Jeff Dyke on EchoPark Growth and Used-Car Strategy

Pre-owned vehicle growth and operational flexibility are driving strong performance across dealership groups in 2026. On this episode of Inside Automotive, Jeff Dyke shares how the company is scaling its used-car strategy through EchoPark while navigating affordability pressures and shifting market dynamics.

Dyke reflects on Sonic Automotive’s record-setting 2025 and explains how adapting inventory strategies—leveraging franchise stores, loaners, and fleet vehicles—has strengthened EchoPark’s performance. He also discusses brand-level trends across OEMs, the impact of rising vehicle prices, and why pre-owned demand is expected to grow if affordability challenges persist.

With expansion plans underway and cautious optimism for the year ahead, Dyke outlines how disciplined growth and operational efficiency position the company for continued success.

Discussion points include:

•  EchoPark’s rebound and flexible inventory sourcing strategy 
•  Record-breaking 2025 performance and key operational metrics 
•  Rising vehicle prices and their impact on new vs. used demand 
•  OEM performance trends across Nissan, Stellantis, Mercedes, and Audi 
•  EV adoption trends and market-driven growth expectations 
•  Expansion plans and outlook for pre-owned vehicle growth

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Transcript

Record 2025 Earnings Snapshot

SPEAKER_00 0:07

Welcome to Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick 0:11

Hey everyone, Jim Fitzpatrick. Welcome into another edition of Inside Automotive right here at cbtnews.com. One of the nation's largest auto retailers. Sonic Automotive closes out yet another record year in 2025. Gross profits were up. And uh once again, Jeff Dyke is here to uh give us the lowdown. He's the president of Sonic Automotive. So congrats on another record-breaking year, Jeff. Uh this is getting very very very tiresome for me because every time I talk to you, you're breaking records in certain areas. Now it's the overall year. So congrats on all of that. So let's start with the latest earnings. It looks like you guys finished an outstanding 2025. Total revenues in the fourth quarter, 3.9 billion down 1% year over year. Um, fourth quarter record, total gross profit 598 billion, uh 4% year over year. What say you about all that?

SPEAKER_02 1:02

Well, thanks, Jim, for having us. Um, you know, it just was an amazing, it was a great quarter. October and November didn't start it that way, but December finished like a freight train as it always does for us. And so just an amazing uh quarter. And then the year was, you know, if you throw out some of the fake news years of COVID, um but that 2025 was probably from a KPI perspective, our best operational performance year we've ever had across all sectors of our business. We set nearly 800 records uh as an organization, which is just incredible. Um and, you know, that's the tenure, I think, of the team, uh, the brand mix that we have. Uh Echo Park really coming to life, our Power Sports business coming to life. Uh, we had an amazing Sturgis where we sold over 1,100 Harleys uh during the week and um Wow You know, brought our processes and our technology to the game. So um amazing year, and we're looking to do it again in in 2026.

Jim Fitzpatrick 1:58

Yeah, I was gonna say you you may you keep making it tougher for yourselves here, right? Because it's uh uh the board is probably going, yeah, well you did that last year, but now you got to I keep trying to explain that to the board. Yes, yeah, yeah. And the board can be just like your typical car uh sales manager where it's like, yeah, you know, here hero to zero, right?

SPEAKER_01 2:17

Yeah. It's all it's all it's a 30-day cycle, Jeff. We start over every 30 days.

EchoPark Rebounds After COVID

Jim Fitzpatrick 2:23

Just to kind of review the numbers,$15.2 billion in revenue, up 7% year over year. As I said, it's an all-time uh annual total gross record,$2.4 billion, up 9% year over year. Um, th those are very, very impressive numbers. Uh so uh and then Echo Park, talk to us about that. That that is doing very well as well, right?

Finding Inventory In New Places

SPEAKER_02 2:45

Yeah, if you think about it, Echo Park prior to two thousand to COVID, you know, in the late 2019 was really on fire. And we were growing rapidly, and then COVID hit and and really took uh some wind out of our sales. We're back. Um we're we're starting to sell a lot of cars on a per-rooftop basis again. Um we're finding ways to access inventory, including something that we've never done before, which is supply inventory from our franchise stores. Uh that's starting to really help uh and make a big difference. Interesting. Okay.

Jim Fitzpatrick 3:17

They have the inventory to offer the the used car operations?

SPEAKER_02 3:20

Well, we do. What you know, what whether uh we're taking loaner cars out of loaner car service or fleet tail cars that were being fleet tailed to somebody uh other than ourselves, um, you know, we took a step back and said, look, let's let's break some of our rules here um and um be a little bit more flexible um uh with the details. And so um we we've done that, and that's making a big difference um, you know, in our performance, and it's continued to make a big difference. And then we're gonna have you know lease cars coming back towards the end of this year and in a much bigger way next year. Um so uh that all bodes really, really well uh for Echo Park. And then with new car pricing, which I'm sure you're gonna ask about is as as new car prices continue to escalate because of the tariffs, um, you know, the gap between new and used and this affordability issue is really becoming a problem. Sure. So so you Pete, uh, we're gonna see you know a sort of a more big of bigger focus from my perspective on pre-owned. Um and that that bodes very, very well for our pre-owned departments on the franchise side, but in particular uh for Echo Park.

