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Easing Recon Woes for Fixed Ops Directors

“We sometimes lose sight that used cars should be the most profitable department in the entire dealership. The reconditioning department can play a lesser or greater role in that outcome.”

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Dennis McGinn is the founder and CEO of Rapid Recon

Perhaps the position in the entire dealership most squeezed by the used car department’s appetite for fresh inventory and the reconditioning department’s ability to get those cars to the sales lot quickly is the beleaguered service director.

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The used car manager (UCM) figures into this frustration, as his or her delay in responding to requests to authorize repair and service costs ends up slowing down this crucial process. This delay alone can eat away the UCM’s sales gross — and he or she won’t even know it.

As we have noted before, every vehicle moving from “acquisition” to “sold” incurs a daily cost called holding cost depreciation. All in, this $36-per-car-per-day cost erodes sales gross by as much. Get cars to the sales line faster, and less holding cost will erode the gross.

UCM approval delays of even a few hours slow down the entire line and throw kinks in otherwise what should be a smooth, highly efficient assembly line. This battle for efficiency is at the service manager’s doorstep daily. When the flak comes in blaming the service department for taking too long to get cars to the sales lot, the immediate response is to duck and run.

Do these woes sound familiar?

• Juggling and scheduling service bay and technician availability for servicing trade, auction and private sale vehicles taken in by the dealership for the used car department;
• Managing labor, parts time and costs to service/repair vehicles safely, and yet keep costs low;
• Needing to pull cars out of line to wait for approvals, parts or sublet, or needing to push a vehicle ahead in line — at others’ delay — to please a sales manager, GM or dealer;
• Balancing technicians and detailers between retail and internal needs;
• Poor communication about incoming inventory from auctions and trades, and then onboarding them into the recon process so work can begin promptly; and
• Dividing and managing recon detail technicians against the prerequisite for make-ready staff and delivery prep.

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If these woes are to lessen or cease — if reconditioning cycle time is to shrink to a profitable three to seven Average Days in Recon (ADR) — the following must be in place:
• Improved communications between all involved departments and personnel;
• A more structured, step-by-step process enabling cars to be on-boarded more quickly and moved to the front line in less time; and
• Measurable and reportable accountability up and down the chain of command — even to the granular level — for each technician and detailer, and to each step necessary to recondition vehicles to the dealership’s standards.

A disciplined leader demanding accountability is not the most popular knife in the drawer, but it’s often the most productive. Moreover, because he or she is clear that a policy of accountability is in place, technicians, advisors, detailers and porters may learn to work smarter, harder and faster so everyone wins.

We sometimes lose sight that used cars should be the most profitable department in the entire dealership. The reconditioning department can play a lesser or greater role in that outcome.

With an accountability-focused, multi-department workflow strategy in place, you can reduce a service director’s heartburn while bringing order, coordination and accountability to vehicle reconditioning — all while flowing more profit to the bottom line. This is done by reducing:

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1. Blame

If anything goes wrong, it’s the service department’s fault, right? Service managers are protective of their staff and get frustrated when blamed without justification. Accountability validates truth.

2. Delay

Delay created by UCM failure to quickly approve or decline work frustrates techs who rely on a fast decision to generate the flag hours to make a paycheck. In many recon processes, the vehicle is in and out; it comes in for the inspection and then goes back out to the lot while waiting for approvals. The ideal is to keep the vehicle in the stall or on the rack and keep it moving. Process-driven recon that monitors and measures this workflow can show UCMs in real time how approval delay means more holding cost depreciation and more gross erosion.

3. Communication Issues

Poor communication can leave the head not knowing what the tail is doing — and the tail not knowing what to do next. To be efficient with internals, service managers must know where each vehicle is, who has it, what has been approved and what is being done. Mobile and e-mail communications keep connected parties in the loop, and each communication indicating completed steps, next steps and pending steps. No one has an excuse for not knowing what’s going on or where’s the ’16 Malibu that came in yesterday.

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4. Shifting Priorities and Wasted Time

Nothing is more frustrating to service managers and their staff than not having proper approval from sales management. It frustrates advisors and managers when they must waste time to track down the UCM for approvals. A system that speeds approvals, documents those approvals and keeps this assembly line flowing will avoid wasting time, clear up any confusion about priorities and eliminate lost opportunity.

5. Eroding Profit Opportunity

Fixed ops managers get frustrated when not allowed the opportunity to make a profit. Some dealers find it necessary to send recon out, which UCMs endorse, particularly when they believe that reconditioning will be “cheaper.” Some reasons for subletting this work include:
• The service department is not technically able to do the repair;
• The service department workflow is backed up with recon work; and
• The UCM can get it done cheaper, reducing his cost and increasing his gross.

That last reason is very frustrating for fixed operations managers because it makes no sense. When the used car department sublets recon, the result is money out of the dealer’s pocket. The best-case scenario is to do all work in house and just shift money from one pocket to the other.

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Finally, I am a strong proponent of making the store’s door rate equal to the internal rate. The used vehicle department should be the No. 1 customer of the service department. By bringing many of these woes under the observation of reconditioning workflow software, frustration ebbs away, cars get to the front line in fewer days, money is not wasted on unnecessary holding costs and the dealership is more efficient and profitable.

Dennis McGinn

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