Jeff Dyke: Yes. And it’s a stairstep to EV, right? And I think that’s how you got to look at it. And some of the hybrid vehicles that are coming now are just absolutely amazing, just back from the Mercedes meeting in Germany last week. Some amazing hybrid inventory coming in ’26. But it’s a stairstep as consumers get used to that. And – but it’s across all brands, as David said, 100%.
John Murphy: Okay. Thank you very much. Appreciate it.
David Smith: Thank you.
Jeff Dyke: You got it.
Operator: Our next question is from Rajat Gupta with JPMorgan. Please proceed with your question.
Rajat Gupta: Great. Thanks for the question, and congrats on a strong quarter.
Jeff Dyke: Thank you.
Rajat Gupta: Just a question on EchoPark first, the $7 million EBITDA in the first quarter. You mentioned that 2Q might see some reduction in the GPUs. But I was curious like how should we think about the total EBITDA dollar cadence through the course of the year? Any more granularity you can give there outside of just a positive EBITDA commentary in the slide deck? And I have a follow-up. Thanks.
Jeff Dyke: Yes. I mean, it’s going to move around. It’s the first quarter is always your strongest front-end margin quarter, seasonally adjusted, right? So if you just kind of get rid of the last couple of years, and go back to normalized sales, we always have the best margins in Q1. Q2 sinks a little bit as prices flatten out. And so I would expect certainly a positive EBITDA for the quarter, maybe not as strong as Q1. Then I expect Q3 to be real strong, again, maybe like Q1, and then fourth quarter to be – look a little bit like Q2. So that’s kind of how I’d look at it, a little up and down as we go through the year, but progressively, marginally getting better as we go into ’25. And then, of course, I think ’26 is just going to be a huge breakout year for EchoPark.
So we’re back. You know, it’s fun. It’s fun to be back and it’s fun to put our inventory skill sets to work and that’s happening right now. And again, with 18 stores, it’s not a problem. With 50 stores, maybe a little bit more of an issue because of the lack of total inventory out there. But there are less people that we’re bidding against in the auction lanes, and that’s where 80% of our inventory comes from because some didn’t – unfortunately, didn’t make it through all of this. And that goes along with David’s comment. We feel like we’re some of the last ones standing on a national basis, and it’s going to make it fun for us throughout the rest of this year and going forward.
David Smith: It’s also – this is David. This – it’s open to emphasize is that what we’re seeing from the demand standpoint. We’ve got some stores where we’re needing to hire additional sales people because the demand is extremely strong. We have some stores that are selling over 30 cars per salesperson, which is fascinating. And if you look at our reputation.com scores, we are getting – virtually every review is a five-star review.
Jeff Dyke: And I think this is…
Rajat Gupta: Got it.
Jeff Dyke: That’s key David’s point on having the right headcount and the right productivity per sales associate. That’s part of the variability in EBITDA for the remainder of the year is how do we invest this positive EBITDA that we’ve flipped to in supporting ourselves for further growth as we go through the year as we go into ’25, even just at the existing store base as pricing and affordability begin to improve that should drive more volume, more potential there. And so we’ll think about having the right headcount to support that growth, and there may be some investment ahead of the growth coming or on the brand marketing side of things. Having that optionality with positive EBITDA may let us begin to invest in and develop the EchoPark brand. As we had intended to do a couple of years back and obviously had to make some adjustments on the fly, but continue to build that as we build out that nationwide network over time.
Rajat Gupta: Got it. Got it. That’s helpful color. And just a broader question on the used car market. I mean, you had positive comps in the franchise business. Although obviously, EchoPark is starting to see some traction on the volume. When you look at like some results from some of your peers, like independent to me, it seems like there’s still some pressure that they might be facing in their same-store numbers. I’m curious like what in your view is driving that diversion? Is it because having the advantage of the franchise stores? Or how would you explain that kind of disconnect? Because you seem to be not having – or not – you seem to not be complaining about the one to five year old vehicles at all. So just curious like what’s driving that divergence? Thanks.
Jeff Dyke: I can’t speak for them. At the end of the day, I think we bought some of the best inventory management skill sets in the industry. We know where to get the cars, how to get the cars, and with inventory coming back on the new car side, it just opens the doors for us. And we just don’t see – I’ve read a lot of the comments that are out there for the rest of this year. I know lease returns are going to drop off a cliff. But there’s other ways to procure inventory. And we just don’t see it as having some massive effect on the used car business. We expect to grow our used car business from the low to mid-single-digit range for the year. And I expect that to continue into the second, third and fourth quarters and to grow from there.
