PALO ALTO, CA, August 22, 2016 – Common mistakes that go undetected and unresolved in vehicle reconditioning cost auto dealers gross margin and erode their ability to be more competitive, says Dennis McGinn, Founder and CEO of reconditioning time-to-market workflow software company Rapid Recon.
“As the industry tightens over the months ahead, fixing these five broken processes now will increase reconditioning’s productivity, resource utilization, and time to market or speed to retail,” he adds.
“Recon’s efficiency – or lack of – permeates the entire store, so fixing these mistakes it isn’t just a ‘recon’ issue,” says McGinn, the undisputed authority in how to transform auto dealership reconditioning operations into profit centers.
He notes these frequent reconditioning mistakes that put used car profitability at risk – and their fixes:
- Us-Them: Recon touches so many areas of the business that managers who understand this knock down siloed ‘us versus them’ attitudes that erode recon’s value to the bottom line. For example, what adjustments might be suggested to appraisers and buyers so vehicles that flow into recon will require less time and money to become frontline ready faster? This will improve used car grosses and inventory turn.
- Shared resources: A dealership’s largest customer is its used car department but shares its critical need for service department resources with customer needs. This keeps waiting either retail or internal needs, thus the common tension here. Separate retail and internal service, physically if possible, but certainly philosophically. Where done, dealers report improved recon output and quality, and retail advisors and technicians become better at inspection thoroughness and upsell results.
- Overconfidence: Without measuring and monitoring recon processes, it’s impossible to gain an honest grasp of how efficient or inefficient recon is. Ask recon their cycle times and their best estimates will be around five days. Yet when the clock measures recon, the actual cycle is eight to 10 days or more! You will not maximize gross where a vehicle spends half or more of its magical 30-day retail window in reconditioning.
- Not counting the cost: The money-meter runs from the day the dealership acquires a trade or buys at auction until that unit is sold. This is called holding cost. NCM Associates pegs this daily cost at $32 per vehicle, on average, though some brand costs can be upwards of $50 and more. At $32 per vehicle per day, shaving six recon days off 100 units saves the dealership more than $19,000 a month or more than $230,000 a year! These costs (and savings) go against (or toward) actual sold gross. A sold gross of $3200 is actually $3008 if the car took six too many days to get to the front line. A focus on improving workflow and production through recon puts dollars directly to the bottom line.
- Allowing poor communications: Repair approval delays, misplaced vehicles, untracked sublet work and other communication delays wreck recon’s speed to market, throws efficiency in the ditch, and frustrates staff. Get everyone on the same track – internalizing a collaborative time-to-market culture. Devise recon repair/parts preapproval buckets based on vehicle mileage to eliminate approval delays. Use mobile devices with VIN, bar code or QR code readers to track recon inventory. Use software tracking to alert everyone about vehicle status and whereabouts, so everyone takes ownership of faster and more productive recon results.
Rapid Recon is the leading time-to-market reconditioning software for new and used car dealerships. Rapid Recon benchmarks and best practices help GMs, used car managers, and service managers fine-tune their reconditioning practices to achieve faster time to market that helps retain vehicle gross. www.rapidrecon.com
Author: Digital Dealer
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