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How Are You Managing Your Speed to Sale?

This new standard is speed to sale, an all-embracing attitude geared to selling cars faster. Speed to sale starts with faster recon time to line (T2L).

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Dennis McGinn is the founder and CEO of Rapid Recon

In recent months, a new operating standard has arisen, which I encourage you to put into practice to make your dealership more competitive and profitable.

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This new standard is speed to sale, an all-embracing attitude geared to selling cars faster. Speed to sale starts with faster recon time to line (T2L). This is because managed T2L:
• Sells 15-40% of used inventory out of recon, meaning much less holding cost and aging erosion takes place to rob you of sale price and margin;
• Equips your sales staff with real-time notification about incoming/arriving cars and the status of vehicles in recon, allowing for a more timely response and follow up with prospects in the CRM looking for those vehicles; and
• Gets used-car manager approval on recon repairs within seconds, not hours or days, and avoids stalling out your recon T2L and unnecessarily aging your inventory. 

Dealers practicing automated T2L put fresher inventory on their lots, enjoy stronger grosses and increase their inventory turns. You can see why this is a great foundation to launch speed-to-sale standards.

The core idea is that by removing waste, unnecessary costs and unfortunate delays from reconditioning — primarily in the recon-repair approval process — dealers now get cars ready for sale in only three to five days, far surpassing the average dealership’s T2L.

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Every dealer who first embraced T2L did not expect to learn that their standard T2L practices were taking 10 to 21 days, meaning cars aged and the window of profitability closed by the time those units in recon were finally sale ready. 

From the financial side, T2L and the speed to sale are the GM’s or dealer principal’s best tools when measuring return on invested inventory, which requires the car be front-line and sale ready almost immediately after acquisition.

“Time to line and speed to sale,” a large dealer group operator told us recently, “are about doing more with less — getting inventory to the front line faster means we have more inventory to sell, which increases our inventory turn, which decreases the amount of inventory we need to buy. We’re selling more vehicles with less investment, which increases our wholesale profit.”

Here is one way T2L makes speed to sale reality:

Because T2L recon workflow software provides both your variable and fixed operations departments a peek at the dealership’s T2L reporting screen — either on their smartphone or desktop — they know at any time the status of any vehicle in the recon pipeline. They know the work completed on it or the work recommended and, if not yet in recon, where it is on the lot (or sublet). 

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This means that, when a prospect phones or the BDC or sales department receives an online lead, the sales team can answer questions about inventory on the fly. No longer are opportunities lost because customers are made to wait while a physical search for the vehicle takes place. The location of a requested (or similar) vehicle is immediately known so those details can be instantly conveyed to the consumer. Sales can even send photos of the vehicle and a “build sheet” of the recon work completed or currently in progress on that vehicle, building both confidence in the car and trust in the dealership.

The goal, of course, is to improve PVR and turns continually. The T2L and speed-to-sale approach do both. By motivating early callers, even before the car is front-line ready, the scarcity factor works to the dealership’s advantage. 

Increasing inventory turn, of course, depends on more than just first callers, but when used with inventory management tools for pricing, syndicating and aging, your sales team now has a running start to capture that business.

My rule is that you sell what you have all day every day, and then use your favorite inventory management tool to decide which vehicles to mark down and replace.

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Some of the nation’s most competitive dealer groups have seized on this emerging understanding that speed of sale is rooted in faster recon. It looks as if we’re in for another tight market in used car sales and, as the used inventory tightens and forces prices upward, we likely will see a slow down in used car sales.

“Used vehicle sales are about velocity — sourcing the inventory and getting those vehicles ready for resale as quickly and efficiently as possible,” said Justin Hoisington, pre-owned operations director for Hennessy Jaguar-Land Rover of Duluth, GA.

“We’re constantly trying to figure out how to increase our efficiency, and it’s imperative we get used vehicles ready to sell fast,” said Geoff Meeker, general manager for Mercedes-Benz of Buckhead of Atlanta. “When we don’t have them ready to sell, they do no one any good.”

We see now that used-car department profitably improves significantly over the status quo where speed-to-sale strategies are applied to reconditioning time-to-line automation. The reality of today’s used car business is that speed matters — in fact, it matters more than ever, and speed to sale enhances the profit potential dealers expect from using an automated inventory management tool.

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Regardless of how stellar the car is and how many “sold” units the associate puts on the board every month, cars must be online or in the showroom if they’re going to be sold. Speed to sale eliminates the friction, so incoming inventory is almost immediately ready for presentation and sale.

Faster T2L is the crucial and achievable speed-to-sale metric. Automated T2L keeps cars from languishing in recon while providing sales transparency about the cars in recon so marketing and selling can commence upon acquisition. This advantage helps sales departments sell more vehicles at higher commissions because T2L holds grosses — and fewer opportunities slip through fingers when cars aren’t yet physically “presentable” for sale.

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

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