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Automotive Recon Operations: Digital Tools & Processes to Transform Your Dealership’s Most Costly Silo

Keeping Recon Departments On The Radar

Over the past 15 years, dealers have implemented groundbreaking digital technologies across sales, service, and finance such as electronic contracting and titling, advanced CRM systems, equity mining software, and electronic MPIs. On the consumer side, digital has transformed the car buying experience – from personalized walk-around videos, virtual reality kiosks, and trade-in valuation tools to modern retailing solutions and online direct purchasing platforms. Digital has even changed the way we own cars – from driver assistance technologies and adaptive cruise control (ACC) to advanced car maintenance systems.

While nearly every aspect of buying, selling and owning a car has been radically altered by some form of digital mechanism, there remains a silo in many dealerships that has managed to fly under the radar of digital detection – that is, the used car reconditioning operation, otherwise dubbed “recon”. Recon has managed to hide itself from scrutiny for decades even though it can be one of the largest profit killers for the dealership. Moreover, the recon department’s often-entrenched practices can lead to dysfunctionalities felt across other dealership departments, such as poor communications, finger-pointing, lack of collaboration, and misprioritized initiatives.

Shedding Digital Light on Recon Processes

Many dealerships still use spreadsheets and whiteboards to manage and track units in recon. Unfortunately, with this approach, dealers have no real way of knowing exactly how long units take to get to Retail-Ready, how long they spend in each recon step, how much idle time has accrued throughout the process, nor the amount of gross profit lost on vehicles in recon. Nonetheless, if you were to poll a room full of used car managers using these antiquated tools, they would tell you that they have a good handle on recon and that it only takes a few days, on average, to get cars ready for sale.

Regardless, the truth is that without software to track and manage a vehicle’s progression through recon steps, there is no way of measuring the efficiency or inefficiency of the overall workflow. In fact, it is humanly impossible to track the number of hours much less the minutes that multiple units spend in mechanical, the body shop, with sublet vendors, in detail, and being merchandised. More than ever, it is crucial that we shed digital light on reconditioning operations and implement process management and automation technologies that can track recon step progress by the second and provide managers with an accurate measurement of recon performance for data-driven decisions.

The Recon Silo vs. Early Internet Shoppers

The second step to transformation is to implement recon workflow management software so those involved in recon have the tools they need to achieve the dealership’s performance goals.

Many dealerships still use spreadsheets and whiteboards to manage and track units in recon. Unfortunately, with this approach, dealers have no real way of knowing exactly how long units take to get to Retail-Ready, how long they spend in each recon step, how much idle time has accrued throughout the process, nor the amount of gross profit lost on vehicles in recon. Nonetheless, if you were to poll a room full of used car managers using these antiquated tools, they would tell you that they have a good handle on recon and that it only takes a few days, on average, to get cars ready for sale.

Regardless, the truth is that without software to track and manage a vehicle’s progression through recon steps, there is no way of measuring the efficiency or inefficiency of the overall workflow. In fact, it is humanly impossible to track the number of hours much less the minutes that multiple units spend in mechanical, the body shop, with sublet vendors, in detail, and being merchandised. More than ever, it is crucial that we shed digital light on reconditioning operations and implement process management and automation technologies that can track recon step progress by the second and provide managers with an accurate measurement of recon performance for data-driven decisions.

Digital Technologies Are Transforming Recon Operations

Progressive dealers understand that recon software is essential to achieving transparency across the entire recon workflow, thereby enabling managers to know each unit’s progress within each step of recon. These dealers have salespeople and BDC agents on the phone on day #1 of acquisition, reaching out to potential buyers so that vehicles can potentially be sold the minute they are Retail-Ready.

Jeff Dyke, VP of Operations of Sonic Automotive, recently talked about a pilot that was conducted at 7 of their dealerships wherein recon process management software was implemented to measure the impact on recon time. Within just a short period, he reported that the stores in the pilot had shaved between 2-3 days at a minimum off recon time – adding more profit to the bottom line and helping them sell more used cars. It makes sense that all 106 Sonic locations are now implementing the recon platform, and the teams are looking forward to embracing necessary change for continued growth and profitability.

Recon Process Management Software

Recon process management software is designed specifically to reduce the time it takes to get a vehicle through the recon process to the front line or Retail-Ready. Because the dealership’s recon workflow is mapped out in individual steps, there is an incredible amount of transparency into how long each unit stays within each step, as well as the ability to track the amount of idle time of units between steps.

Having this bird’s-eye view of recon step intervals allows managers to identify bottlenecks and to take immediate corrective action. Additionally, this insight enables managers to hold individuals and vendors accountable for recon goals.

Automation is a critical aspect of recon software as well. For example, if a user neglects to manually move a unit into the next step within the mobile or desktop application, smart-routing or GPS technology can automatically progress the unit, so that step time reporting is accurate.

Improving cross-department communications is a huge function of recon software, in that app notifications and twitter-like VIN-specific messages enable real-time communications about step progress. Unlike text messaging, recon app notifications and @mentions are vehicle-specific meaning that when they are opened from the application, the messages are displayed within the vehicle’s notes. Such advanced features make real-time work approvals and denials a reality, which can lead to increased technician efficiency and productivity levels.

  • Leverage data from recon software to make data-driven decisions rather than rely on experience or emotion.

  • Begin change with employee training, then manage every step against the clock – realizing that every minute costs you money.

  • Do not let the fear of change impede your recon transformation. Help employees understand the benefits and the dealership’s goals.

More Selling Days, Higher Gross Profits, Increased Inventory Turns, and More

Highly efficient recon operations get vehicles Retail-Ready within 2-5 days, while keeping recon costs within appraisal allotments. Additionally, since buyer prospecting begins at acquisition, the number of selling days per unit is maximized, leading to increased sales and reduced depreciation. All of this translates into higher gross profits for the dealership and potentially increased employee incomes and customer referrals.

Inadvertently, the dealership gains other benefits of digitizing the recon operation such as an increase in trade-ins, which then leads to more internal work for the service department. There may also be additional future customer pay opportunities as unit sales increase. There is also the opportunity to sell warranty products and hold F&I gross.

Now more than ever, dealers need to recognize recon as the hidden silo that has averted digital transformation long enough. They must help employees embrace technological change that is necessary to tightly control recon costs, give velocity to the used car inventory turn, and protect diminishing gross profits.

The end is a win-win for everyone involved – the dealership retains more gross profit while driving customer retention, salespeople earn more income and get more referrals, and vendors get more of the dealership’s business. These enormous benefits will manifest from a digitized, more accountable reconditioning operation propelled by recon process management and automation technologies.

How inefficient recon operations adversely affect other dealership departments.

Department Adverse Affect
Acquisition Exceeding recon costs decreases initial margin calculations.
Management Unsure of who is responsible for hold-ups so cannot know who to hold accountable.
Sales Delays in Retail-Ready-Time chip away at gross profit; bad customer experience when vehicle is delayed to the front line.
Service Delays in work approvals create bottlenecks in the shop and affect tech productivity levels.
Body Shop / Detail Time wasted trying to locate vehicles; unsure of their status; delays.
Photos Cannot find vehicles or they are not through the detail process.
Vendors Vehicles are not ready for service or take time to locate, delaying recon and increasing costs.

Karla Guleserian, MSEC
www.reconvelocity.com

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