After years of interviews and first-hand experience, across various car dealerships, the most efficient ways of working become clear. With the adoption of some simple techniques and technology, dealers can: capture operational efficiencies; protect margins; and speed time to sold.
Before we dive in, it’s important to acknowledge that every dealer is different. Yes, all dealers sell cars, but operations develop personal management styles, geographic realities, local customs, and customer preferences. What is common to all dealers is the need to move vehicles and keys through a system of preparation to optimize returns – external or internal. It is this common need that we will address. We invite readers to adjust these practices to fit their unique needs.
1. Map distinct steps for recon vendors or providers
Bundling several providers into indistinct steps – whether transportation companies or technicians – can make it difficult to measure the efficiency and performance of each provider and the system as a whole. Splitting each vendor, even duplicate vendors, into different steps (e.g. Mechanical Shop A, Mechanical Shop B, etc.) helps the GM and recon management pinpoint performance and time to completion for each vendor more clearly. Now, you have a system with steps that can be measured, step-by-step, and thus improved.
2. Provide your account credentials to your auction buyer
Transportation time from auction to dealership can be tough to measure, especially for larger dealerships. Let your software do the work for you and alert you if there are delays by providing an account to your auction buyer. Once the buyer has completed the purchase, he/she can push the vehicle into the transport step. No software? Make the auction buyer accountable for the transition and start the clock from the moment they notify transportation.
3. Use a single vendor for your transportation
More vendors mean more price and service competition, but it also means more handoffs that are the enemy of efficiency. Train one vendor to be an extension of your operation. Involve them in your auction plans early and give them access to your auction passwords and your inventory tools. These steps allow for ready loading, bypassing of gates, and moving cars into the in-transit step of your process with less waiting and fewer calls.
4. Create a “Recon Pack” as a way to track margins
Start by adding up your average monthly vendor expenses per car. This is your benchmark. Then, send as a single envelope with the car from the first to the last vendor to insert their invoice. As each vendor washes their costs against this one account, each car’s performance against the average and margins become transparent. If you want to go one step further, ask your vendors to report to your best vendor as a leader who manages the process. At month-end, one single check gets cut to the lead vendor to distribute shares to the others. Now that you know the averages, you can speak with greater confidence to waiting customers and even offer vendor incentives for faster turnarounds.
5. Appoint one service advisor to head internal recon
This is your field general that controls the flow of the car throughout your internal recon process. This too removes extra hands, conflicting direction, and friction in your recon system. Optimizing recon processes can be a heavy lift and the fast pace of dealer operations can be all-hands on deck, but every ship needs a captain to chart the course. Appoint one person to be your recon captain to make your system run as one.
6. Designate one group of techs as an internal service team
Same as with a single service advisor, taking the time to designate one group of techs makes the question of whose job it is to service a car moot. Less time lost on assigning pick up and making it ready means more time on a lot with margin intact. Again, it may seem obvious, but so many times the simple choice if making it clear who does what gets overlooked.
7. Designate one lot manager/porter for new and used cars
Can you spot the trend? Clear roles and responsibilities help operations run more effectively. As with other areas we have discussed, identifying responsible lot managers and porters creates fewer points of accountability that drive efficiency. When the managers and porters have a designated area of responsibility things just get much faster and you can start to spot bottlenecks.
8. Create a “Parts Estimate” stops internal slowdowns
Repair approvals can be delayed if parts costs aren’t available in time. Many times parts managers are busy with the service shops, part orders, and other tasks. Creating this formal step alerts managers to the open item. They’ll know how long they have to complete this task. Management will have the information they need to augment staff or reprioritize activities. In the end, this step removes a bottleneck for recon as well as service fixed ops processes.
9. A picture’s worth….thousands of dollars
Internal or external recon aside, today’s online shopping marketing, stock photos don’t cut it and auction photos may leave a lot to be desired. Hire an expert photographer, rather in-house or trusted partner, for photos and window stickers as the final step in your process. This is one expense you won’t regret. You’ll get better, more consistently produced pictures in a timelier manner. Remember, customers can’t short-list what they can’t see. If you simply can’t have your photos ready – let’s be honest, it happens – develop an attractive “Coming Soon Template” with an invitation to call for more. It’s better to give customers a reason to call than a reason to move on.
10. Choose a tested recon software tool to optimize it all
Most of today’s dealership recon profitability lies on an inventory volume of at least 40 vehicles at any point in time during the process. Even for smaller independent dealerships, this number of vehicles, personnel, and vendors can become a nightmare to manage using Excel sheets, emails, and notepads.
Technology has come a long way with cloud computing, mobile apps, Internet of Things trackers, as well as powerful and large database solutions. Several reputable software companies sell recon software tailored to help dealership manage the recon process end to end.
These software products help you manage the recon process including its flow, time vehicles spend in each step, the organization involved, cost of parts and labor, alerting regarding delays, reporting inefficiencies, and even the application of location data to automate the full process – making them worth every penny spent on them.
In the end, a recon process is a system. If you map it, monitor it, and optimize it as a living, breathing thing, you can materially impact efficiency and margins. If you choose a recon software solution, you can do all of this with greater ease and as much as a 70% reduction in staff management involvement. Whether you go analog or digital, spend the time to identify a process and optimize it. The time you spend upfront will more than pay for itself in the value you create on your lot.
Co-authored by TrueSpot (an Internet of Things asset location platform for cars and keys) and Craig White, 35-year Pre-Owned veteran operations specialist. Read Craig’s Blog >