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.
As President-Elect Trump begins his transition into the presidency, many car manufacturers and dealerships are celebrating his victory. The Consumer Financial Protection Bureau (CFPB) has been using a mathematical formula to target dealerships that they believe use discriminatory tactics when selling vehicles. What are Trump's plans for this agency?
Change can be difficult in any business sector, including the automotive industry. New technology can serve as a powerful tool to help make dealerships more efficient and profitable, but it can be met with resistance from employees.
A Harvard Business Review article addressed this very topic, citing research that found resistance to change can be overcome by getting people who are affected by the change to participate in making it. However, participation is too often used as a buzzword by ownership and management to get employees to take part in discussions that don’t result in any true feeling of participation. The result is often increased resistance to new technology.
Every industry is being transformed by new technology, and auto dealerships are no exception. Unfortunately, far too many businesses deploy technology but fail to focus on adoption. Simply rolling out a new way of doing things with a lot of fanfare isn’t enough to make it a success as indicated by a recent study conducted by Harvard.
About Our Blog
Learn more about what we're doing to improve your business and workflow procedures.