Q1 2025 Sonic Automotive Inc Earnings Call
Speaker Change: Good morning and welcome to the Sonic Automotive First Quarter 2025 earnings conference call. This conference call is being recorded today, Thursday, April 24th, 2025.
Speaker Change: Presentation materials which a company managements discussion on the conference call can be accessed at the company's website at ir.sonicautomotive.com
Speaker Change: At this time, I would like to refer to the Safe Harmer Statement under Private Securities and the Negation Reform Act of 1995.
Speaker Change: During this conference call, management may discuss financial projections, information or expectations about the company's products or market or otherwise make statements about the future.
Speaker Change: Such statements are forelooking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.
Speaker Change: These risks and uncertainties are detailed in the company's filings with the Securities and Exchange Commission. In addition, management may discuss certain non-GAAP financial measures as defined by the Securities and Exchange Commission.
Speaker Change: Please refer to the non-GAB reconciliation tables in the company's current report on Form 8K, filed with the Securities and Exchange Commission earlier today. I would now like to introduce Mr. David Smith, Chairman and Chief Executive Officer of Sonic Automotive. Mr. Smith, you may begin your conference.
Speaker Change: Thank you very much, and good morning everyone. Welcome to the Sonic Automotive first quarter 2025 earnings call. As you said, I'm David Smith, the company's chairman of CEO
Speaker Change: Joining me on today's call is our president, Jeff Dyke, our CFO , Heath Byrd, in our Vice President of Investor Relations, Mr. Danny Wieland.
Speaker Change: We would like to open the call by sincerely thanking our amazing teammates for continuing to deliver a world class guest experience for our customers.
Speaker Change: We believe our strong relationships with our teammates, our manufacturer, and lending partners, and our guests, our key to our future success. And as always, I would like to thank them all for their support and loyalty to the Sonic Automotive team.
Speaker Change: Turning now to our first quarter results, Gap EPS was $2.4 per share, and excluding the effect of certain items as detailed in our press release this morning, adjusted EPS was $1.48 per share, a 9% increase year over year.
Speaker Change: 1st quarter consolidated total revenues were a 1st quarter record of 8% year over year while consolidated gross profit grew 6% and consolidated adjusted EBITDA increased 7%.
Speaker Change: Moving to our franchise dealership segment results, in the first quarter we generated first quarter record franchise revenues of $3.1 billion, up 9% year over year.
Speaker Change: This revenue growth was driven by an 11% increase in new retail volume and a 6% increase in fixed operations revenues.
Speaker Change: First quarter results benefited from an increase in new vehicle sales in the final days of the quarter, which we expect was the result of customers buying in advance of tariffs that went into effect on April 2nd.
Speaker Change: Our Fixed Operations Gross Profit and F9 Gross Profit also set first quarter records of 7% and 9% year-over-year, respectively.
Speaker Change: Same-store new vehicle GPU was $3,089 down sequentially from the fourth quarter due to our luxury brand mix and in line with our guidance given on our last call.
Speaker Change: On the use vehicle side of the franchise business, same-store use vehicle volume decreased 2% year-over-year, driven by lower levels of late model use vehicles and consumer affordability challenges.
Same-store-used GPU increased sequentially to $1555 per unit.
Speaker Change: Our F&I performance continues to be a strength with same-store franchise F&I GPU of $2,442 in the quarter, up 1% sequentially and 4% year-over-year.
Speaker Change: The continued stability and FNI of these levels supports our view that FNI for unit will remain structurally higher than pre-pandemic levels even in a challenging consumer affordability environment.
Speaker Change: Turning now to the Echo Park segment, first quarter segment income was an all-time quarterly record, $10.3 million, and Adjusted Eva Dyke was an all-time quarterly record, the $15.8 million, up 116% year-over-year.
Speaker Change: For the first quarter, we reported Equipark revenues of $560 million flat year over year and all time record quarterly Equipark gross profit of $64 million of 21% from the prior year.
Speaker Change: Echo Park Segment Retail Unit Sales Volume for the Quarter was approximately 18,800 units, about 5% year-over-year.
Speaker Change: On the same market basis, which excludes closed stores, Echo Park revenue was up 3%. Gross profit was up 19% and retail unit sales volume increased 7% year over year.
