Page 46 - GIADA-Jan-2018-Final

DEALERSHIP TRENDS

COMMENTARY: 5

Answers to important

questions about recon,

used-car profits

By Dennis McGinn

The practice called rapid reconditioning to reconditioning wastes. No one’s lying, but without a
get vehicles from acquisition to the sales lot b) More productive technicians and system that connects the recon
faster has caught the imagination of general detailers who now work toward
managers and their reports. timed, specified and specific work workflow process to all step
steps. They remain focused and on owners in real-time, you will
When implemented and executed well, task as their performance is measured keep convincing yourself that
rapid reconditioning results in measurable and monitored for opportunities and
step-by-step discipline, accountability accountability. your ADR or average days in
and return on investment for dealers who c) Improved communications (including recon is based on your “best
pursue continuous improvement. mobile) up and down the line, so all case” cars.
involved in recon know what step(s)
As rapid reconditioning brings new particular vehicles are in the process This selective recollection is a well-
recognition of the recon process as a profit- and when they will be on the sales line. developed assumption born out the
generating department and no longer a Reduced finger pointing, grumbling necessity to protect the GM at 20 Group
necessary expense for a dealership’s sale of and lost efficiency fade away. Groups meetings. At one time it may have been
used cars, it also requires GMs and their and individual store reporting equips okay to dismiss this as “no big deal,” but
used-car, fixed-ops and recon reports managers with real-time, actionable after several million cars of data, we know
to think and manage their particular performance information. this is costing around two turns of real gross.
kingdoms in new ways. d) Increased labor and parts sales. What we find is recon time guesses of three
e) Less holding cost erosion, an average
Therefore, we receive questions about just of $40 per car per day, according to an to five days are instead 10 to 15 days when
measured by reconditioning workflow
what rapid reconditioning is all about and estimate by NCM Associates. Holding software. Inventory that takes that long to
what differences it can and should make to cost is each vehicle’s share of dealership get to the retail line has consumed half of
a dealer’s business. Here are the top five: overhead, A car spending 10 days in its magic 30-day optimal retail window. Get
recon goes to the sales line with $400
What’s in this for me? This question is already eroded from its actual sale cars to the front line faster and inventory
turn increases by one turn for every 2.5
rarely asked aloud, but everyone thinks margin.
1it when considering a change. It’s a fair days cut from the recon cycle.
question. Without exaggeration, the answer Why would we need this, our What is time to line best practice
is a dealership using rapid reconditioning reconditioning is already rapid? then? With the proper reconditioning
principles and practices will reduce 2 Examined closer, your recon is 3 workflow practices and controls in
conflict, improve communications, reduce probably not rapid — at least not as fast as place, a recon center should consistently
turnover and enjoy more prosperous used- you think it is. When you ask your recon or get cars from acquisition to the sales line in
car and fixed operations: fixed ops managers about recon efficiency, three to seven days.
most of their responses will be poll-based
a) Fresher inventory that retails at higher or best-guess estimates; either case will be
margins; money that traditional wrong, by a lot, 99 percent of the time.

44 | GIADA Independent Auto Dealer JANUARY 2018