CHARLOTTE, N.C. -

Like any dealership that turns used vehicles, Sonic Automotive is keeping close tabs on what might be one of the most important metrics — gross profit per unit.

Sonic closed the year with a 3.1-percent dip in gross profit per used vehicle retailed, as the figure landed at $1,384.

The slight annual dip didn’t alarm Sonic executive vice president of operations Jeff Dyke because “we’ve done enough homework.” Dyke indicated that Sonic expects its gross profit in the used-vehicle department to be near $1,400, give or take $15 either up or down.

“I don't see that changing. I think we'll be right in that same ballpark as we move throughout the year,” Dyke said when Sonic reported its fourth-quarter and annual financial statements earlier this week.

“Our pre-owned business is really rolling on both sides of the table, EchoPark and Sonic. And so, we expect that to continue on,” he added.

Sonic closed the year by retailing 6.4 percent more used vehicles than in 2014, establishing a new company record at 117,123 units. And Dyke highlighted that Sonic is off to a great start in 2016 with regard to grosses on used turns.

“We’ve had a fantastic January. We're having a fantastic February from a pre-owned perspective, and margins are all in line about the same,” he said.

“You could fluctuate a little bit here and there. I guess with more off-lease cars coming, there's probably going to be a little pressure there, but nothing so drastic that it’s going to make that big a difference,” Dyke went on to say.

Nevertheless, Wall Street observers wondered if the margin pressure experienced when dealerships are trying to move new luxury models would be impacting Sonic’s efforts to turn used high-line vehicles. Dyke acknowledged there might be some impact on certified pre-owned luxury units but not non-CPO vehicles, which constitute about 30 percent of Sonic’s overall used-sales volume.

“Every car, from our perspective, has got its own unique individuality, and we sell it based on the value that our systems tell us what we can get for that vehicle, and so, we've been really consistent in our margin,” Dyke said.

“If you look not just a couple of quarters but for a long while now, we sort of target that ballpark, and we feel like that's where we get our best turn and where we gets the best volume, which overall generates the most gross dollars and related gross dollars for the category,” he went on to say.

EchoPark update

Sonic reported that its trio of EchoPark locations — the uniquely branded stores dedicated to selling only used vehicles — turned 3,225 vehicles last year. That network of stores is expected to grow quickly because of the strategy Sonic wants to employ, opening four or more stores simultaneously instead of just one at a time. Why?

The company indicated it costs at least $7 million to build a new EchoPark location, taking six months for construction that executives are hoping to shave down to four.

“One of the other reasons why we are waiting to open simultaneously is when we order the materials for construction, it’s significantly less expensive and we can move significantly faster in erecting facilities and it’s bringing the costs down for these pods,” Sonic chief executive officer Scott Smith said.

Dyke added, “And on top of that, the training that we do. We’ll train for four or five stores at one time versus training one store at a time, which reduces cost as well.”

The success thus far of Sonic’s three EchoPark locations near Denver is another reason why Dyke has high expectations for two more locations in the market that are projected to open later this year.

“We’ve learned a lot with our first three stores opening. We’re very pleased with the amount of volume and gross that we're getting out of those stores, and so it won’t be long now that we'll see a bunch more EchoPark stores up and running,” Dyke said.

Technicians and reconditioning

Sonic hired more than 200 technicians to work in its service bays a year ago. Dyke would like to bring in another 100 tech to keep dealer group operations performing at peak capacity.

“We’re working every day to bring more techs on board,” he said. “We’re always out looking for more technicians. And we have the capacity for them and we’re building more capacity in our facilities. So, no question, we’d hire more technicians.”

Part of the reason why Sonic has such a high demand for technicians is the reconditioning the company does to used vehicles.

“We have one set reconditioning standard for our vehicles at EchoPark and a set reconditioning standard for our vehicles at Sonic Automotive and we follow those to the T,” Dyke said.

“That’s one of the, we think, competitive advantages that we have,” he continued. “We have a low return ratio in terms of those cars, and we’re really focused a lot on making sure that the product that we put out on our lot is a high-quality product from a reconditioning perspective.”