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Sonic Automotive bets on EchoPark and used cars as car buyers feel the squeeze
The US dealer group says luxury brands, service work and a rebooted used-car chain are keeping it steady while affordability worries weigh on the market.
Sonic Automotive says it is holding up in a tough car market, and it wants to grow by selling more used cars. At the 50th Annual Automotive Symposium, executives of the US dealer group (ticker: SAH) pointed to its mix of luxury franchises, used-car stores and powersports shops. They acknowledged that high prices, buyers who owe more than their trade-in is worth, and an uneven electric-vehicle market are all pressing on the industry.
The company brings in about $15 billion a year. Roughly 80% comes from 108 franchise dealerships, and more than 60% of that franchise revenue comes from luxury names such as BMW, Mercedes and Jaguar Land Rover. Its new-vehicle selling prices run above $60,000, against a national average of about $50,000. Management also said about three-quarters of franchise gross profit comes from parts and service, work that tends to hold up when car sales wobble.
The main growth story is EchoPark, the pre-owned chain Sonic launched in 2014 and scaled back in 2023 after expanding too fast. It now has 18 stores and about 15% of company revenue. Third-quarter 2025 volume rose 22% year over year, after 18% growth in the second quarter. Management said it could eventually match or beat the franchise business in revenue over the medium to long term. That is a goal, not a forecast with a date attached.
EchoPark is also growing its footprint again. A new store was due to open in Orlando, Florida, in December 2025, and Sonic expects two to four more openings in 2026. Executives said the limiting factor is finding suitable land in the right markets, not demand. A brand campaign was slated to start in the fourth quarter of 2025.
Shoppers could see the effect in the used-car aisle. Sonic expects more off-lease vehicles to reach the market in 2026 and 2027, which it believes will help both EchoPark and its franchise used-car lots. More supply could ease the squeeze for buyers, though the company did not promise lower prices.
Sonic also said it was the only public franchise peer to post sequential gains from the second to the third quarter of 2025 in new-vehicle gross profit per unit, used-vehicle gross profit per unit and finance and insurance profit per unit. It says it is splitting cash among dividends, buybacks and acquisitions, with leverage near its target of about 2.5 times. Market data cited in the report put its market value at $2.01 billion and its price-to-earnings ratio at 10.17.
Read the original report at Investing.com.