Speaker Change: Echo Park segment, total gross profit per unit was an all-time quarterly record of $3,411 per unit, $456 per unit year-over-year.
Speaker Change: Rebounding from the temporary GPU pressure we faced in the fourth quarter as we indicated on our previous earnings call.
Speaker Change: We continue to believe that our data-driven centralized inventory management strategy is a key differentiator for Echo Park, which should help to minimize disruptions from market volatility in the short-term while maximizing Echo Park's long-term growth potential.
Speaker Change: When combined with the strategic adjustments we've made to our Echo Park business model, we believe we are well positioned to resume disciplined long-term growth for Echo Park once used vehicle market conditions sufficiently improved.
Speaker Change: We are beginning to see the benefits of our investment in modernizing the power sports business, and we remain focused on identifying operational synergies within our current network before deploying capital to expand our power sports footprint.
Speaker Change: Finally, turning to our balance sheet, we ended the quarter with $947 million in available liquidity, including $430 million in combined cash and floor plan deposits on hand.
Speaker Change: We continue to maintain a disciplined balance sheet approach with the ability to deploy capital to the gross strategically as market conditions evolve.
Speaker Change: Additionally, I'm pleased to report today that our Board of Directors approved a quarterly cash dividend of 35 cents per share, payable on July 15th, 2025, to all stockholders of record on June 13th, 2025.
Speaker Change: Despite these challenges, our team remains focused on near-term execution and adapting to ongoing changes in the automotive retail environment and macroeconomic backdrop while making strategic decisions to maximize long-term returns.
Speaker Change: Early more, we remain confident that we have the right strategy and the right people and the right culture to continue to grow our business and create long-term value for our stockholders. This concludes our opening remarks and we look forward to answering any questions you may have. Thank you.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press start one on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press start to remove yourself from the queue for participants using speaker equipment and maybe you necessary to pick up the handset before pressing the start keys. You may press start to remove yourself from the queue for participants using speaker equipment and maybe you necessary to press the start keys.
One moment please, while we pull for questions.
Speaker Change: Our first question comes from the line of John Murphy with Bank of America. Please
John Murphy: Good morning guys. I just wanted to ask a first question around sort of the obvious on tariffs and just maybe from three specific angles if you could you'll comment as best you know right now. You know first, you know, what kind of commentary are you getting from?
John Murphy: You're factory partners. Second is you think about the full forward in March and early April . You know what you're seeing outside of your stores maybe inside of your stores on pricing and GPUs because it doesn't seem like you've necessarily taken advantage of stuff there yet, but it's certainly stories of other folks.
John Murphy: and then third, what kind of impact do you think the uncertainty has around M&A activity and pricing?
John Murphy: It's Jeff John from a manufacturer's perspective. This is the all balls in the air right now. No one really knows. Parts are coming in from out of the country on American made cars and so it's for us. It's just steady as she goes. We had a great first quarter. We think we're going to have a great second quarter. We're going to have a great second quarter. We're going to have a great second quarter. We're going to have a great second quarter. We're going to have a great second quarter.
John Murphy: And, you know, we believe based on conversation with the manufacturers over the next 90 days.
that things will settle down.
John Murphy: You know, is there going to be a price increase? Maybe, but we don't see it as being a 25% price increase and we've had price increases before and we faced a lot tougher situations than this and you know the industry is Teflon from my perspective, we can we'll battle our way through this and so. Thank you.
John Murphy: We just are not watching the news. We're putting our head down, we're going to work, we're very focused on executing our playbooks, our processes and we think those results showed up in the first quarter and we'll see what happens in the coming months ahead but I'm not
John Murphy: and our team is not too concerned that we won't have solid resolution over the next 90 days or so.
John Murphy: Maybe the dealers and the consumers have to participate a little bit, not sure yet, and hopefully the governments will come along and get a hold of this.
John Murphy: But at the end of the day it's not some massive concerns in terms of
John Murphy: M&A, it hasn't really made a huge difference at this point. We've got a lot of discussions going on.
