In today’s market, the most successful dealers typically complete their work in less than twenty-four hours. During this period, some dealers have reported that the turnaround time for their reconditioning services is at least seven days. With Simple dealer reconditioning software, users can reduce the reconditioning time and stay organized. Click here to know more about the software.
The discrepancy is generated by two key factors: the degree to which a dealer realizes that reconditioning time equates to lost front-end profit potential and the degree to which a dealer implements and monitors systems that reflect the “time is money” reality of selling used automobiles.
The following are five best practices that we have collected from dealers that have revolutionized their reconditioning operations to avoid delays and maximize the potential value that can be made from every used vehicle:
1. When making a purchase, stay away from vehicles with known issues:
This may seem easy to make, but when dealers and their purchasers are frantic to fill holes in their used car inventory, they sometimes lose their acquisition discipline. Consequently, they ignore reports of the vehicle’s condition, such as those provided by AutoCheck, CARFAX, and others, and drive home vehicles requiring major reconditioning work. As a result of this dynamic, they are effectively “throwing good money after bad” since they are paying for expensive repairs that they might have avoided.
2. Immediately determine the best route out of the parking lot for each automobile:
One of the best practices is to get the appraisers and the people making the decisions together once a day to go through the trade-ins and decide whether they will be sold at retail or wholesale. This best practice is closely related to the one that was discussed previously; more specifically, dealers should not acquire vehicles at auctions if they are not in a condition or have a market appeal (such as Market Days Supply) that indicates that they have the potential to be sold as retail units. Naturally, the process of trading in a vehicle is more complicated, and this is particularly true in situations when the dealership has already purchased a vehicle in order to close a retail sale. When a situation like this arises, dealers and their managers need to work together and decide as quickly as possible whether a unit has retail potential.
3. Create a system that provides “auto approval” for reconditioning work:
This best practice helps avoid the delays that might occur when a used car manager cannot authorize reconditioning work promptly (or chooses not to do so). Dealers that use this strategy determine a baseline cost for renovating the vehicle (often between $600 and $800 per vehicle), and they provide permission to the service department to do the work if the estimates are lower than the threshold. Because they fear their service staff may “stitch up” the repair order to the maximum amount on every automobile, some dealers fight this best practice even though it is widely accepted. A dealer from the Northeast states that “that hasn’t been an issue at our dealership,” but that they check if projections line up with the actual pricing.
About ten percent of the arriving autos at dealerships where customers routinely examine vehicle condition reports before buying a vehicle will need a manager’s OK since the estimations are higher than the baseline. In situations like this, dealers will send e-mail or text notifications to managers and wait for a decision on whether or not to approve the request in under two hours.
4. Make increasing your speed throughout reconditioning your top objective:
This implies that some dealers will have to give up the tug-of-war they have been engaged in with service directors and managers, who often place greater importance on customer pay work. In these types of shops, dealers will establish a different crew (often led by a manager or writer and consisting of anywhere from one to five mechanics, depending on volume) whose primary mission is to do reconditioning work in the quickest time possible without sacrificing quality. The manager’s remuneration structure often emphasizes the requirement for speed and efficiency, with bonuses being related to fulfilling the store’s 24- to 72-hour reconditioning standard.
In some other dealerships, the manager of the used vehicles is also responsible for overseeing the reconditioning process. The manager will next work with their colleagues in the service department to devise and carry out the procedures that will allow the dealership to recondition vehicles effectively and promptly.
5. Investigate potential avenues for cutting expenses:
A rising number of dealers are looking at the prices of their internal labor and components to alleviate pressure on their front-end profit margins. These efforts frequently result in the decision to charge lower rates than retail for work, to use non-OEM parts that are less expensive (for example, brake pads, tires, wiper blades, etc.), and to tighten their oversight of outside vendors who handle small dent/body, upholstery, and window repairs. These choices go beyond the financial considerations that drive the extent of the reconditioning work performed on individual vehicles.
The five best practices outlined here are concrete actions that dealers may take to speed up the time it takes to bring their vehicles to the front line of the assembly line. However, dealers should also be aware that there are two front lines in today’s market: the physical and the virtual. Both of these should be considered equally important. The time it takes for vehicles to reach the actual front line should be recorded in hours, but the time it takes to get to the virtual front line should be measured in minutes.
Some dealers don’t handle the description, photographs, price, and other features needed to stand tall on the virtual front line until the reconditioning is finished. In the current climate, when time is money, this is a terrible operational idea. Hence, it is wise to invest in software like Simple Dealer reconditioning software to increase operational efficiency and reduce time to market. Fill out this form to know more about our reconditioning software or schedule a free demo.