In addition to announcing its first EchoPark Automotive retail hub location in Nevada this week, Sonic Automotive said Thursday that starting Sept. 1, it will increase its minimum employee wage to $15 an hour.
The retailer has approximately 8,500 teammates working at its franchised dealerships and EchoPark locations across the country.
“Our people are our greatest asset, and we are proud to be able to give our teammates across the country the ability to earn a minimum wage of $15 an hour and to ensure they are paid above average for the industry,” Sonic and EchoPark chief executive David Smith said in a news release.
“As Sonic and EchoPark reach new heights and achieve record-breaking performance levels, we want to show our teammates how much we value their contributions,” Smith said. “Moreover, this increase, coupled with the full spectrum of benefits we provide our associates, furthers our position as an employer of choice that attracts and retains the best possible talent.”
Moving over to the expansion news, Sonic said Tuesday it has opened a retail hub in Las Vegas. The store is 20,500 square feet and will have roughly 40 employees once fully staffed. Just last week, Sonic opened an EchoPark delivery center in Austin, Texas, its seventh EchoPark facility in the state.
“The opening of EchoPark Las Vegas is a key component of the company’s ongoing growth strategy, as we continue to execute our accelerated expansion plan to meet the strong demand for pre-owned vehicles across the nation,” Sonic and EchoPark president Jeff Dyke said in release.
Jim Ellis adds Cadillac store
Sonic isn’t the only group expanding. Jim Ellis Automotive Group announced Tuesday that it has added Cadillac to its franchise roster.
The group has opened Jim Ellis Cadillac of Atlanta, located at 5880 Peachtree Blvd. in Chamblee, Ga., between the Jim Ellis Chevrolet and Buick GMC stores.
As such, this is the only General Motors dealership campus in the Atlanta area that includes all of the GM brands, the group said.
“We are pleased to be able to offer our clients the convenience of all GM brands in one Atlanta location,” Jim Ellis Automotive Group president Jimmy Ellis said in a news release. “I believe that Cadillac owners and prospects will appreciate the legendary Jim Ellis customer experience they can now get in Atlanta.”
The store is the Jim Ellis group’s 21st overall dealership. With the addition of Cadillac, the retailer now has 17 brands.
There’s a strong connection between the auto industry and motorsports — particularly among dealership groups — and one Michigan auto retailer is adding to it this weekend.
With its sponsorship of driver Josh Bilicki of Rick Ware Racing, Sunday’s Firekeepers Casino 400 at the Michigan International Speedway will mark the first time that Zeigler Auto Group will be a full primary sponsor in the NASCAR Cup Series.
Bilicki had previously competed in an Xfinity NASCAR series race with combined sponsorship from Zeigler and Marriott Companies.
In addition to Sunday’s race, Zeigler is hosting a meet-and-greet with Bilicki from noon to 4 p.m. (ET) on Saturday at Zeigler Motorsports in Kalamazoo, Mich.
"I am very excited to be teaming up with Zeigler Auto Group and Zeigler Motorsports at Michigan International Speedway this year. This seemed to be a very natural fit, for several different reasons,” Bilicki said in a news release.
“Zeigler Auto Group is expanding into my home state of Wisconsin, which is very exciting for me to have them close to my home,” he said. “Another reason is my love for all things with a motor which aligns perfectly with everyone at Zeigler Motorsports, from my background racing go-karts and motocross, to riding snowmobiles and more.”
Zeigler Auto Group has bought nine dealerships in the last 16 months, including the purchase of four stores in Wisconsin late last month that marked its first acquisition in the state.
“With Zeigler continuing to expand into other states — most recently Josh’s home state of Wisconsin — it is now more meaningful than ever for us to have someone like Josh represent Zeigler in a NASCAR race right here in our own backyard in Michigan,” Zeigler Auto Group president and owner Aaron Zeigler said.
“Besides being very talented and hardworking, Josh is an overall great guy. I know that the community will be very excited to get to meet him in person at our event on Saturday,” Zeigler said.
Karma adds to dealership network with Big Apple store
In other dealer-related news, Karma Automotive has partnered with the Manhattan Motorcars Inc. — a retailer of luxury and performance vehicles in New York — to add a new store to the automaker’s dealer network.
Karma Manhattan will be part of the Manhattan Motorcars network. This is the fifth dealer partner Karma has added in the last seven months.
“We are excited to have Manhattan Motorcars join the Karma dealership network,” Karma Manhattan principle Brian Miller said in a news release. “There has never been a better time to buy an electric car in New York State. We look forward to sharing Karma's brand and products with our clients and providing them the unique luxury electric vehicle experience that they are looking for.”
