Sonic Suspends Some EchoPark Operations

Because of the adverse impact of lower used-vehicle availability and higher wholesale pricing on EchoPark's business model, Sonic Automotive Inc. has reduced its EchoPark used vehicle-only footprint.

Sonic indefinitely suspended operations at eight EchoPark locations and an unknown number of delivery/purchase centers, reported Automotive News. The report noted that the company will incur a one-time impairment charge of $60 million to $80 million in the second quarter, with almost all of it being noncash and only $3 million to $5 million related to severance costs.

David Whiston, an analyst with Morningstar in Chicago told Automotive News that the strategy suggests the auto retailer “wants to maximize profitability in certain markets at the expense of the eight stores” being shut down.

The Charlotte, N.C., company didn't specify which EchoPark locations it suspended indefinitely or how many jobs will be cut, according to Automotive News. However, five EchoPark locations are currently labeled as temporarily closed, the report noted. Those include one location in Georgia, and two each in New York and Maryland. A delivery center in Salt Lake City is also labeled as permanently closed online.

According to a Baltimore Business Journal article, EchoPark's Baltimore and Laurel, Md., branches will close in August, resulting in the loss of 34 jobs. However, the same article noted that the closures are temporary.

Evan Berney, EchoPark's digital operations director, told the publication that both locations could reopen; all real estate remains; and employees are receiving 60-day severance packages and being offered the chance to transfer to other Sonic or EchoPark locations. Sonic declined to comment further before its second-quarter earnings call.

Originally posted on Auto Dealer Today