Certainly, it's come up [inaudible]
John Murphy: If anything, maybe it's, we're buying a little bit of time, just kind of see what happens over the next 90 days before we finalize.
Some transactions, but no big changes.
John Murphy: There from from our perspective. And John is David I think one thing to mention about pricing because I think you alluded to it is that you know some dealers out there are I think taking advantage of the situation and and taking advantage of customers and and we're definitely not doing that we're [inaudible]
John Murphy: You know, we have our the highest guest satisfaction we've ever had and we want to keep it that way and so we're doing more market pricing not and not gouging our customers.
Speaker Change: I appreciate the balance for you. Maybe just one quick second one on fixed apps.
Speaker Change: I know you guys were a little slow on head count hiring, you know, last year, just careful if there's any update there and what kind of opportunity you think there is to ramp up that, you know, that hiring process and really, yeah, I think it's the same for sale, it's a lot higher.
Speaker Change: Made a huge difference for us in terms of fixed ops, so we'll continue to hire as we grow through the year. We've got capacity with open stalls and bays for those technicians that we're hiring. [inaudible]
Speaker Change: and I think the results have proven that, you know, in the last four or five quarters. And we've had, you know, the number of stores where we're opportunistically growing our service, we're building new stalls, adding stalls, so there's definitely opportunity to grow.
Speaker Change: And right now with the additional warranty and recall activity we're seeing there's a lot of volume running through the service lanes So as we go forward and get those technicians fully productive We'll be better to balance, better able to balance the customer pay and warranty side of the business as long as these warranty tailwinds persist
Speaker Change: Super helpful, just one follow up on that. I mean, if you think about the opportunity is a lot of it volume or because you're in the high class, you have the high class problem of too much demand, the United States door rates, inch up a bit.
Speaker Change: I mean, we're looking at our door rates on a quarterly basis. John , that's something that's been ongoing forever. No, the demand of volume is there.
Speaker Change: There's just plenty of volume from a fixed perspective and we're taking advantage of that.
Speaker Change: and they're more techs to be hired. And our culture's taken over it. We're not having to push so hard to hire techs, the culture's taken over and and and
I'm going to say, but, Viamen Price, right, opportunity. Yes.
Speaker Change: Yeah, okay, just at my point, John , and speaking of tariff impact, you know, service is one of those areas where we can pass that along to the consumer.
Speaker Change: So that's another opportunity. We think if there are tear-up issues people are making a vibe versus repair decision that can help that and we can if we can pass along the tear-up increase to the consumer.
Speaker Change: Love the whole time, the whole team tag it in there. I appreciate all the answers. Thank you guys. Yes sir.
Speaker Change: Thank you. Our next question comes from the line of Bret Jordan with Jeffries. Please proceed with your question.
Patrick Buckley: Hey, good morning guys. This is Patrick Buckley on for Bret. Thanks for taking our questions.
Morning. Morning.
Patrick Buckley: I'm the use side. Could you talk a bit more about what the GPU's trajectory looks like from here? I guess it's 2-1 above the 25 outlook. You know, once we start modeling in contraction and what's driving that?
on the franchise side throughout the end of the year.
Patrick Buckley: and Echo Parks margins are growing. We're buying a larger percentage of our cars off the street. We've moved from 20 to 25% up to 30 to the highest 35% of their cars now on a weekly basis coming from street purchases. That's making a big difference in our front margins and then really helped out in March of the first quarter and it's carrying over in April and that's a change for us.
Patrick Buckley: So, more front-end margins are improving there and we expect that to continue
Patrick Buckley: Great, thank you. And then I guess, you know, on BEVs, have you seen any changes year-to-date with the current administration and, you know, just a little shake-up as far as mandates and, you know, I guess what's the current outlook there on inventory versus the man?
Patrick Buckley: Yes, it's dropping if we have less supply. Yeah, I mean, everything positive there. I mean, the thing is is that now inventory levels are beginning to get closer to matching what consumer demand is and that's where it should be.
The demand is, is-
Patrick Buckley: Yeah, it's lining up with the inventory levels, right? And so we're applauding that. We're having to carry less inventory that doesn't turn as fast.
Thank you.
