Page 3 - MIADA-q42020

Maximizing Used Car Gross Profits in a

Market Where Every $1 Counts

By Karla Guleserian, MSEC

The used car market is more complex Time of 3-5-days would do to a dealer’s bottlenecks and take immediate corrective
than it has ever been. With new vehicle inventory turn if it had an aggressive action. Additionally, this insight enables
inventory levels steadily declining and sales team that had a line-up of interested managers to hold individuals and vendors
consumers growing more wary of high auto customers immediately after recon was accountable for recon goals as well as
payments and public transportation due to completed on a car. Not only would it recognize outstanding performance.
the pandemic, the demand for used cars give tremendous velocity to the used car
has accelerated which has naturally led to inventory turn, but depreciation would be Improving cross-department communi-
increased prices and higher trade-in values. minimal along with holding costs. cation is a huge function of recon soft-
ware. App notifications and Twitter-like
Dealers face growing competition from To minimize the Retail-Ready Time requires VIN-specific messages enable real-time
companies such as CarMax, Carvana, software that lets everyone involved in the communication about step progress. Unlike
Carlotz, and Shift Technologies that have recon process see every vehicle across the text messaging, recon app notifications and
ramped up their used car efforts and were entire operation and know exactly where it @mentions are vehicle-specific meaning
modeled long ago to sell used cars directly is at in the workflow and how long it’s been that when they are opened from the app,
to consumers without dealer involvement. in a particular step. Trying to manage the the messages are displayed within the ve-
complicated reconditioning operation with hicle’s notes. Such advanced features make
With the pressure mounting, it is critical a spreadsheet or whiteboard will simply not real-time work approvals and denials a re-
that dealers find ways to maximize used car get a dealer to the 3-5-day Retail-Ready ality, which can lead to increased technician
gross profits and to tighten up processes to Time necessary to thrive in this market. efficiency and productivity levels.
control vehicle depreciation and holding
costs. From the moment that a vehicle is Recon process management software is Recon process efficiency is essential to
acquisitioned either from a customer trade designed specifically to reduce the time speeding up the Retail-Ready Time of
or an auction purpose, dealers need to track it takes to get a vehicle through the recon used inventory. It ensures that costs are
every minute a vehicle sits in recon in a process to the front line or Retail-Ready. controlled, and units turned quickly so that
non-retail-ready state and make sure that Because the dealership’s recon workflow vehicles sell for as close as possible to the
each unit stays in the process no more than is mapped out in individual steps, there is profit margin estimated at appraisal. The
3-5-days. an incredible amount of transparency into faster vehicles are turned, the faster those
how long each unit stays within each step, profits go back into the hand of the used car
What many dealers do not realize is that as well as the ability to track the amount of manager so that the cycle can begin again.
consumers are buying up cars the minute idle time of units between steps.
they come out of detail – before there’s time Visit reconvelocity.com/lnd/playbook for a
to get a full set of photos onto the website. Having this bird’s-eye view of recon step FREE Guide so that you can sell more used
Imagine what achieving a Retail-Ready intervals allows managers to identify cars and minimize recon costs. n

MIADA MISSISSIPPI DEALER Q4 2020 | 3