“No room for error” summarizes used car operations at Honda of Downtown Los Angeles. Staff continues sharpening skills and creativity to source and recondition cars quickly.
Clayton Birtell, service director, pinpoints a pain, saying, “We came in Monday morning with just four new cars on the ground, and we’re the sixth-largest Honda dealer in the country for new cars!”
The dealership is a six-floor building in downtown Los Angeles. Floors three through six are for used vehicle storage.
For a dealership that usually sells 450 new and used cars a month, coming off a weekend with only four new cars is a brutal reality.
“The only volume factor we can control in this market is used cars,” Birtell said.
“And that means more pressure on the reconditioning department,” observed Reconditioning Manager Zack Nyman.
The dealership needs a constant 300-unit used car inventory.
“We have never used auctions because our new-car volume always supplied used car needs. That gives you an idea of where we are in this current market,” Birtell said.
The dealership recently implemented a buying center and brought aboard an experienced buyer. This individual is charged with sourcing and purchasing used cars of various ages and conditions to supply the necessary inventory inflow.
“Not only are we buying more cars than we would normally but we’re putting more money into them. Two or three years ago, you’d be hard-pressed to find a Honda dealer putting $4,000-$5,000 in recon costs into a car. That’s how tight the supply is,” Birtell noted.
Both men expressed astonishment when Used Car Manager Steven Aguayo was approving 18-hour recon tickets to save a car.
“It’s a strange market when you can do that and make a profit,” Birtell said.
Whatever the market, reconditioning software that helps reduce a dealer’s time to line (T2L) is necessary. Three-to-five-day time-to-line speeds mean cars are made ready to retail quickly to match consumer demand. Because speed to sale fights margin erosion, it positions dealers to push back margin compression.
Intelligent reconditioning software designed to troubleshoot “why” and “how” questions give recon managers like Nyman the correct insight to address workflow issues quickly, whether with internal operations and staff or those vendors assigned reconditioning work. On the surface, this dealership’s T2L speed through recon doesn’t seem that impressive. The older and higher mileage cars the dealership is now sourcing require body shop and cosmetic work, which adds days to their acquisition to front-line performance.
“A few cars like this throw off our T2L average, but a five-day turn is more common for newer used inventory,” Nyman said.
Other methods the dealership had tried for moving cars through reconditioning didn’t yield the precision or results Birtell and Nyman thought possible and needed. Those methods included a manage-recon-by-clipboard strategy. “We had cars clogging the ramps to our three-level used car area and everywhere else.”
Monday morning trade walks didn’t help them understand what cars were in recon. “All we knew was, this car is waiting. It was a mess,” Birtell said.
“Because speed to sale fights margin erosion, it positions dealers to push back margin compression.”
The decision was made to investigate reconditioning software. A product from a major technology company was evaluated and installed. Birtell said it quickly became apparent the software couldn’t provide the accountability and performance he felt this used car operation required.
That was a problem. Managing Partner Brad Mugg had made used cars the dealership’s number-one priority and called for an all-hands-on-deck offensive. “Used cars are the lifeblood of the dealership,” he said.
Birtell and Nyman suggested the store investigate Rapid Recon workflow software to meet this challenge. Mugg was initially skeptical; after all, hadn’t the store already tried reconditioning software?
But Birtell and Nyman were confident. They had joined the dealership from similar roles at a Wilsonville, Washington, Mercedes-Benz dealership where they’d used the Rapid Recon system to significantly reduce that store’s time to line.
On a recent Monday morning trade walk with Mugg and the store’s general sales manager, no used cars littered the parking ramps. Mugg turned to Birtell and wondered, “What did we ever do before Rapid Recon?”
“There has never been a product I’ve seen launched at a dealership that got so quickly implemented and accepted,” Birtell said. “Our techs told us Rapid was exactly what we need.”
To learn more about Rapid Recon for your dealership, visit www.rapidrecon.com or call sales at 650-999-0497.
