Slow Recon = Fast Profit Leak
If you ask most dealers how many days it takes to get their cars through reconditioning, it’s like asking them how big was that fish, or how far they drive a golf ball. You get grade inflation. Typically the answer you get is the number they think it should be. Three, four, or five days. When we help the dealer probe a bit more, they learn it is more like ten or twelve days, creating a cascade of issues for the dealer.
First there are the carrying costs for the dealer. Many have quoted numbers from $32 to $40 per day (NCM and NADA respectively). If we split the difference and call it $36 per day, with a turn of 50 cars per month we’re talking about $9,000 monthly profit leak for the dealer if recon takes ten days instead of five days. I don’t know about you, but I can think of some great marketing investments if I could save that money.
There is also the issue of missing photos on the dealer website. Since many dealers grab inventory from the DMS, and then freshen it with photos, videos and options from lot service companies like Dealer Specialties, the cars that are stuck in reconditioning appear on the website with few options and no photos. Not a good combination if you want to capture the attention of an internet shopper, and instead gives the appearance that the information is outdated.
So how do you get started solving this problem? Get some visibility into how long recon is taking, or better yet, how long each step in the process is taking. When considering steps, make sure you include ones that don’t involve actual reconditioning work, like getting manager approvals on ROs or waiting on parts. Once you have the steps defined, look for bottlenecks and snuff them out when they appear. Keep in mind you never really remove bottlenecks, you just move them around while hopefully also reducing the time each bottleneck adds. Finally, don’t forget to think through incentives, recognition, and compensation. Set standards for what a good job looks like, measure to those benchmarks, then recognize and reward when the benchmarks are beaten.
There are many ways you could track the reconditioning process, but a web-based software solution is the best direction, preferably a mobile app. Compare the price of the mobile app to the potential savings from reducing the number of days from vehicle acquisition to front-line ready. The quick math will show that this investment will have a very quick payback.