Great. That's all from us. Thanks, guys. Thank you
Thank you. Our next question comes from the line of Jeff Lick with Stevens Inc. Please proceed with your question.
Good morning, gentlemen. Thanks for taking our question.
Patrick Buckley: First one is, I wonder if you could break down the warranty works, some parts worked a little bit as it relates to warranty customer pay. I know you're getting a little bit but just that.
Thank you.
Patrick Buckley: What the metrics were in terms of warranty growth as it relates to the common customer pay? Yeah, about 40% warranty growth in the first quarter versus two to three percent customer pay growth. That's not a mix we like at all. It's an adjustment that we're making. We need to, you know, a lot more focus on getting our CP customers through the lanes. We're doing a lot more focus on the customer pay growth. We're doing a lot more focus on the customer pay growth. We're doing a lot more focus on the customer pay
Patrick Buckley: Between warranty and customer pay for our liking and there's a lot of warranty work out there that can't be helped But we need to we need to adjust in terms of that mix coming through our lanes and we think it's a great a great sign of our that our team you may want to mention out that they already highlighted and noticed that [inaudible]
You know, it wasn't like that was just noticed [inaudible]
Speaker Change: Yeah, the team towards the end of the first quarter is saying, look, this is just not the mix of revenue coming through the service drive is not the mix we like.
Patrick Buckley: We need to start making some adjustments, and those adjustments are being made. And we've got the technician headcount now to handle that, and that's growing. So put all that together, and we think we can pivot pretty quickly in how that mix is coming through the service drive in the second quarter.
Is there evidence, or do you have ways to track? [inaudible]
Jobs, A Bitloom, in favor of warranty.
Patrick Buckley: Not intentionally, but it's common sense. I mean, if you got that much warranty coming through, it's easier work, it's higher margin, it's, you know, everybody's taking, taking the licks at that and it's just, it's not the right way to run the shop. You need to load the shop differently.
Speaker Change: We know that, just a lot of warranty hit us all at the same time, and you know, service router can take a warranty job in, technician can flip it and get another one real quick, because there's another one standing in line. And so we're not doing the additional service requests and the things I think from a playbook perspective that we should do, we've got to slow down and execute it at a higher level. It's great to have the warranty work, it certainly played a big role in our quarter.
Speaker Change: from a fixed perspective, but we can do a better job in making sure that we're balancing customer pay and fix the right way and loading the shop appropriately and we're making those changes.
Speaker Change: Yeah, I would say it's more, you know, rather than saying turning customers away, it's more scheduling properly.
Speaker Change: And just a quick one on Echo Park, if you, and this is kind of just a
Speaker Change: Hypothetical, if you think about a tariff scenario where let's just say the SAR does.
Speaker Change: And obviously that's going to come at the franchise dealers, there'll be less trade-ins where franchise dealers tend to get more, you know, their supply through trade-ins up top.
Speaker Change: You know, I'm just curious. I could see either way how this could affect Echo Park. Obviously Echo Park is the whole premise is it's a value proposition. I'm
Speaker Change: You know, when you think about the puts and takes of all the different dynamics in terms of, you know, less stuff going through the auction lane and that and whatnot Do you do you guys view a tariff scenario as beneficial to Echo Parker? Would it be a headwind?
Speaker Change: and we're prepared for it. That's why you're seeing this pile out more cars off the street. We think we can push that up even higher, maybe the 40 to 45% level.
Speaker Change: when COVID hit. And so it could have been a headwind if this was 2020, but we don't look at it like that now. We're very prepared and just had an amazing first quarter with Echo Park. We look to have another one in the second quarter. April sure enough that way.
Thank you very much.
Speaker Change: You know, as you may have heard on our previous call, you know, our Echo Park stores have the number one reputation dot com [inaudible]
Speaker Change: They're friends and family coming to Echo Park and those people as you see our gross is going up.
Speaker Change: People are identifying Echo Park as saying we want to go there and buy a car and just choosing to go there at first, and we're seeing that in our numbers. So I think that, you know, our team will adapt prices go up. I still think that customers will pay for that amazing guest experience.
And that's...
