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I attended a NADA class recently and the concept of level recon costs was brought up. The way we do reconditioning at our store is each vehicle stands on its own. Meaning whatever the actual recon costs for the given unit is gets billed to the car. I had never really considered the fact that there might be a better way to account for recon.
It was mentioned in the class and several of the class members work at dealerships where they have a set amount of recon that is billed to every unit. Meaning, service hits each car the same amount of money regardless if the actual recon is more or less than the set amount. They mentioned that the benefit to doing it this way is that service is less prone to try to take advantage of the sales department. Also, service is then on the hook for any repairs that need to be done after the sale in the event that they missed something in the reconditioning process. They also mentioned that it is nice to have a predictable amount attached to each car so you don't have to worry about getting buried in one.
I see a lot of disadvantages to this program as I have been thinking about it. I was wondering if there are many dealers out there that currently account for their recon in this way and what there experience has been. Or, if there are some dealers out there that have tried it and found that it didn't work well. Any feedback would be appreciated.....