What’s the True Cost of Your Under-performing Reconditioning Department?

What’s the true cost of your under-performing reconditioning department?  As most good operators have figured out, a lot. The experts will tell you that a vehicle depreciates between 1.5% and 1.75% of its net value each month. That percentage might not scare you by itself but think about this…if you have 100 vehicles at an average cost of $15,000, that’s approximately $30,000 of depreciation each month. Yes, $1000.00 per day. Improving your process by one, two or three days can add a quite a bit of improvement to your bottom line.

With the pre-owned markets predicted to substantially drop over the next couple years and depreciation costs doing the same, there’s never been a more important time to focus on turning your trades around from new car deal to pre-owned available, fast.

You Can’t Fix What You Aren’t Tracking

Most dealers have no idea what their true recondition cycle time is. Have you ever followed a car from trade to ready for sale? That exercise will be painfully eye opening for many. For reference, the national average reconditioning cycle time is 7.5 days. How does that match up to yours?

If you’re in a competitive market, your turnaround time is even more important. If you have a car that sits on your lot for 30+ days, there’s a good chance you’ve had substantial depreciation and your competitor just bought that exact car for $700 less than what you bought it for. That means that if you both sell the car for the exact same amount, you’ll see $700 less profit than your competitor. Ouch!

Depreciation starts the minute you own the car and it doesn’t wait for anyone. If your recon department is telling you that they are turning around your cars in 2-3 days, you might want to think about it further. One of the easiest bluffs is the true cycle time because there’s simply no way to track it. It’s convenient to pick out a few of the quick cars and forget about those back-ordered parts or paint issues that take 20 or 30 days to turnaround. Worse yet, how long did it sit around the showroom after it was traded in before the service department even knew it existed?

There are a couple of software tools that help track cycle times for only part of your reconditioning process and they force you to follow “their” process. These tools are manual, and require full participation from every person. After each step, the manager needs to finish one and start the other which leaves plenty of room for inaccurate reporting.  

ReconTRAC tracks every step of the process. It’s a patented workflow system not only tracks the process, but fixes the process itself. Once the estimate is completed and approved, the car flows through your departments automatically, pushing the oldest cars first in each area of YOUR process. Take a look…

How many total days did it take from when we took ownership to when we actually inspected the vehicle? How long did it take for your manager to approve an estimate? How long did we wait for a vendor to fix that scratch? ReconTRAC answers all of these questions. We hope you consider ReconTRAC for your dealerships pre-owned reconditioning needs, click here to schedule a live demo.