by Dennis McGinn, founder and CEO, Rapid Recon
Regardless the market, the one aspect of your business you have direct control over (or could have) is vehicle reconditioning.
When the new standard for recon department efficiency and profitability called time to line or T2L is applied to recon steps you get ultimate control and accountability over this vital part of any used car operation.
T2L practice increases turn and improves sale gross, whether your shop reconditions 100 cars a month or 600.
Where T2L recon workflow management isn't in place:
Unrecognized practices and policies eroding gross before vehicles even get to the lot
Weak or non-existent accountability or trackability of the movement of cars through recon from acquisition to sale-ready — and no insight into the performance of those responsible for reconditioning vehicles
The sales department’s voice increasingly becoming frustrated and angry that new inventory is slow to get to the front line or is not available to show to customers interested in new arrivals yet to be inspected and detailed
Finger pointing between sales, used cars, recon and fixed ops, each blaming the other for the delay, cost overruns, neglected repair approvals and confusion within the process.
Recon T2L is an automated way to take waste out of recon operations, plug in continuous cycle improvement and unify the team around a structured process of work steps and work tasks that organizes their day, helps them work smarter and faster, and reduces your T2L to three to five days.
That’s a substantial time savings in days off the recon cycle from what most recon centers are operating at using manual structuring and tracking via Google Docs or spreadsheets. When you can drop your recon cycle from 10 to 21 days or more — we see this all the time — to three to five days, magic happens to your bottom line.
Here are parting observations and encouragement:
Reduce existing recon cycle time by 2.5 days and pick up one additional inventory turn
Sell more cars yet inventory fewer
Reduce gross-eroding holding cost, a $40 per day per car overhead depreciation you accumlate on every vehicle you own until sold. Recon holding cost start at acquisition to they’re signed off as sale-ready. For example, a 10-day recon cycle at a 100-car monthly volume runs up $40,000 in holding costs (100 x 40 x 10-day cycle). Reduce T2L to seven days to see the difference — $28,000 in holding cost. This is the cost against gross. Every reduction in your T2L delivers gross margin gain.
Use this calculator to understand how your recon times impact your holding cost erosion.