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4 Ways to Improve Your Pre-Owned Reconditioning Process

Ed French is the DealersEdge go-to contributor for excellence in Auto Dealer Used Vehicle Department Management. Much of what Ed features in the DealersEdge Advance Guide to Pre-Owned Success has to do with efficiencies in your digital marketing strategies.

However, he also has much to say about some non-digital marketing issues… one such issue is the effectiveness of how you manage the reconditioning process. You acquire used vehicles so that you can sell them. The faster you get them on the lot and ready for sale, the faster you can turn and multiple your return on used vehicle inventory.

Here are Ed’s tips on how to improve your reconditioning processes:

Determine Your Exit Strategy at Acquisition – You are not acquiring this vehicle for your garage, or your collection. You acquire so that you can sell. So keep your attention on how you will go about retailing this vehicle. Decide what class or segment the vehicle belongs in (A, B or C- priced). Decide if this will be a vehicle “At Risk”. According to how the vehicle was classified, decide how long you can afford to hold on to this vehicle in your inventory.

Establish “Auto Approvals” for Reconditioning – Every time the reconditioning process stops and waits for an approval, is time wasted, and as we have discussed before it increases our holding costs.

Empower your reconditioning staff to go ahead and make the obvious decisions on their own and keep the process moving.

Look for ways to lower the cost of reconditioning – Ask yourself questions like… Are OEM parts necessary on this vehicle or are there lower cost substitutes? Can we create Labor Op Codes that are specific to reconditioning and less costly? Do we have the appropriately skilled technician performing the recon?

Audit your reconditioning process and look for ways to shave the costs. Give yourself an exercise… perform this audit with the goal of saving 10% on recon. You might be surprised at what you find.

Make SPEED a priority and Track It – Follow the vehicle through the process and make sure to time stamp the repair order. Explore software products that help manage the recon process. Often these include electronic communications like text messaging. Use these to speed the process and keep it in motion.

What Makes Best in Class Used Car Departments Tick?

Dedicated Remarketer with Authority - Typically have one person… not a service manager… not a technician. Responsible to shepherd the vehicle through the process… smoothly.

Clear and Defined Workflow for Recon – Flow chart the process, find the stop and wait dead spots and work on removing the slow downs.

Compensation Plans Tied to Cycle Time – All staff involved in the recon process should be rewarded, or not, based on the time it takes the vehicle to transit the recon. Measure the time when it enters and the time it goes on the line… total time.

Dedicated Reconditioning Technicians – Too many dealership service departments treat recon work as something that can be done as time allows. Generally that means when they do not have any customer pay work on hand. Both customer paid work and reconditioning are very important to the dealership. One should not have a higher priority over the other. This is difficult to achieve when technicians do both.

Consider a “Recon Team” to work Flex Time – Like with dedicated recon techs, this variation can provide ready access to the recon team that does not conflict with the other shop operations.

Multiple Sources for Outside Vendors - Avoid ceding control over your Recon Process to outside vendors. If you have to stop the workflow to accommodate their needs and schedule, it’s costing you time and money. So if you employ outside firms for any portion of the recon, have more than one. In fact have as many as you need so you never have to stop the process and wait for them.

Constantly Audit Outside Vendor Relationships – Compare costs, efficiency and availability. Play one against the other to get the best and most professional service.

Use In-House talent as much as possible - You can avoid all the issues surrounding the use of outside vendors by training in-house staff to perform the work that was otherwise outsourced. You may even be able to hire away a talented outside vendor’s staff giving you complete control.

Squeeze costs from parts and labor ops where appropriate - For example, on your “C-Priced” vehicles, using OEM parts should not be required. However of an “A” car this might be the absolute standard.

Avoid the “Tug of War” for Gross Profit between Used Vehicle Dept and Service – Here the idea is to create collaboration between the two departments. Consider a monthly bonus plan paid for by the Used Vehicle and Service Departments, to reward the Reconditioning Team when they meet benchmark performance for reconditioning cost, speed and quality.

This is just a portion of what Ed has to say on maximizing Pre-Owned profits and his complete comments are contained in the DealersEdge Resource - Advanced Guide to Pre-Owned Success. Details below.


New Key Performance Indicators– For Today’s Digitally Efficient Used Vehicle Marketplace

Inventory Objectives-

How to plan and forecast your inventory to provide maximum return on investment.

Appraisal Effectiveness-

A new way to look at the traditional appraisal process. How this change in mindset can help ignite huge profit improvements.

Reconditioning as a Profit Center– How to change recon from a “cost of doing business” and into a “Profit Center”

Digital Parity- How to give your online shoppers exactly what they are looking for and then how to make your in-dealership process align and complement the online experience.

How to Design and Execute a High Performing Dealership Website- What you Must Have on to keep pace with the sophisticated and big box competitors.

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