Joost de Vries, Karma's vice president of global sales and customer experience, said in the release: “The Northeastern United States — and New York State in particular — is an important area for Karma as we look to share our vision for a high-tech and sustainable future. Manhattan Motorcars is a perfect partner to support our goals in helping to grow our business on the East Coast. We believe the new Karma GS-6 suits their clients' lifestyle and tastes very well.”
Sonic Automotive said Tuesday it has opened an EchoPark Automotive delivery center in Austin, which marks the seventh Texas location for Sonic’s standalone used-car program.
The retailer plans on opening approximately 25 EchoPark locations a year (including 20 delivery centers and five medium or large retail hubs) from 2021 to 2025.
The company anticipates covering 25% of the population by the end of this year.
“With our new Austin Delivery Center concept, EchoPark introduces the next level of car buying, allowing guests to replace the traditional dealership experience with an exciting, enjoyable and seamless transaction, while still locking in savings of up to $3,000 versus the competition,” Sonic and EchoPark chief executive officer David Smith said in a news release.
“Our customized guest delivery experience in Austin features three technology-enabled indoor delivery bays that will inspire our guests to celebrate their new purchase in a unique new way,” Smith said.
Sonic and EchoPark president Jeff Dyke added, “Over the past several years, car buyers in my home state have already discovered the value of the EchoPark brand, traveling to one of our six pre-existing physical locations to save thousands of dollars purchasing their next vehicle. We are excited to bring our flexible, seamless car buying experience directly to the state capital as we continue to grow our market share and expand our nationwide reach.”
Sonic is also expanding EchoPark within the company’s home state.
One of the EchoPark locations planned for 2022 is in the Raleigh, N.C.-area. Dyke told Auto Remarketing late last month that a hub in nearby Cary is expected to open at a former Crossroads Ford store in the first quarter.
Sonic’s current EchoPark locations in North Carolina include a hub in Charlotte and a delivery center in Greensboro.
In related news reported previously, Sonic said late last month that its board of directors has begun a review of “potential strategic alternatives” for EchoPark, given the success in the program’s strategy and “our confidence in our runway for continued expansion.”
In a news release on Sonic’s latest quarterly earnings report, the retailer said it is, “considering a full range of potential alternatives with respect to its EchoPark business.”
Sonic has not set a timeline for the review to be completed and noted that it may not result in a transaction.
“The company does not intend to disclose further developments with respect to its review process unless and until its board approves a specific action or otherwise concludes the review,” Sonic said.
Sonic is currently building a digital retailing platform for EchoPark, which is slated to be finished in the fourth quarter. It also is bringing in a chief marketing officer specifically for EchoPark.
Lithia is tackling Dallas expansion with the help of a former New York Giants linebacker.
In an update Tuesday, Lithia & Driveway said it added two open points in Texas, including one in which it teamed with former NFL star Jesse Armstead.
For its new Grapevine Honda store in the Dallas-Fort Worth market, Lithia partnered with Armstead, a DFW-native and longtime all-pro linebacker who played for the Giants and what’s now known as the Washington Football Team (ironically, two of the biggest rivals to the hometown Dallas Cowboys).
In the release, Lithia also said it bought Kia of Frisco, a newly opened store.
“Our track record of high performance underpins our relationships with our manufacturer partners, and we appreciate their continued trust in our ability to meet customer needs and grow market share,” Lithia & Driveway president and chief executive officer Bryan DeBoer said in a news release.
Beyond its Texas growth, Lithia also shared some recent statistics around its Driveway e-commerce program.
Last month, there were 800 Driveway transactions, up from 550 in June. Lithia says it is on track to reach nearly 10,000 Driveway transactions for 2021. The eventual target rate is 15,000 annually.
“Our omni-channel approach is proving to be a welcome solution providing consumers choices of when, where and how they transact,” DeBoer said in the release.
“With Driveway, we gain an incremental channel to reach consumers seeking a more convenient, shop, sell and service online and in-home experience,” he said. “Driveway leverages our existing strengths of the network, inventory and personnel to a whole new level, translating into more sales and robust customer loyalty through our first national brand.”
As it turns out, EchoPark isn’t the only piece of Sonic Automotive with expansion plans.
In addition to the growth in its line of standalone used-car stores, Sonic plans to increase its presence on the franchise new-car dealer side.
For the most part, the geographic footprint of Sonic’s 86 franchised dealerships includes the majority of the Southeast and the Washington, D.C. area, plus Texas, Colorado, Nevada and California.
But the retailer sees room for growth in regions of the country in which it doesn’t yet operate.
“We’ve got acquisitions working right now that are literally from coast to coast from the North to the South … we're just now diving back into the pool from an acquisition perspective,” Sonic and EchoPark president Jeff Dyke said in an interview with Auto Remarketing last week.
