Sonic Automotive Inc., citing timing and market conditions, said it ended a strategic review of its EchoPark used-vehicle unit without taking further actions.
One analyst covering the publicly traded retailer speculated last year that the review could have been a precursor to an EchoPark spinoff.
Sonic on Thursday gave the EchoPark update as it announced lower income but higher revenue for the second quarter.
“After carefully evaluating a range of alternatives, the company has concluded its review and the board has determined that timing and current market conditions do not align with the company’s value creation objectives for the business,” Sonic officials said in a release.
“Sonic will continue to execute on its expansion plans for EchoPark and will monitor market conditions and periodically consider potential opportunities to maximize long-term shareholder value as they arise.”
Sonic also said it is backing off 2025 revenue and other goals for EchoPark 2025 amid current conditions. The retailer previously had projected that EchoPark locations would account for the sale of 575,000 used vehicles and $14 billion in revenue annually by the end of 2025.
“While the company remains confident in EchoPark’s long-term prospects, the current market environment has caused the company to adjust EchoPark’s projected revenue growth and push back the achievement of its previously stated financial goals beyond 2025,” the company said in the release.
Sonic President Jeff Dyke said in the statement that EchoPark, which launched in 2014, remains on track to reach 90 percent U.S. population coverage by 2025.
The retailer first revealed the EchoPark strategic review in July 2021. No updates on the strategic review had been given since that announcement. Sonic had hired investment bank Lazard and law firm Kirkland & Ellis as financial and legal advisers.
In May, Sonic opened an EchoPark retail hub in St. Louis. Sonic operates 50 EchoPark locations nationwide. That includes 11 Northwest Motorsports used-only stores in Washington, Idaho and Montana that were acquired as part of Sonic’s December 2021 purchase of RFJ Auto Partners Holdings.