years.

The company said it has been working on developing this program for the past five to seven years, patiently putting all the pieces together.
 
After announcing this program, Sonic held a conference call to discuss the news, along with its latest quarterly earnings results and its plans for a “One Sonic-One Experience” guest experience initiative to be rolled out in 2014 next year.

As one might expect, CarMax came up quite a bit during the call.

“CarMax is a great big company that we’ve got a lot of respect for. They’ve done a good job, but they’re all by themselves,” Dyke said. “And it’s time for a new player in this arena.”

As for that aforementioned store-count target, he said: “We believe that we 100 stores is the tip of the iceberg.”

Dyke added: “This has become a national brand. We’re going to go from coast to coast, from the South to the North and take advantage of the massive opportunity that’s out there.

“And we all know it’s there, but not everybody has the expertise to be able to do this. That’s what special about our company. We’ve put the people together that have the experience. We don’t have any barriers to entry here,” Dyke continued.

“We’re not out looking for experience to build all this; we have it, we’ve had it … we’ve been very, very patient in developing our processes, techniques and technologies in order to bring this to life. I think you’re going to be very, very surprised when we open up towards the latter half of ’14 in the Denver market in what you see out of that city.”

Though declining to go into too much detail, Dyke also provided a glimpse at how these outlets might look.

“The model is being built a lot differently than the CarMax model, but we’ll sell all brands,” Dyke said, qualifying that by saying Sonic will likely “stay away from the Ferraris and Lamborghinis of the world.”

It will look to have a price-point range from $14,000 to $18,000 and service all brands.

“But it’s more than that. It’s the retail experience they’re going to get when they come to the facility,” he added.

“This is a very unique concept. This is not a big box on a 10-acre lot where you’ve got 1,000 or 1,500 cars sitting out there in a very traditional model,” he emphasized. “It’s a non-traditional model, and I don’t want to get into some of the details just yet, but we’re very, very excited about where we’re headed with this concept.”

Relationship With Existing Pre-Owned Ops

Addressing a question on how the stand-alone pre-owned centers and the existing pre-owned departments of its new-car stores will “co-exist,” Dyke emphasized they will “operate completely independent of each other.”

There will be two separate organizations using “the great economies of scale in terms of the technologies that we build and the processes we develop.” There will be a team to run the pre-owned concept and a team to run the core business.

“Right now, you would think that sharing of inventory and all these things might be primary on our board, but they’re not,” he noted. “We have the experience, we have the expertise, we have the ability to purchase and trade for inventory, and we’re building a brand-new stand-alone business that’s going to live and thrive all by itself.

“There’s a huge, huge market on the pre-owned side,” Dyke continued, noting how CarMax typically takes about 4 percent to 5 percent of the markets in which they compete and 1 percent of the overall U.S. market. “There’s just too much upside with the experience we have and the technology we’ve developed not to go attack that.”

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.