Watching CarMax And Carvana

Jim Fitzpatrick 4:24

Yeah, do you keep you do you guys keep your eyes on what's happening at a company like CarMax, and then at the same time, your eyes on what's happening at Carvana? Because you're all like somewhere in between there, where you've got this new car powerhouse going on with these, you know, used this network of used car operations. Um what do you guys monitor that closely and and learn from some of the mistakes that a CarMax made, and then maybe some of the cool things that Carvana's doing as well?

Brand Speed Round Takes

SPEAKER_02 4:53

Absolutely. I mean, look, those are both great competitors, and and you know, the 900-pound gorillas in the room. And so uh you'd be a fool not to watch what they're doing and how they're doing it. Our model's different. Um we're sort of the Costco model, if you will, and the low uh cost providers, so our pricing's you know a lot lower than theirs are. And and really our model depends on very, very high volume on a per-rooftop basis. Um uh and so that's that's that's happening for us. But yeah, we watch them very, very closely. Um, and they're doing a lot of great things. They're doing a lot of smart things. Um, and I feel like we are too. Yeah. Um very, very rooted in our in our focus on our guest experience and uh in the CSI scores we get, which are industry leading. Um, and um we won't sacrifice that for just being able to grow. Uh so you'll see us at the end of this year. Uh we'll we'll um open probably two stores in the fourth quarter. Uh-huh. Uh, and then anywhere from three to five, maybe six stores uh in 2027. We'll see how that goes. Um, but we're doing that based on access to inventory. And we've opened the doors now with access to some franchise store inventory that's really gonna help. Um, and when we put all that together, I feel like we can we can grow the business uh judiciously um and put ourselves in a really good position as we go through the next couple of years with Echo Park. It's it's fun to watch. The the we've got such a seasoned team there and they're doing a really nice job.

Jim Fitzpatrick 6:17

Yes, yeah, for oh, for sure. Um maybe we can do a quick speed round and you can just give me the first things that hit your mind as I mentioned some brands. Is that cool? Because I know you've got these. Uh Nissan, what's your what's your what's your feeling on Nissan?

SPEAKER_02 6:32

Tough. I I I mean they they just you know kind of fell out of the tree and hit every tough branch on their way down, if you will. You know, just a really difficult brand. Um, I still think you know they're trying to find their way. Um, it's a great pre-owned product. You know, and and uh our stores struggle and and and I don't know anybody that's running really great, great Nissan stores or not complaining about them, but uh to be fair and honest, it's tough, it's tough.

Jim Fitzpatrick 6:59

Yeah, Stillanis.

SPEAKER_02 7:01

Getting better. Um feeling good about that? Uh headed in the right direction. We're very excited, and our our Stillantis stores are our CDGR stores are improving uh vastly. So that's great.

Jim Fitzpatrick 7:14

Okay. Mercedes.

SPEAKER_02 7:16

Also getting much better. Great new leadership there. Um uh we're very fired up about Mercedes and and uh you know have a bunch of those stores and and they're doing great, getting ready to go to Germany here uh in a week or 10 days or so to see uh some of the great new things that they're doing. But yeah, they're they're they're on fire. They're gonna be great. Uh I think they're gonna have a fantastic uh 26.

Jim Fitzpatrick 7:37

That's awesome. Their their headquarters are now a stone's throw from us here in Atlanta. What about Audi?

EV Demand Finds Its Pace

SPEAKER_02 7:43

Struggling. Um, you know, it look, great product lineup coming. Um but not having the manufacturing plants here. Um, super, super uh leadership. Just love uh our Audi uh relationship. Uh there and we've got a bunch of Audi stores very committed to the brand uh long term, but certainly they've had their bumps and bruises um here uh over the last year and a half or two. Uh but I think you know that we'll start to see them improve. It's not gonna happen to the second half of this year.

Jim Fitzpatrick 8:12

Okay, okay. Overall, what's your take as you sit here today on the EV business in your stores?

SPEAKER_02 8:18

I mean, it's down less than five percent. Um, and now the country has a choice. We're not being forced to buy uh uh you know battery electric vehicles. And so uh let let's let it grow at its own pace. Great technology, uh, mileage is gonna be not become not an issue. A lot of wonderful things. Prices will come down, you know. It it there's certainly a place for it, and it can grow at its own natural rate over time.

Tariffs And New Car Affordability

Jim Fitzpatrick 8:43

Sure, sure. So let's talk about the word that the president loves, which is affordability. Obviously, this is a a sticking point or a or a thorn in everyone's side right now. I mean, price of new cars over 50 grand, payments that are you know, seven, eight hundred bucks a month, uh uh 20% of them are over a thousand dollars a month. As the president of one of the largest automotive giant retail giants out there, what is is that a concern of yours that that is?

