Although some dealerships are slowly starting to see an uptick in new vehicles being released, this trickle of inventory cannot provide dealers with the volume they need to stay profitable month after month. For the foreseeable future, acquiring used vehicles will continue to be a central focus. And getting those vehicles from trade in or auction to front line ready as quickly and efficiently as possible is key, for used cars sitting unsellable on a lot are a huge liability for any dealer or dealer group.
Kirk Firmin, fixed ops director from Florence Toyota in Florence, South Carolina, knows the importance of an efficient reconditioning department.
“We own all the used cars, so it’s a large capital investment for the dealer group. So fixed operations’ ability to get those cars cycled through lets them reinvest that money back into other cars that we can get back into fixed operations,” he says.
“Being able to repair and turn these cars is what makes us very profitable in what we’re doing right now.”
Having been in the automotive industry his whole career, actually his whole life, Firmin has seen various market fluctuations. “I’m one of those blessed ones. I was born into this (industry).” His father was a manager of a Cadillac store and then a Pontiac store, and later owned a buy here, pay here store in Tampa, Florida, for about 30 years.
Firmin started as “the stock guy” in a dealership’s parts department and worked his way up to management positions over the years. Looking back on his career, he notes some of the major market downturn he’s witnessed, including one in the early ’90s, the dot.com bust, the housing market in 2008, 9/11 and COVID.
“COVID brought a whole new dynamic to this (business),” he says. “Most of the dealerships I’ve worked with have always had a good focus on fixed operations. But the big dynamic came from not having new car inventory anymore. There were a lot of dealerships that kind of freaked out when COVID first hit.” He mentions a store he knew of that had liquidated all their used cars early on in the pandemic because they didn’t know what the market was going to do, and then when dealers couldn’t get new cars, they found out they had made a multimillion-dollar mistake.
Firmin credits A.J. Jones, owner/managing partner of Florence Toyota, for seeing opportunity in the used car market. He notes the dealership was already strong in that market and was able to use that to propel themselves that much further.
Reconditioning has become vitally important to the dealership due to inventory issues. “We’re not able to get the new car inventory that we used to have two, three years ago,” Firmin says. “We’ve got a very large sales force that relies on these used cars, and if we can’t get the used cars through the process and get them up front in a sellable condition, they also cannot make a paycheck. So it’s really vital for the wellbeing of the entire dealership. A lot falls on this used car reconditioning process. We would struggle if we were not efficient in how we handle our used car business. Financially, it would be a struggle for the dealership, and it would be a financial struggle for the employees. The new cars sell themselves pretty quickly, but when they’re gone, they’re gone. The only thing we have to replenishment with is the used car inventory.”
To continue their success and stay ahead of the game, Florence Toyota looked for a reconditioning system that would not only speed their processes but would keep the whole dealership on track at all times.
“As fast as the market is changing, how fast you can get those cars to a reconditioning process and onto the lot gives the sales department that much more opportunity to try to get that inventory released,” he says.
“We need to be able to track that monetary investment in the used cars. It’s capital. We own them all, so it’s pure capital that’s sitting out there and it’s perishable,” he explains. “So, we’ve got to be able to turn that money for the owner. We need to be able to track what’s going on. We need to be able to get the cars pushed through in a certain amount of time, and we needed a mechanism that would allow us to be able to have full visibility of everything that was going on with it.”
That’s when the dealership decided to partner with ReconTRAC, a web-based software application that streamlines the vehicle reconditioning process.
Firmin likes how the ReconTRAC system allows the whole dealership to see where a car is from when it’s traded in to its mechanical inspection to parts estimates to detail photos and more. He says knowing the estimated times when parts are coming in allows the used car department to plan what they’ll be working on that day. This communication has had a positive effect on the service technicians as well.
“The communication is huge for them not having to wait forever for somebody to make a decision on whether or not to repair a vehicle,” Firmin says. “Technicians only get paid when they’re turning wrenches. They don’t get paid for paperwork. They don’t get paid to run up front or trying to find cars, trying to get permissions to work on cars. So having a system available that takes care of a lot of that legwork makes them that much more efficient and allows them to turn more hours.”
Firmin is thankful for the dealership’s foresight and its partnership with ReconTRAC. He shudders to think of going back to the old ways of tracking the reconditioning process.
“(Without ReconTRAC), it would slow the process down. We have a small reconditioning department,” he says. “I’ve only got four technicians back there right now, but we’re reconditioning over 150 used cars a month. And we’re turning them in about four and a half days from start to finish through this recon process. ReconTRAC has allowed us to speed up about one full day from our former process.”