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Auto dealers who speed the flow of vehicles through reconditioning to get them frontline-ready faster reduce holding cost erosion, said Jared Ricart, Service Operation Manager, Ricart Automotive, who has reduced recon time there from 12 days to four.
“We thought we had good insight into how long it was taking us to get vehicles frontline ready, but when we turned on Rapid Recon it showed us we were at 12 days!” he said. “That long process was killing gross.”
“The issue is holding costs,” said Dennis McGinn, president of Rapid Recon. “Holding cost is each vehicle’s percentage of dealership overhead, which accumulates daily, from acquisition to retail. Faster time to market reduces holding costs’ margin erosion.”
NCM Associates notes from its 20 Group studies that daily holding cost is an average $32 per vehicle.
“Where used car and service and parts managers aren’t aware of how holding costs add up as the recon clock ticks, they’re erasing dollars from gross on every vehicle,” McGinn said. Rapid Recon time-to-market reconditioning software applies the science of workflow accountability to vehicle reconditioning.
“With Rapid Recon we found a way to track every step of our recon process. It has helped us finely tune recon and reduce time to market by eight days, to just four days,” he recalled.
“Looking at the first seven months on Rapid Recon, we’ve retailed 5,000 used cars. By cutting down the days in service by eight days, at $32 a day per vehicle, you can do the math on the savings we’ve collected,” Ricart said.
Understanding how holding costs erode gross, a parts manager, for example, can better decide whether to buy a more expensive part to do the repair now versus waiting for a less expensive part that takes a day or two to arrive.
Dealers can calculate their holding costs here using Rapid Recon’s Holding Cost Calculator.
Ricart said the Rapid Recon process can help technicians better appreciate recon economics. “Techs who understand recon is a production-based service work to move vehicles through inspections and repairs faster. At Ricart, recon technicians work a three-day week, with the compressed time to earn their hours incenting them to work faster and push more vehicles through their phase of the reconditioning process.
“As a communications tool, Rapid Recon has helped everyone involved eliminate wait times and work faster toward our common time-to-market goal - and not point fingers,” Ricart noted.
Rapid Recon is the leading time-to-market reconditioning software for new and used car dealerships. Rapid Recon benchmarks and best practices help GMs, used car managers and service managers fine-tune their reconditioning practices to achieve faster time to market to retain vehicle gross. www.rapidrecon.com