Now, however, that’s not necessarily the case. Potential buyers used to get their first look at a used car when they visited the dealership. Now they’re very likely to first see a used vehicle online, where photos may not be able to fully convey the amount and quality of reconditioning work. In addition, lower margins on used vehicles make it harder for dealers to recoup their reconditioning costs.
1. Charge Less than Retail for Parts and Labor
Dealers frequently charge full retail – or even more – for parts and labor used in reconditioning. By reducing these rates up to 20 percent, they can decrease the amount of money they’ll need to recoup when reconditioned cars are sold. As a side benefit, their parts and service departments will see a greater volume of internal repair orders. Each order will result in a lower profit than before, but the increased volume should more than make up for it.
2. Don’t Overdo Reconditioning
Dealers have tended to overdo reconditioning in some cases, fixing very small cosmetic damage or routinely doing work such as replacing tires. Ultimately, the goal of reconditioning work should be to ensure that the car is safe and to make it look nice. Anything else probably isn’t necessary and won’t make much of a difference in how long a car takes to sell or the price it sells for. Dealers should also hold third-party vendors to the same principle, because it’s easy to let costs for upholstery, dents, and other outside work to rise unchecked.
3. Lower the Cost of Replacement Parts
For used cars that don’t require OEM parts for certification programs, dealers can reduce costs by using high-quality non-OEM parts when possible. Many parts, such as brakes and rotors, are frequently replaced, so the savings from using non-OEM parts could be significant and can be achieved without compromising quality or safety.
4. Track – and Fix – the Reconditioning Process
Many steps are involved in the reconditioning process, each of which can cause a dealer to make less profit when a vehicle is sold. Attempting to create a homegrown report on the process is time-consuming, difficult, and often inaccurate. Dealers can save time and money by utilizing ReconTRAC, a Cloud-based software program that helps track the entire process. They’ll be able to precisely identify and correct inefficiencies and hold departments and managers responsible for the time and money they spend on reconditioning. The result will be a more streamlined, accountable reconditioning process and better profit when these vehicles are sold.
The reconditioning process needs to be carefully tracked and controlled. By utilizing these strategies, dealers will be much better positioned to translate the time and money invested in reconditioning into profits.