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Gross is Hiding in Plain Sight

It is surprisingly easy for gross to be hiding in plain sight at any dealership, but a quick holding cost calculation can identify the magnitude of the profit not being realized compared to the direct benefits, which in turn makes a compelling case for proactive attention to your time to line.

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Dennis McGinn is the founder and CEO of Rapid Recon

It is surprisingly easy for gross to be hiding in plain sight at any dealership, but a quick holding cost calculation can identify the magnitude of the profit not being realized compared to the direct benefits, which in turn makes a compelling case for proactive attention to your time to line.

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In my experience, general managers may feel they have a better way of keeping reconditioning in line, but the reality is, technology has changed how we interact, communicate and access information, so too has it brought new expectations about how a modern reconditioning department should operate in 2019.

The new standard for recon department efficiency and, yes, profitability, is time to line. T2L defines the speed in days (and hours) that any recon department, whether reconditioning 100 cars a month or 600, should operate to increase used car turn and gross.

A recon department allowed to operate using old-school ideas and tracking systems costs the dealer tens of thousands of dollars a month in holding cost, gross, turn and wasted time. But any dealership, any size — franchise, independent or buy here/pay here — using T2L workflow technology will be more profitable, sell more cars than necessary to inventory and be more profitable.

So, What’s the Catch?
Many dealers don’t use workflow automation to manage their T2L. Why? I have two answers: resistance to change and competing priorities. First, resistance to change because in most dealerships there is a checkered history of asking the users to take on yet another system, so the reluctance is understandable. Second, the GM has a lot of other priorities in his or her ear seeking attention, some requiring routine and others reactive decisions.

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We all want win-win solutions, but those do not come easily in the car business. Every sale presents a unique challenge for improving profit. It would be ideal if every customer felt they got the best deal, which may be as close to win-win as it gets.

However, when it comes to T2L, there is a triple win hiding in plain sight. First, incremental gross; second, accountability users prefer; and third, problem cars and problem steps are visible, so actions can be taken in real-time. With T2L driven by T2L workflow software, users’ performance metrics reflect their actual performance — what a novel idea. The GM now can finally see those users’ performance metrics in real time — and insight into what needs improvement so the whole train stays on the rails.

Going off the rails in recon means:
Unrecognized practices and policies eroding gross before vehicles even get to the lot.
A pattern of vehicles neglected or actually lost on back lots and sublets.
Weak or non-existent accountability or trackability of the movement of cars through recon from acquisition to sale-ready — and no insight into the performance of those responsible for reconditioning vehicles.
The sales department’s voice increasingly becoming frustrated and angry that new inventory is slow to get to the front line or is not available to show to customers interested in new arrivals yet to be inspected and detailed.
Fingerpointing between sales, used cars, recon and fixed ops, each blaming the other for the delay, cost overruns, neglected repair approvals and confusion within the process.

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The Solution
For many GMs, it’s time to rise above the noise and manage recon T2L.

T2L is mainstream and validated for dealerships of all sizes and markets, franchised and independent, and even for buy here/pay here. It addresses your current pain points, such as:
Knowing where all your cars are
Improving gross profit
Reducing inventory volume and costs
Eliminating recon approval conflicts between the used car and fixed ops managers
Instituting accountability and verifiable metrics, including vendor services
Desiring to become a leader among your peers

Recon T2L is more than a practice — it is an automated way to take waste out of recon operations, plug in continuous cycle improvement and unify the team around a structured process of work steps and work tasks that organizes their day, helps them work smarter and faster and reduces your T2L to three to five days.

That’s a substantial time savings in days off the recon cycle from what most recon centers are operating at using manual structuring and tracking via Google Docs or spreadsheets. When you can drop your recon cycle from 10 to 21 days or more — we see this all the time — to three to five days, magic happens to your bottom line.

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Click here to view more solutions from Dennis McGinn and Rapid Recon.

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