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Dealers Surprised to Learn Cost of Traditional Recon Process to Bottom Line

December 18, 2015 - Holding costs describes a daily charge assigned to each vehicle as it flows through the reconditioning process until it is retailed. Many dealers aren't aware of the erosion to sale gross that holding costs are for the typical dealership, noted Dennis McGinn, CEO of Rapid Recon reconditioning time-to-market workflow software.

To help auto dealers and their general managers grasp how traditional vehicle reconditioning practices increase holding costs and erode used car gross margin, Rapid Recon created an online Holding Cost Calculator.  

Long reconditioning cycles – the average is 10 to 12 days – not only delay getting vehicles frontline ready but waste dealership recourses. Dealers using Rapid Recon time-to-market workflow software reduce their recon cycle to five days or less.

NCM Associates notes that the average daily holding cost is $32 per vehicle. For dealers reconditioning 50 units a month at an average recon cycle of 10 days, that long cycle amounts to $192,000 in annual holding costs or lost opportunity.

Shave recon time to five days instead of 10 and the annual savings is $96,000.

"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!" said Jared Ricart, Service Operation Manager, Ricart Automotive, who has reduced recon time to four days. "That long process was killing gross."

"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.

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.com07add114543dc99b19836e82a4709e38.jpg?t=1

 

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