Hurricane season has been especially brutal this year, with damages from Harvey costing as much as $180 billion and damages from Irma trending upwards of $100 billion. While most of the recovery expenses will go towards property damage, a large portion will go towards vehicle losses due to extensive flooding from the storms.
The car dealership of the future has always been a topic of intense discussion and disagreement among industry leaders. The biggest point of contention seems to be whether dealerships will even be relevant in a few years from now.
If you were planning a trip to a place you'd never been. And you were looking for the fastest route. Would you plan that trip without using GPS?
Reconditioning costs and time to market are crucial to the profitability of your used car inventory. So, as you know, the goal is to minimize both as much as possible. In order to reduce your reconditioning costs and time to market (cycle time), you need to know how you’re current process is tracking. More so, you need to know what part of the process may be slowing down your cycle time and/or costing you money. The old adage “knowledge is power” is very true in this situation. Do you really know how long each car’s time to market is and/or average recon cost is?
2017 is starting to look like a promising year for used car dealers. However, many dealers are finding they need to sell MORE used cars than they did in previous years just to make the same profit as before. And with consumers becoming more and more educated about the car buying process it's making the market much more competitive than ever. Simply put, the number of cars sold is increasing, but margins are lower than in years passed.
The used car reconditioning process can be time consuming and difficult to maintain if procedures aren’t in place to hold each party accountable for their part in the reconditioning workflow. With so many individuals, all with different responsibilities, it’s easy for things to fall between the cracks and get missed.
In 2016, we saw used vehicle depreciation rates rise above the 15% projected previously. This year, they’re projected to reach 20% or higher for used cars and up to 18% for used trucks. Your profit margins are determined in large part by these rates of depreciation, so it’s important to be cognisant of this while evaluating your used car reconditioning processes.
If you aren’t careful, the used car reconditioning process can greatly impact the profitability of your car sales. The longer a car sits around waiting for reconditioning to be completed, the less profit you’ll make when you finally sell it. When you don’t closely monitor this process, it’s easy for things to slip through the cracks and add up to a lot of time and money lost.
Nick Saban is currently one of the best college football coaches out there, and many would argue that he’s the best coach of all time. Regardless of who you root for, you can’t argue with results, and that’s one thing that we’ve seen from him time and time again (and that we’ll see once more at the playoffs).
As the manager of a car dealership, it’s important for you to see results from your reconditioning processes. In your efforts to get the best out of your recon department, there are a few tips you can take from Saban.
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