Sonic Automotive is expanding a retail hub on Independence Boulevard that is part of a fast-growing segment of its business, the Charlotte-based auto company announced Tuesday.
The Fortune 500 firm said it has closed on the purchase of four acres next to the store at 3648 East Independence Boulevard near the intersection with North Wendover Road. Property records show Sonic paid $3.2 million for the site.
The acquisition allows the company to add around 400 parking spaces for vehicles to its inventory, according to a release from Sonic, for a total capacity of around 1,000 cars at the location, known as EchoPark.
EchoPark focuses on offering used one- to four-year-old cars at a discount, and allows people to buy and sell cars through its website or retail locations.
David Smith, CEO of Sonic and EchoPark, said the pandemic delivered a hit to revenues in April. As a result, the company had layoffs and cut costs.
“We didn’t know where the bottom was — nobody knew,” he said. “It was like jumping out of a plane and not knowing when your chute is going to open.”
Sonic also owns other dealerships across the country and in Charlotte.
Overall, the company’s revenue was down around 19% in the three months ending on June 30 compared to the same period last year, according to a July earnings release.
But after stay-at-home orders and other measures were eased, Smith said, demand bounced back, particularly as consumers were hesitant to take airplanes or cruises. And EchoPark, as well as the company’s used vehicle sales in general, fared better during the lockdown too, according to the earnings report. Second quarter revenue for the EchoPark division was up 8% from the previous year.
“Let’s say we go through an economic downturn: there are more people who would’ve bought a new vehicle who are going to choose to buy a nice, pre-owned vehicle,” he said. “The market in that way is very recession proof.”
In 2018, David Smith took over as CEO of Sonic after his brother Scott stepped down. The company was founded by their father, Bruton Smith, who also started Speedway Motorsports, LLC, which owns and operates racetracks.
Sonic is not the only company with a presence in Charlotte proposing to change the used car buying experience. Carvana, the online used car retailer, opened an eight-story “car vending machine” in South End in 2018. The company also announced last year it would bring hundreds of jobs to an auto inspection and recommissioning facility it will locate in Concord, on the site of the shuttered Philip Morris plant.
But Smith said while EchoPark customers may conduct the majority of the buying process online, many still want to come to a store and take a test drive.
In addition to retail hubs, the company also expects to open delivery and buy centers, where buyers can pick up their cars, Smith said. For example, he said EchoPark operates such a center in Greenville, South Carolina, and the inventory comes from the Charlotte store.
The Charlotte location was one of the first for the brand, but the company expects to open another 25 retail hubs or delivery centers per year from next year through 2025.
Smith said the expansion of the Charlotte hub will be complete within the next few months.