The cost of an Under-Performing Reconditioning Department

The cost of an Under-Performing Reconditioning Department

Have you ever thought of finding out the true cost of your reconditioning department that has been underperforming since a while?
Many of the top dealerships have figured out that this cost is a significant one.
Most of the industry experts suggest that each vehicle suffers a net value depreciation of 1.50% to 1.75% every month.
This depreciation percentage may not look like an alarming one. However, this percentage refers to a monthly depreciation of $30,000 for a dealership with 100 vehicles, each worth $15,000.
This is equal to a depreciation of one thousand dollars per day. Therefore, it is possible to improve a dealership’s bottom line significantly even by improving the reconditioning process by a few days.

It has been predicted by many experts that the market for pre-owned vehicles will drop substantially over the next few years.
Therefore, this is probably the best time for the dealerships to quickly turn around their trades to pre-owned from new vehicle deals.

It is impossible to fix a problem without tracking.

Many would be surprised to know that most of the dealerships are clueless about the true time span of their reconditioning cycle.
Following a vehicle from the stage of trade to that of being ready for sale can be a painful eye opener for most dealerships.
In this regards, please remember that the national average time for the entire reconditioning cycle is seven and a half days.
Where do you stand in comparison to this national average?
The turnaround time for a car’s reconditioning becomes even more important because of the competitive nature of the market.
If a vehicle remains in your dealership’s lot for more than thirty days, your dealership suffers a significant depreciation.
Moreover, this will also allow your competitor to purchase the same car for a significantly lower price.
Therefore, even after selling the car for the same price, your profit is lower compared to the competitor.
Always remember that a vehicle starts depreciating from the moment you own it, and it continues all the time.
Don’t be too pleased if your reconditioning department says that your cars have a turnaround time of two or three days.
Since tracking is practically impossible, it is very easy to misrepresent the true reconditioning cycle time.
Instead of being impressed by the turnaround time of a few quick vehicles, you should focus on the ones with paint issues or back-ordered parts that may require almost a month to turnaround.
In some worst cases scenarios, vehicles remain unattended in the showroom for days because of the ignorance of the service department.
Some software solutions have been created to track the department wise cycle time for reconditioning.
These manual tools require the complete participation of every person involved in the process.
While using these tools, there is a possibility of inaccurate reporting because the manager needs to finish and start the steps.
Simple Recon presents a powerful workflow system that tracks each step of the reconditioning process. More importantly, this system is designed to raise attention when things are taking longer than usual.
After the estimation and approval, the vehicle will move through the departments, ensuring that each vehicle is tracked and accounted for.

Some of the many important questions answered by Simple Recon are
  • Time taken in each department
  • Work that took longer than expected
  • What is currently in each department's queue
  • Vendor performance.
Address all your reconditioning needs for old cars with Simple Recon.


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