How’s your financial portfolio performing these days? How would you know unless you have access to detailed reports illuminating for you each fund’s performance? Don’t you want to know how your investments are doing overall as well as compared to the market?
As the general manager of your dealership, do you consider yourself its investment portfolio manager? If not, you should; you are responsible for improving the performance of your store’s assembly of assets — its profit centers.
Fortunately, the reports you do have — including daily operating controls (DOC), financial statements, cost of lead and sale data and fixed absorption rate percentages — help you monitor the pulse of each key department under your care.
None of those sources are much help for managing your dealership’s reconditioning department, an asset offering you tremendous opportunities for both short- and long-term gain.
The traditional reporting tools used by most recon departments — spreadsheets or whiteboards — won’t help you or your recon team keep up with all the moving parts you need to manage recon profitably.
Only in the last few years have the right tools been available to help you manage recon smartly. Foremost among them is reconditioning time-to-line (T2L) workflow software. Dealers who use this technology and the reporting tools it provides have reduced typical 10- to 21-day recon cycles to three to five days. Every 2.5 days shaved from a recon cycle translates into one additional inventory turn.
Consider the following scenarios:
Dealership A:
• Reconditions 100 vehicles a month
• Has a validated, non-automated T2L of 10 days
• Has the average NCM holding cost per vehicle of $40 per day
• Reports a total holding cost for 200 units X $40 each X 10 days = $40,000 per month
Dealership B:
• Reconditions 100 vehicles a month
• Has a validated, rapid reconditioning T2L of 5 days
• Has the average NCM holding cost per vehicle of $40 per day
• Reports a total holding cost for 200 units X $40 each X 5 days = $20,000 per month
Thus, holding cost for Dealership A is $400 per each vehicle — a charge that must be subtracted from each vehicle’s selling gross. Holding cost for Dealership B is $200 per each vehicle. So, how much more competitive — and profitable — is Dealership B?
Contributing to more profitable recon operations is the use of reconditioning T2L workflow software and by-store and by-group reporting tools. Reporting tools give GMs and the used car, fixed ops and recon management teams:
• Daily, weekly or monthly reporting on employee activity, step times, holding cost and T2L metrics
• Detailed graphics on past performance and performance trends
• Real-time reporting that creates transparency and accountability
• Departmental and individual performance reports
Rod Rowley is senior vice president responsible for Larry H. Miller Dealerships’ nine franchise and five used car operations in Utah, plus group-wide used car operations.
“Group reporting gives me the advantage of being able to look at all stores in one view and it’s clear to me who needs help in their recon processes,” Rowley said. “We know that stores using T2L workflow software recondition faster, and they get cars to the frontline faster, so initial grosses are better. If we can get cars to the frontline in four days, that leaves us 11 days to maximize our grosses. Our T2L in these stores is getting faster and group reporting is driving this trend.”
Blind portfolio management is unwise, whatever the investment. Leadership seeking to turn dull and unprofitable recon operations into moneymaking assets will find recon reporting tools as essential as choosing the right asset investments.
Click here to view more solutions from Dennis McGinn and Rapid Recon.