SPEAKER_02 9:09

It's a huge concern. Here's the thing is the industry has not really felt the effect of tariffs yet, in my from my perspective, because the manufacturers, all of them, amazingly did a wonderful job last year and saved our butts. They covered the cost of the tariffs and they lost billions of dollars you know doing it. They can't continue to do that. So that's gonna get passed on to the dealer, it's gonna get passed on to the consumer. And in 2026, you're gonna finally see uh you know the effect of tariffs and what it's gonna do from an inflationary perspective um uh on the U.S. market. And so we'll see, you know, kind of how things go. That on our call, I was very cautious and said, look, we're set up for a great year. We were set up for a great year last year and we were worried about tariffs, but they really didn't take effect because of the manufacturers, as I said, and in their deep pockets. They're gonna start passing on that cost. We are seeing prices rise. Our average selling price in the in the fourth quarter was over$62,000. First time we've crested that ever. First time we pressed$60,000. I think we just approached it in the third quarter. Uh, but that's just crazy. Um, I was looking at a at a car um earlier today, and a customer sent me and said, I paid uh just three years ago, this car was$20,000 cheaper. And um, you know, that's crazy. Same exact car, same setup, same everything. These things can't continue. And if they do continue, you're just gonna see a drop-off in the new car volume and a big increase in pre-owned volume, which uh, you know, it bodes well for us.

Jim Fitzpatrick 10:36

Yeah, but even that's not sustainable because uh, you know, obviously the new cars was feeding the new cars.

SPEAKER_02 10:42

And you've got a lot of off-lease cars coming back where the residual values are too high, somebody's gonna take that hit. We're we're in for you know a a bit of a conundrum, I think, in this calendar year. Um something's gonna have to give. Uh and and uh, you know, it would not surprise me if if if we you know got a little tariff relief. Um, or sometimes I would just pray a little bit uh for for that. Um because we're getting to a point where you know the elastic we're hitting the top of the elasticity ban on what a customer can can pay for a new car. And and you know, then what happens is instead of you know a 60-month uh finance deal, it's going out to 84 months, and are we gonna see 100 months where it's going? Right. Um, that's a little out of control, and we need to get our arms around it and bring the cost of this product down, decontent cars, do things to to really make it more affordable for the consumer. That's right. Who needs a vibrating back seat? I mean, let's do some things.

Chinese Competition And Price Pressure

Jim Fitzpatrick 11:38

You never use mine anyway. Yeah, yeah, no, or air conditioning. Yeah, no, no question. Um and by the way, we're also paving the way for the uh the Chinese to come in with a lower price quality unit at some point in time. Obviously, uh uh the Canadians have fallen now. You're gonna see some 40 or 50,000 uh Chinese vehicles being sold in that country. And uh Michael Dunn, who's the foremost authority on all things China Automotive, has said that we are on an island in North America. Well, now it's just America because of because of uh the Canadians, you know, saying, Yeah, come on in here, you know. And uh it'll be interesting to see what happens with the Chinese, right?

SPEAKER_02 12:22

I mean, look, two schools of thought bring them in and and prices are gonna drop uh because you know, competition, um, the good old American way, um, or or keep them out and and uh prices are gonna continue to rise. Something's gonna have to change there. Um so we'll we'll see kind of what happens. Um, but it one thing for sure new car affordability has to be addressed. That's not being addressed. It's gotta change. Something's gonna have to happen. Um, and I believe you know we're gonna we're gonna start to feel it uh in in our pocketbooks this year.

Jim Fitzpatrick 12:55

Just right before this interview with you, I spoke to uh the the chief economist at Cox Automotive. He feels uh pretty good year ahead. And in fact, he mentioned that the tax season um will be uh particularly a good tax season this year with some of the benefits from the uh big beautiful bill that was passed and what have you. He said that there's still a large number of uh tax returns that haven't even been filed yet. So uh you guys at probably at Echo Park are are waiting for those to hit, right?

SPEAKER_02 13:24

Absolutely. He just spoke at our annual meeting and uh fantastic, uh fantastic discussion and said the exact same things. And um big tax returns. We're seeing that if you look at our January was spectacular. I said this on the call without the snowstorm, it'd have been an all-time record. It was probably an all-time record January, but uh without the snowstorm, we'd have blown everything uh out of the water. Yeah, February comes and had a pretty darn good February, so we'll see uh what happens in this March. Um, but I'm I'm ecstatic to the way the the year started off. Um but remember price changes, they they're not quite in in place yet, and those are coming. Yeah. Uh oh yeah. And so uh we'll see what happens uh to our new car volume as we move into the second, third, and fourth quarters.

Jim Fitzpatrick 14:07

Yes, absolutely, absolutely. Another record uh quarter, I'm sure. That's what we'll be talking about next.

SPEAKER_03 14:12

We'll see. Uh again, I'm praying.

Jim Fitzpatrick 14:15

President Sonic Automotive, Mr. Jeff Dyke. Thank you so much for all the time you give us here at CBT News. It's always great catching up with you, and our viewers love when you're on. So thanks so much.

SPEAKER_02 14:24

Jim, always have a great time. Uh, always fun uh visiting with you. Thanks for having me.

Jim Fitzpatrick 14:28

Awesome, thanks.

SPEAKER_00 14:33

Thanks for watching Inside Automotive with Jim Fitzpatrick.