Speaker Change: Not just the sourcing, obviously sourcing could go up, but if your demand goes up
Speaker Change: and your value proposition goes up even, you know, your prices could go up, but your value proposition relative, the alternative couldn't we could actually why that's what I was trying to get at is 100%. We saw we saw at the end of March and we're seeing it in April .
And we're still going to be
and we really have that dialed in.
Speaker Change: In particular, around the inventory management, the day supply, how fast we're moving, inventory through the system, 20 to 22, 23 days supply on lot, we're turning those cars in 12 days just as fast as they can go, and we don't, the inventory is not sitting.
Speaker Change: and so if you can turn it into the fascist that the boo is going to win and we have that out there. We've got a great education. I have been getting a lot of education, but that's a little bit of it. We're ready to prepare for this, and we've taken this another day from.
Thank you. Bye-bye.
kind of must all of us vote for it, Britain.
I perform Patrick Buckley
Approved.
Speaker Change: David Ford, Patrick Lee, or more quickly than we did in the ages, as far as the platform is concerned, the perforate
Speaker Change: We were a lot smarter and more nimble than we were even 24, 36 months ago. 415 cars are rooftop and march every store profitable and the big Echo Park stores among the most profitable that we had in the company. And so we've got it dialed in and now the question is can we get him in tour to stabilize a little bit?
Speaker Change: Because once we do that, we can start opening some stores and we're hopeful that towards the end of the year, the beginning of next year, we can start announcing, hey, we're going to bring a strategy that shows you how we're going to grow the footprint of Echo Park.
Speaker Change: For example, we've gotten it speaking of things we've learned as we open that store and I think I mean it went off like
Speaker Change: You know, very efficiently, we've got a mature team in there and they did 400 plus cars like in their second month Yeah, and have been profitable since day one so which is just a great time
Speaker Change: Awesome. Well, thank you very much. You're best of luck in Q2. Thanks so much. Thank you. Take care. Bye bye.
Speaker Change: Thank you. Our next question comes from a line of Rajat Gupta with JP Morgan. Please receive a seat with your question.
Rajat Gupta: Sorry, you have just one more follow-up on Echo Park here. The first quarter results obviously pretty strong here.
Rajat Gupta: It looks like you did take up your four-year guidance, but maybe it seems a bit conservative in context of how strong the first quarter was.
Rajat Gupta: It looks like you feel good about the Echo Park retail GPU, the FMI, you know, you maintain your unit guidance.
Thank you.
Speaker Change: Sorry, I think there might be some issues with my line, but I'll try again. We heard, we heard, we heard your question.
Speaker Change: Oh, you did? Okay, great. Can you hear us? Can you hear us?
Speaker Change: He'd broke up like in the respond, but I can check the transcript, maybe it's on my line, but I'm not sure it looks like others have got it, but if you want to repeat the answer, that's fine.
Speaker Change: Dad's no problem. We said you sound like our board of directors yesterday in our board meeting, asking the exact same questions. And look, the tariffs are playing a role in our forecast there. We'll get a lot more. We can get more aggressive if things play out the way we think they're going to from a tariff perspective. We're going to get more aggressive if things play out the way we think they're going to from a tariff perspective.
Speaker Change: and they turn positive, but we need to be conservative there, Rajat, so we don't get out ahead of ourselves if things do get tighter from a used car pricing perspective and so further adjustments as we get into announcing the second quarter, if things play out the way we think from a tear perspective.
Speaker Change: I'm just a, I'm just a, that's helpful. And then just on SG&A, you know, one of the things you've noticed, you know, you know, in your print and you know, some of the peers that are reported, we we did see a little more de-laveraging, you know, in the first quarter than, you know, maybe at least what, you know, I had been expecting and maybe some other investors might have been expecting.
Speaker Change: You know, you know, some of the peers talked about like some weather headwind in January , February , you know, a couple lower selling days
Speaker Change: That might have caused that. I was curious if there's anything you would want to call out on the SNA if you know the the leverage was in line with their expectations or was it worse or better and also like just have there be need to pay plan or commission type adjustments. I'm going to ask you a question.
Speaker Change: within the workforce, that's maybe, you know, the driving the S-June higher and which could be more sticky.
Speaker Change: So, just wanting to unpack all of this a little bit, if possible, that's all I have. Thanks. I could just mention that it is David from the kickoff to the year.
