If a dealer’s goal is to turn used-car inventory in 30 days, half that time can’t be gobbled up by reconditioning.
When I’m asked to analyze a dealership’s vehicle reconditioning department, it’s quickly apparent from my performance-report review who is running the show.
Stores with recon processes that get used cars to the frontline faster for more gross are managing their recon processes much differently than are operators who take 10 to 15 days to get vehicles to retail.
The most telling difference is who is in charge. In highly productive, assembly-line efficient recon shops, the general manager is setting the tempo and holding key managers and staff accountable for delivering a 5-day time-to-market culture.
That culture is disciplined, process-driven and quick. Its reconditioning steps are clearly defined (and written) activities, responsibilities and accountablilty goals. By adhering to this process, management and staff run recon by the clock and profit from it.
General managers who instill this culture get cars to retail faster so they sell sooner for higher gross. Getting vehicles’ frontline ready just 2.5 days sooner equals one additional inventory turn. A 5-day improvement means two extra turns a year.
When you achieve this change, service and parts are kept busier and more profitable. Because recon and detail staffers work smarter, their efficiencies can lift their compensation.
Cut Costs, Add Turns
The industry reconditioning time-to-market average is 10 to 15 days. If your goal is to retail more used units at the magical 30-day mark, you can’t afford to have half of that time burning up in recon. Stodgy recon processes delay units getting to the frontline – and such delays erode sale gross.
With each unit you acquire, whether through trades, private purchases or from auctions, you acquire a cost associated with each vehicle. This cost is each unit’s share of floor plan, advertising and other operating expenses. NCM Associates notes from its 20 Group studies this figure is $32 per vehicle, per day, more for luxury brands.
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