A Big Miss with Big Risk

A Big Miss with Big Risk

Without a clear look into their recon pipeline, the sales operation is generally clueless about newly arriving used inventory flowing in real-time into inventory.

In conversation with Dan Anton, the on-site lead for our customer performance service, he coined the term “demand-focused recon” to describe a discipline used by serious practitioners of strategic time-to-line (T2L) reconditioning.

Dealers who understand this T2L strategy use it to bridge the contributions of both their variable and fixed operations to overall dealership profitability.

Historically — and unfortunately, too often to this day — vehicle reconditioning is considered the sole function of the fixed operations department. When correctly applied, it has also always been a deal tool for variable ops.

Variable managers, not fixed managers, understand their inventory needs, days’ supply, market opportunities and consumer demand best. But the ability to convert this knowledge into sales often falls short when variable managers don’t leverage their recon data to maximize retail sales.

Without a clear look into their recon pipeline, the sales operation is generally clueless about newly arriving used inventory flowing in real-time into inventory. The trade walk is helpful for identifying newly arrived opportunities, but no one checks on the hour. CRMs and other lead tools are fantastic opportunity devices for the sales staff, but again not as fantastic as they can be when they don’t afford this recon supply-side pipeline view. 

“You have to strategically identify which cars are going to bring you the most profit, the fastest,” stressed Ed French, president of dealership performance group AutoProfit, Inc., and a dealer himself. “And those are the cars you need to get through recon first and tell everybody you have a customer for that car. That’s where the best of the best operate.” 

Strategic T2L reconditioning enables the new and used sales staff to click an app to view inventory in the recon pipeline. This demand-focused recon gives general managers and used car managers a quick grasp of their incoming inventory landscape in real-time to know just as accurately as they understand their days’ supply and customer opportunities. Now they can request certain vehicles be pulled forward in the recon workflow to meet demand quickly without tripping up the store’s established T2L goal.

It is a two-part strategy — buy or trade cars you hope will move quickly, and then reevaluate their importance in the recon workflow pipeline according to which will sell sooner, points out Bradley Orr, a former dealership general sales manager and now one of our performance consultants. 

“This strategy helps dealerships get their act together by managing customer expectations. When a customer asks about a specific vehicle, the salesperson has that definitive answer to take advantage of that opportunity here and now,” Orr said.

“Teaching salespeople to use reconditioning information to their advantage is a must,” said Dan Kommeth, group platform director for the Hudson Automotive Group. “If you can get a customer in the dealership, you have a 50/50 chance of closing the sale.”

The goal here is to control sales like never before. “We have robust evidence from dealerships using demand-focused recon that they perform exceptionally well,” Anton said.

Here’s how dealers using demand-focused strategic recon are benefitting:
• It helps educate the sales team on current inventory, including vehicle condition, where the vehicle is in the recon pipeline, and when it will be showroom ready.
• It helps to get prospects into the showroom by allowing salespeople to contact customers interested in a particular vehicle. 
• It helps the sales team provide transparency about the vehicle when meeting with a customer and, 
• It helps close more sales. 

Strategic T2L and demand-focused recon is a group-level enterprise’s best lever for success in our changing market. Now dealers have a better focus on:
• Improving T2L speed, which cuts most reconditioning cycles by half or more to get cars from acquisition to frontline ready in three to five days.
• Controlling costs while having better insight into parts, which controls holding cost depreciation and reduces expenses against gross.
• Profit per vehicle and meeting this challenge with authority.

Managing average days in recon and T2L metrics. Dealers can regularly achieve these performance benchmarks to increase speed to sale and improve overall used car performance.

For some managers, recon activity happens “back there,” and that thinking dilutes the value of their reconditioning tools. We’re working hard to bring strategic recon into proper perspective by integrating it into the work life of the people who deliver the cars. 

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