Company executives declined to say more about the move.
“There’s going to be a whole lot of speculation,” Sonic President Jeff Dyke told Automotive News last week. “We thought long and hard about it and just, at this point, can’t make any comments about what’s going on there. At the end of the day, our goal is to maximize shareholder value.”
The review marks a change in tune for Sonic leaders. When asked about the potential separation of EchoPark from Sonic in July 2020, executives downplayed such a move.
“There are synergies between the two companies, and we think that’s what makes us valuable,” CFO Heath Byrd said then, referring to EchoPark stores and Sonic’s franchised dealerships.
J.P. Morgan analyst Rajat Gupta said in a note last week that the review “in our view hints at potential spin-off, and signs that profitability should inflect in 2022 making the business self-sustaining.”
EchoPark sells used vehicles that generally are between 1 and 4 years old with less than 50,000 miles and prices them up to $3,000 below market.
The approach draws customers seeking vehicles in that range, as well as would-be buyers of slightly older vehicles and new vehicles, Sonic executives have said.