“And so, we're going to grow that side of the business. And we can now because we’ve got the capital to do it,” Dyke said. “So, you’ll hear more about that as we move forward in the coming couple of months. But for sure, we’ll delve into markets that we don’t do business in today.”
Its growth on the franchised side got started late last month with the purchase of Grand Junction Subaru and Grand Junction Volkswagen in Colorado, a state in which Sonic already had a presence.
Sonic joins a bevy of dealer groups, both public and private, who have their eyes on expanding.
The Dave Cantin Group said in a news release Wednesday that the DCG Acquisitions line of its business has already secured a record 16 acquisitions through seven months of 2021. And DCG said it has 21 more on tap in the back part of the year.
“Automotive entrepreneurs are very resilient, and COVID hasn't prevented them from zeroing in on acquisition and merger opportunities,” DCG founder and chief executive officer Dave Cantin said in the release. “Combined with a record-number of dealership owners ready to sell DCG’s knowledge and expertise affords its clients the most favorable transactions.”
When asked by Auto Remarketing what he believes has driven the M&A activity, Dyke said there’s “a little bit of animosity out there in the mom-and-pop world,” as to what is going to happen with all this M&A growth industry-wide.
He sees an environment of consolidation, where there are still a lot of dealerships, but not as many owners.
“I think that there’s probably more M&A activity going on right now than at any other time in our history. And I'm not talking about Sonic Automotive, I’m talking about the industry in general,” Dyke said.
“You talk to the manufacturers, they’re (saying), ‘Gosh there's so many deals coming across my desk,’” he said. “And I think that this is a stepping off point or time in history when you've got a lot of the single-point or smaller multi-point family-owned business that are looking at this and saying, ‘This is going to end up being a fewer horse race than what we're in today.’
“And it’s a great time — people are flush with cash — to find a great opportunity to sell. And we're seeing that. That's why us, Lithia, AutoNation, everybody’s out buying,” Dyke said. “And there's good deals out there to go and get (stores) that will either support a market that we're already in, like we did in Colorado where were got Subaru and Volkswagen in Grand Junction. Or puts us in a new market.”
For example, the Northeast, Midwest or Northwest, Dyke said; areas “where we just don't have any stores, but are great car markets.”
As part of its "50-50 strategic plan" — through which the company aims to reach $50 billion in revenues and $50 in earnings per share over five years — Lithia & Driveway said Tuesday it has expanded the senior leadership in its marketing department.
That includes the hiring of a chief marketing officer.
Appointed to the role of senior vice president and CMO is Marguerite Celeste, who was Lithia’s director of creative services from 2011-2013 and whose background also includes time with NBC Universal, DreamWorks Animation and The Walt Disney Company.
"With an established knowledge of LAD's mission growth powered by people and its core business values, Ms. Celeste embodies the insights and innovative acumen necessary to continue to reimagine and catapult LAD to the next level of delighting the consumer. Her strong background in brand management, voice of customer, operational excellence, and creativity will add a vibrant voice to the company's vision to provide our consumers with personal transportation solutions wherever, whenever, and however they desire," Lithia president and chief executive officer Bryan DeBoer said in a news release.
Lithia also moved Tom Dobry to the role of vice president of marketing as part of this strategy. Dobry’s role will entail "elevating and expanding LAD's traditional business and 260 local brands, in complementary fashion with the Driveway e-commerce channel," Lithia said in a release.
"By doing so, Mr. Dobry will concentrate his more than 11 years and experience of supporting our stores, operations teams and critical acquisition growth," said DeBoer.
CARY, N.C. — While Sonic Automotive leadership declined to comment further after announcing a strategic review of EchoPark Automotive, company president Jeff Dyke did share more details about Sonic’s investment in its standalone used-car program in an interview with Auto Remarketing on Thursday.
The wide-ranging conversation included more details on the digital retailing platform in the works for EchoPark and plans to hire a chief marketing officer specifically for the pre-owned stores.
Starting with digital retail
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SoCal Penske Dealer Group closed July with some excitement by opening a trio of luxury showrooms on Friday.
The company began retailing at Jaguar Puente Hills, Land Rover Puente Hills and Penske Volvo Cars in the Puente Hills Auto Center.
These new dealerships serve the greater Los Angeles Area, including the Inland Empire, San Gabriel Valley and Orange County.
“We are absolutely thrilled to open the doors of Jaguar Puente Hills, Land Rover Puente Hills, and Penske Volvo Cars and look forward to forging relationships with our new guests and the local community,” said Roger Penske, Jr., president of SoCal Penske Dealer Group.
