Common mistakes in reconditioning used-car inventory vehicles can erode dealer margins and competitiveness.
Recon’s efficiency – or lack of it – affects the entire store, so fixing these mistakes isn’t just a recon issue. Here are the mistakes and fixes.
Us vs. Them: Recon touches many areas of the business. Managers who understand this knock down the silos of separatation.
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: The used-car department is one of the service department’s best customers. It should be treated that way. It shouldn’t be kept waiting while the service department takes care of retail customers.
To prevent long waits, it’s best to separate retail and internal services, physically if possible, but certainly philosophically. When this is done, dealers report improved recon output and quality, and retail advisers 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 efficiency or inefficiency.
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.
Gross profit is not maximized when a vehicle spends half or more of its magical 30-day retail window in reconditioning.
Not Counting Cost: The money meter runs from the day a dealership acquires a trade or buys a used-vehicle at auction until that unit is sold. This is called holding cost.
NCM 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.
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 issues slows down operations, throws efficiency in the ditch and frustrates staffers.
Get everyone on the same track with 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.
Dennis McGinn is founder and CEO of Rapid Recon, a workflow software company.