David Smith: We had a big focus on S-GNA and expenses and throughout the company in our annual meeting and we think that that's taking effect.
David Smith: As you see it in the numbers, but yeah, I'm just going to mention there are a few things that our first quarter one times, you know, we had some compensation that was just for the first quarter that would be driving that up [inaudible]
David Smith: But there's nothing this material. There hasn't been any changes that pay plans. It would have caused that. It's really just your first quarter of things that we clean up in the first quarter, such as paywall taxes or higher, etc. But nothing systematic that is going to be going through the next three quarters of the year. [inaudible]
That's how full clarification. Thanks for having a good luck.
David Smith: And maybe one final point on that, we reaffirmed our full year consolidated company SGNH Argett in the low 70 range. And so there's going to be some puts and takes as to what comes from the franchise and what comes from Echo Park as we go through the year and obviously depending on how the tariff situation plays out on demand and volume. Volumes, the big driver of sales compensation, the variable compensation piece.
David Smith: But overall, you know, we're still in line with what we anticipated for the year through the first three months Yeah, and I think this is it I think it's interesting to point out that, you know, this quarter of Echo Park, 16 A's percent agree this was lower than the franchise [inaudible]
Heath Byrd: and that just shows you as the volume and the growth increases you have more money that flows to the bottom line quicker because of the fixed expense structure that we have at Echo Core.
John Murphy: Got it. Got no, that makes sense. Thanks for flagging back. All right. Great. Thanks. Thank you. Good luck. Thank you, John . Thank you
Speaker Change: Thank you. Our next question comes from a line of Daniella Aegean with Morgan Stanley . Please please proceed with your question.
Daniela Avian: Hi, thanks. One more on Echo Park and Apologies if you answered this earlier. I also had some connection issues but...
Daniela Avian: You mentioned anticipating an increase in use, pricing, uplift to demand as a result of tariffs.
Some Affordability Concerns as well [inaudible]
at times.
Daniela Avian: So I'm not too concerned about getting inventory, we'll watch pricing pricing.
Daniela Avian: It just adds complexity to the business when you do that. Recon times take longer. There's just a lot of complexities and we're trying to stay away from that because complexity is not part of the Equipark model. But it's certainly something that we have to keep building of doing in. We did during the COVID years.
I hear you, thanks.
Thank you.
Michael, and Michael, are you there? Your line is...
Sorry about that. Yeah, am I good?
Speaker Change: You're good. Sorry about that. One thing we haven't touched on is that if we get these price increases for tariffs, you get a corresponding increase in the residual values of vehicles coming off lease, particularly at the luxury end, at the import luxury end, how fast?
Do those residual values adjust?
Speaker Change: I mean, they, they, they will adjust quickly, Michael, but we're still dealing with the lack of lease returns from lack of lease sales in the, in the past.
Speaker Change: You'll start to see, yes, an adjustment, but not in this county or no way.
It can, yes, it can [inaudible]
Speaker Change: Okay, to help mitigate it. Okay. All right. And then one last thing on Echo Park, you kind of alluded to that.
Speaker Change: If necessary, can that be accelerated or are you still just going to wait and see before you turn the keys back on?
Yeah, I can tell you that if we are our team
Yeah
Speaker Change: As Jeff mentioned earlier, we've learned a lot from the pandemic and how to open stores.
Speaker Change: and went to open stores and I think you're going to see that in the future quarters, that if our performance continues the way it did in this
Speaker Change: That particular location, that was Jeff Dyke was a general manager at that location back in the day. First GM John , it was great. But we got once we acquired that location.
Speaker Change: From the time we did the opening was a very short period of time and it was off to the races that I mentioned earlier in the call within a couple of months we're selling over 400 cars out of that location. So once we get ramped up and get going again you're going to see we're able to do it quickly and this is Jeff we've got you know obviously properties facilities that we own that are ready to go things that we can go pull the trigger on.
Speaker Change: There needs to be some stability here.
Speaker Change: Yeah, God, you know, it's just we were laughing the other day. It's just uh...
You know, keep throwing it at us. We're Teflon with you at the end. We can handle anything.
