The speed at which dealerships turn vehicle inventory over is essential to your bottom line, so optimizing used inventory flow must be a top priority.
- The recon process can slow your vehicle turn and time-to-sale
- Track individual cars through the process to identify and address bottlenecks
- Inventory management technology can help by automating tracking and reporting
Any time an auto dealership buys a used car, it must go through a lot of steps — from reconditioning to inventory and marketing prep — before it hits the sales lot. These processes can take a lot of time, and every day the vehicle isn’t available for sale to the public costs you money.
This is why it’s important to sell cars fast. Estimates suggest that the net profit on an unsold vehicle decreases by about $40 per day, so the longer it takes to find a buyer, the less the dealership stands to make on the sale.
Improving your dealership’s inventory flow, from the time you purchase it to when a new buyer drives it off your lot, is essential to limiting profit erosion and maximizing earnings.
Here are six ways to optimize the performance of your car dealership’s inventory flow throughout the recon process.
1. Customize the recon plan and budget
Every vehicle you bring into your lot should come with a sales plan that you begin developing before you even buy it.
- How much reconditioning is necessary?
- How long will it take?
- How much will it cost?
By answering these questions, you can quickly develop a plan and budget to improve the sales prospects and value of that car. You can provide this information to your service department, too, which should give them a head’s up on what’s coming their way and how long they have to complete the work.
Planning ahead can involve looking at CARFAX reports and other information to ensure that surprises don’t arise that will create more work for your recon team and force you to pour more money into the car (perhaps more than you can recoup from it).
2. Automate basic approvals
Another way to increase inventory flow is to remove roadblocks that keep the process from moving forward. One way to do this is to give your service department a rubber stamp for necessary repairs that fall under a specific budget.
For example, if you’ve brought in a vehicle that clearly needs some paint touch-ups, having your service department get on the job immediately, without having to wait for your approval, saves time and helps the vehicle move to the next recon stage. The same approval can apply to things like oil changes and fluid top-ups.
It might not seem like much, but if you save a few hours per car, you’ll end up cutting your recon time by hundreds, if not thousands, of hours per year. These hours add up to dozens of days saved annually, which is excellent news for your dealership’s bottom line.
3. Identify and remove bottlenecks across the retail-ready pipeline
There are always back-ups along the road to retail where at least one element, either on-site or through a third-party vendor, holds up the entire job. Each bottleneck slows the time-to-sale and reduces net profit on the vehicle.
You could even run into a situation where the vehicle is ready to hit the lot, but you don’t have a photographer prepared to take pictures to load onto your website. You might also use a third-party webmaster to handle your website who isn’t responsive when the photos are ready.
Without pictures on your website, you’re unlikely to attract any web traffic to your dealership for that car, making it less likely that the vehicle moves quickly.
As you identify jobs that slow used inventory down, you can address them by coming up with cost-saving solutions. For example, investing in a good camera and having a team member take the photos can limit your time waiting for this service.
4. Encourage communication
Streamlining inventory flow only works if every team member is on the same page. Keeping everyone in communication ensures that the next department receiving a vehicle is ready for it.
Good communication also means having access to every vehicle’s location at all times, so you can keep an eye on how quickly the recon process is moving and intervene when necessary.
5. Track every step until the car is ready to retail
Finally, you need to be able to track every step a vehicle takes from the second you purchase it until it sells and is off the lot. That way, you can hold both employees and third-party vendors accountable when they don’t meet your goals.
Tracking the workflow goes hand-in-hand with setting the budget and timeline and monitoring performance against those benchmarks.
You should have a pretty good idea of how long a particular job takes, so tracking the vehicle as it moves between recon steps ensures that everyone involved meets their metrics.
6. Use workflow technology to your advantage
Setting goals, identifying bottlenecks, tracking each vehicle, and monitoring communication is a massive job. When you have dozens of cars moving through the inventory process monthly, tracking every detail is nearly impossible.
The good news is that there’s recon software available that will automate much of this work and keep you continually updated on the status of each piece of inventory your dealership purchases. When each department and vendor you use has access to this software, you can optimize communication and workflow, holding everyone accountable and getting every car where it needs to be quickly and efficiently.
ReconVelocity helps dealerships track the recon process and streamline communication between departments. This tool automates much of the daily work that department or general managers would be responsible for, saving time and money along the way. Give us a call at (850) 616-6294 to speak with a recon expert or use our contact form to request a product demo.