On the Dash:
- Sonic Automotive will add $5 million to $7 million in EchoPark brand marketing in Q4.
- EchoPark retail used sales rose 22% to 19,923 units in the third quarter.
- Dealers in EchoPark markets should expect a louder price message and e-commerce app push.
Sonic Automotive is putting its biggest marketing push ever behind EchoPark, its used-vehicle retail brand. The company expects to spend an additional $5 million to $7 million in the fourth quarter to build awareness of a nearly 12-year-old brand.
Sonic outlined the plan alongside its third-quarter earnings on Oct. 29, while management said the spending will pressure near-term profit and continue through 2027.
Sonic Automotive’s brand push includes new EchoPark app
EchoPark’s new ad campaign and a new Orlando store are both coming in the next few weeks, Sonic Chairman and CEO David Smith said in the earnings release. The news follows a 22% jump in EchoPark used vehicle sales in the third quarter.
The ad money will hold down EchoPark’s profit this quarter, as Sonic expects $2 million to $4 million in adjusted EBITDA, a measure of operating profit, and that figure already includes the $5 million to $7 million in added marketing. Sonic called the push the largest investment it has made in the brand.
The brand push could add $10 million to $20 million in advertising costs this year and will continue into 2027, Sonic executives said on the Feb. 18 earnings call. Part of that money will fund a new EchoPark app for buying cars online. President Jeff Dyke also said EchoPark prices run $3,000 to $6,000 below Carvana and CarMax.
EchoPark volume growing
EchoPark third-quarter revenue rose 14% to $596.0 million, and segment gross profit rose 8% to a third-quarter record of $58.9 million. Retail used sales reached 19,923 units, up 22%. Additionally, profit lagged volume, with adjusted EBITDA at $7.9 million, down from $8.2 million a year earlier. Gross profit per unit fell 12% to $2,972.
F&I income per vehicle also fell because of a higher mix of battery-electric and higher-mileage vehicles, which lowered warranty penetration, Smith said on the call. The company cited the same mix shift in the second quarter.
What it means for competing dealers
Sonic is spending ahead of results because management sees awareness as the one missing piece, CFO Heath Byrd said on the call. The company says EchoPark already leads its markets on price and customer experience. EchoPark has 18 locations, compared with 108 franchised dealerships in Sonic’s network, according to the investor presentation. The Orlando opening and new stores in 2027 would restart growth.
Dealers competing with EchoPark for late-model used shoppers should expect more advertising and a louder price message in EchoPark markets. Stores that can show their own price and convenience online will be best placed to keep those shoppers.
