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?
The Cold, Hard Numbers
We all know about holding costs. So, we can agree that there are some fixed costs that can’t be changed. So, let’s focus on what we can change. On average a used car depreciates between $10-15 per day (average annual depreciation of cars between 2-6 years old is 17.3 %). The average used car inventory is about 70 cars. The average time needed to recondition a car is about 10 days. Let’s figure it on the low side: if the average depreciation per car in your inventory is $10 per day, the average depreciation per car is $100 in those 10 days. So, at $100/car per 10 days, a fleet of 70 cars costs $700 per day. Cars that are NOT ready for sale are costing you at least $7000 just in depreciation in just 10 days! That equals $21,000 per month and over $250,000 per year….figuring on the LOW side! I don’t care who you are, that’s a lot of money being left on the table.
Now, you can’t get rid of depreciation and there’s always going to be a need for a few days time to recondition the car. But, what if you could cut your time to market (cycle time) in half?! With the right tools, commitment and discipline it can be done and you’d save several thousand dollars per month. This is where ReconTRAC can help. Our team of experts have over 30 years of combined automotive and dealership experience. We consult and assist you in creating processes and customized workflows that will make your reconditioning process more efficient and save you money.
You can't count on labor and parts costs to drop, so the only way to save money and increase profit on a used car is cut down on the reconditioning cycle time.
ReconTRAC is a used car reconditioning management system that allows you to have real-time knowledge of all the cars in your reconditioning process. The customizable interface allows you to conform ReconTRAC to your dealership's workflow.
Here is just one sample of a workflow:
- A car is acquired and entered into your DMS then automatically sent to ReconTRAC.
- An estimate of what work that needs to be done is completed and sent to an authorized manager for approval.
- The manager reviews and approves the repairs he chooses and/or are necessary.
- The car enters the first department (in your workflow) that requires service. The service and/or repairs are complete and then the car automatically goes the the next department requiring service.
- Once all services and repairs are done, the car go to an optional QC step and then moved onto the lot ready for sale.
Additionally, your sales staff can know where cars are in the reconditioning process. If a customer comes in requesting a particular car and it is in the middle of reconditioning, they can let the customer know and give them an accurate date when it will be ready.
So now, I’ll ask this question again. 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?
The Bottom Line
ReconTRAC has cut the used car reconditioning process by up to 50 percent in some dealerships. When you multiply that across the inventory of cars, that adds up to real savings. ReconTRAC was designed by veteran dealership owners for dealerships. If you are ready to speed up your used car reconditioning process and save money, contact GreenCloud for a demonstration.