Speaker Change: Um, um, and so this is terrorists, what the hell who cares people just yeah, that's right.
Speaker Change: It's honestly an important message, I think, for the street and our team, is to understand we've got a lot of leather on our skins. We've been through this before, we've seen
Speaker Change: You know, a lot of curve balls thrown at us. It'd be nice to have a year to have just straight. Let's go sell some cars and service some cars and have some great just experience and build the great technologies. But we'll deal with it and we we seem to always find the rose. [inaudible]
Speaker Change: here in the garden, and we'll do that again with this little gig that we're facing.
Speaker Change: So we'll see, it's going to be a fun, it's going to be a fun year. We're going to sell a lot of cars. Echo Park is going to do great, but a few bumps in the road, so to speak.
Speaker Change: Sounds like you planned it out properly back when you made those decisions. So we did it there. Yeah, give me the flexibility. Thank you. Thanks, Mike. Thanks.
Speaker Change: Thank you. And as a reminder, if anyone has any questions you may press star one on your telephone keypad to join your queue and ask a question.
Speaker Change: Our next question comes in a line of Chris Pierce with Need Him and Company. Please proceed with your question.
Hey, good morning, everyone. Morning.
Speaker Change: Can you just walk me through? I think the question was asked earlier on used vehicle GPU I just want to make sure I understand the assumptions my look at first quarter recent history and then the guidance is it that
Speaker Change: Because prices might go up, and you still want to move units, the yourselves in the industry will take a lower GPU, or is there something I'm missing? I just want to make sure I understand the puts and takes there.
Speaker Change: Meaning GPU or margin percentage, from a franchise by you.
Yeah, a Dollar GP from a franchise perspective.
Speaker Change: We've been operating for years now in the 15 to 14 to 1600 range, and you know, somewhere in that 1500 range we're going to we're going to be from a franchise perspective I don't see that really changing. [inaudible]
Speaker Change: and then, but I do see Echo Park's front end margin.
Speaker Change: Getting better historically because of the percentage of cars that we're buying off the street and we're trading for versus the percentage of cars the mix is changing that we're getting from in the auto.
Speaker Change: That's now a 70-30 mix, a 65-35 mix. It was an 80-20 mix and just by definition, if you're buying cars off the street, you're going to have better margin.
Speaker Change: Yeah, and this is he's one thing to add. I think the disconnect here is one of the big issues is that you have seasonality and so as we go through the years Let me do the quarters. You're going to have certain quarters that are historically lower and so you're going to end up like we said between that 1,300 and 1,500 range
Speaker Change: Okay, and then just lastly, one on Echo Park F and I, Provee Jill Vehicle.
Speaker Change: If I look at the number of this quarter and then look at the guidance, I mean, was there some, is there seasonality based on the type of customer you see in the first quarter that takes a higher percentage of warranty or pay the higher interest rate so you can sell off the loan at a higher amount. I just want to understand because it looks like the per vehicle number comes down through the rest of the year to get to the guiding medical park. [inaudible]
Speaker Change: Yeah, you know, honestly, we're probably being conservative. They're executing at a really high level from a warranty penetration perspective. We've done some cost work.
Speaker Change: on what we're paying for warranties and managing that better. That's flowing in other products. Those are flowing to the bottom line. So our FMI performance is just stronger and I would project it. It's going to continue to be stronger.
Speaker Change: Okay, just to clarify that, you're saying that you're seeing prices vanishes from your third party warranty providers, and that's flowing through, the first thing that the crisis vanishes from moves that we've made with our third party warranty providers that's flowing through the to the bottom line. Yes. Okay. Okay. Perfect. That's everything for me.
Speaker Change: Again, it's also important to emphasize again that our team, our ECOPAR team is delivering the number one guest experience in the industry. So there's no doubt that that's reflecting in the numbers.
Perfect. Thank you.
Thank you.
Speaker Change: We have reached the end of the question and answer session. I would like to turn the floor back to David Smith for close remarks. Thank you very much.
Speaker Change: Thank you, everyone. We'll speak with you in the next quarter. Have a great day. Thank you.
Speaker Change: Thank you for your participation and have a great day.