When Sonic Automotive opens its debut stand-alone pre-owned specialty retail sales location later this year, don’t expect it to have the same feel as a CarMax store or a “traditional auto retailer.”
Though Sonic is largely keeping its cards close to the vest when discussing the specifics of the program, a few details emerged Wednesday during the retailer’s quarterly conference call.
Jeff Dyke, Sonic’s executive vice president of operations, said the company has “accomplished a lot in a very short period of time” and is on track to open its first stand-alone pre-owned store in Denver in the fourth quarter.
Sonic is planning on breaking ground on the facility later in February and start hiring and training in the second quarter, he said. A marketing introduction will likely commence in late Q2 or early third quarter.
Dyke also mentioned that the program does have a name, but said the company was not yet ready to reveal it.
As for the feel of the store, it won’t be the same as your typical auto retailer.
“It’s going to be significantly different than what you would see from a traditional auto retailer or a CarMax …. We’ve really built a different kind of facility,” Dyke said during the call. “The experience is going to be different for the guest, both electronically and at the physical plant.”
Years after the initial idea for this concept store surfaced and following much preparation, Dyke said the retailer is ready to make it happen.
“We really feel like there are no barriers to entry for us, from inventory management to pricing, we feel like we’ve shown what we can do on the pre-owned side of the business at Sonic Automotive,” Dyke said. “We’ve used a lot of those tools that will help us implement these things at the new concept, the new division.”
The program was first announced in October. Sonic explained at the time that this pre-owned business would be run separately from Sonic’s existing new and used dealership sales operations — and should have plenty of opportunity for growth.
Later on in Wednesday’s call, Sonic executives were asked why they picked Denver as the first locale to launch this new store.
Dyke broke it down like this: “One, we know the market very well. Two, the demographics fit what we’re doing. Three, it’s the 15th largest pre-owned market in the country. And the throughput per store, if you really study the market, the volume throughputs per store on the new-car franchise is really high.
“Our stores there sell a ton of pre-owned cars. CarMax has opened up there and they’re doing 300-plus cars in their stores, relatively quickly. Their ramp-up period has been short. So, there’s just a great pre-owned market there and a lot of wear-and-tear on the cars, so quicker trade-ins,” he added.
As for where this pre-owned stand-alone program could be headed, Dyke said: “We’ve got 15 other markets identified, but let’s get one opened and then we’ll start attacking some other ones.”