“We appreciate the continued support of the City of Industry and are proud to call Puente Hills home,” Penske continued in a news release.
With nearly 80,000 square feet of facilities including 47 service bays, the dealerships showcase the distinct personalities of the Jaguar, Land Rover and Volvo brands and are well equipped to meet the growing demands of the greater Los Angeles market.
SoCal Penske Dealer Group is a privately held, locally owned company that represents 13 franchises in southern California, including Buick, Cadillac, Chevrolet, Ford, GMC, Honda, Jaguar, Land Rover, Lincoln, Toyota and Volvo. The company also operates three collision repair centers.
Like its fellow publicly traded contemporaries, the used-vehicle department at Group 1 Automotive posted superb performance metrics during the second quarter.
When looking at just its U.S. data on a year-over-year comparison, Group 1 reported a whopping 63.2% jump in used-vehicle retail sales revenue and a 113.2% spike in used-vehicle retail gross profit in Q2.
The company said its total used-vehicle retail sales revenue came in at $882.9 million while that gross profit number was $87.3 million.
Group 1 retailed 34,008 used vehicles during the second quarter, and the company wholesaled another 6,606 units, representing increases of 30.1% and 28.3% year-over-year, respectively.
Gross profit on those used-vehicle retail turns rose by exactly $1,000 year-over-year to $2,568.
And likely reflecting what’s happening in the lanes that’s been well chronicled by Black Book, Cox Automotive and KAR Global, Group 1 indicated its gross per vehicle wholesaled nearly hit the $1,000 mark. That gross metric jumped from $311 to $969.
Furthermore, as discussed by StoneEagle F&I, Group 1 watched its gross in the finance office increase, too. Its F&I gross per unit retailed — which includes both used and new models — came in 13.2% higher year-over-year at $2,114.
One other notable data point associated with used vehicles, Group 1 said its service and parts sales revenue jumped by $78.4 million or 30.8% year-over-year to $332.6. The gross profit for service and parts sales made an even healthier increase year-over-year, coming in $46.1 million or 34.0% higher at $181.7 million.
Group 1 also shared its performances through the first six months of the year. The highlights in the used-vehicle department included:
— Retail used vehicles sold: Up 19.8% to 64,439 units
— Wholesale used vehicles sold: Up 7.1% to 13,046
— Gross profit per used vehicle retailed: Up 57.6% to $2,136
— Parts and service sales revenue: Up 12.5% to $628.9 million
Sonic Automotive said Thursday its board of directors has begun a review of “potential strategic alternatives” for its EchoPark Automotive standalone used-car store program, given the success in the program’s strategy and “our confidence in our runway for continued expansion.”
Sonic’s board is working with Lazard as its financial advisor in this process and Kirkland & Ellis, LLP as its legal advisor.
In a news release on Sonic’s latest quarterly earnings report, the retailer said it is, “considering a full range of potential alternatives with respect to its EchoPark business.”
Sonic has not set a timeline for the review to be completed and noted that it may not result in a transaction.
“The company does not intend to disclose further developments with respect to its review process unless and until its board approves a specific action or otherwise concludes the review,” Sonic said.
During the second quarter, EchoPark pulled an all-time record revenue of $595.6 million, beating year-ago figures by 88.9% and up 104.2% from Q2 2019.
EchoPark also had a best-ever sales volume, moving 21,261 units during the quarter for a 61.0% year-over-year gain. That also beats Q2 2019 figures by 68.9%.
EchoPark’s pre-tax loss came in at $14.4 million, which included a $6.6 million market expansion-related loss. Its adjusted EBITDA loss was $9.4 million for the quarter, which included a market expansion-related loss of $5.4 million
“EchoPark loss reflects expansion-related losses and the effect of strategic price management to grow top-line sales and market share amidst temporary used market pricing inversion,” the company said in a news release.
Sonic and EchoPark president Jeff Dyke said in the release that the company has completed half of its national EchoPark distribution network and digital expansion plan for the year. Sonic is projecting EchoPark to have population coverage of 25% by year’s end, with 90% coverage reached in the next four years.
“ At 10% share of our segment of the market, which we already exceed in our more mature markets, this represents a 2 million vehicle annual sales opportunity at maturity. Complementing this, we are making excellent progress with our new, proprietary digital retail platform and are on track for a fourth quarter 2021 launch,” Dyke said.
“In the meantime, our guest-centric EchoPark buying experience continues to drive market share gains and we anticipate our market penetration and brand recognition will continue to grow rapidly in tandem with our nationwide network.”
Auto Remarketing caught up with Dyke on Thursday afternoon following the earnings call. Stay tuned for more on EchoPark’s growth.
