BOSTON/PHILADELPHIA, September 26, 2019 — In a joint press release, Hunter Malone, owner of DealerMax, announced today the sale of his firm’s assets to Jim Maxim Jr. and Jim Maxim Sr.

Profit By Design, the Maxim family enterprise out of Wayne, PA, purchased the company assets in a cash sale this week and will use the DealerMax brand to market the company’s dealership training and F&I income development programs to an expanded network of dealerships nationally.

The sale comes as dealerships seek to bolster profitability in a response to downward pressure on vehicle margins.  Hunter Malone, President of DealerMax, concurred, “Now is the right time for this.  Profit By Design and the Maxim team have a great formula for increasing dealer margins in Sales and F&I.  The company offers dealerships some of the most respected F&I training programs on the market today, and I am proud that the name will carry on with a family owned business with integrity.”

Jim Maxim Jr. formally ended his dual role as President of MaximTrak and Chief Digital Officer for RouteOne on August 1, 2019, after a 33-month transition period post-sale.  Maxim intends to build upon his family’s 40-years of history in the automotive industry and grow their company platform.

As CEO of the combined entity, now branded DealerMax, Maxim intends to grow the business and employee base in the greater Philadelphia market and looks to expand operations in major metro markets regionally.  The ‘Profit By Design’ name will live on and become the program name for its F&I Income Development offering as the company looks to expand its services into Digital Retail Consulting and Sales and Management Training.

Jim Maxim Jr. expressed that “The opportunity for growth as well as the talent, and expertise of our people at Profit By Design is what drew me back to the family business.  We have employees that have been with us for over 30-years and it is an honor to lead the company into this new era of growth and expansion.” 

Maxim continued, “The re-imagination of the customer experience that is taking place within the automotive industry right now is very exciting.  Dealers need best practices, proven processes and excellent training for employees to help them transition and succeed with today’s consumer.  We intend to expand our offering to help our dealers thrive in the rapidly changing marketplace.

DealerMax has announced multiple openings in partner markets including Pittsburgh, Boston, Rochester/Syracuse, NY/NJ Metro, Connecticut, Washington D.C. and Baltimore.  Interested candidates can apply at www.dealermax.com/careers.

BURLINGAME, CA, September 23, 2019 – Zonic Design, a certified vendor to CDK Global and Reynolds and Reynolds, is urging auto dealers to begin reviewing their vendors’ privacy and data security measures ahead of the January 1 deadline for compliance with California’s Consumer Protection Act (CCPA).

While CCPA is California-specific legislation, its requirements affect dealers and dealer groups having stores in the state, and many vendors serving auto retailers are domiciled there. CCPA’s comprehensiveness is designed to ensure healthy consumer privacy and data security guidelines for dealers and vendors, wherever located.

The timing for this call could not be better. According to a study from PossibleNOW, 56% of U.S. businesses polled are not likely to “be fully prepared” to meet the January 1 CCPA compliance deadline.  This fact should add urgency to dealers’ sense of timing about reviewing their vendors’ compliance practices.

Likely other states will enact consumer privacy and data security legislation, given the lack of national guidelines and standards. Those laws are sure to be as stringent as is CCPA to protect those states’ residents.

Zonic Design is data-driven service marketing company leveraging auto retailers’ existing and conquest consumer to increase customer retention, revenues and ROI. When a major dealer group reviewed the vendor’s data security during vetting, group security personnel were taken aback at how much more comprehensive Zonic’s security measures were than their own.

“Dealer groups may have up to 20 different vendors tapping into their dealer management or other internal systems which store personal consumer data, so they will want to be certain, and confident those vendors’ data practices are current and stringent,” said Brian Ramphal, Chief Executive Officer, for Zonic Design.

Foremost, he said, dealers must insist their vendors be DMS certified. Other qualifying questions they should ask vendors, though, sometimes go unasked, including:

• Where do vendors store client data once extracted from you, and how is that data protected?
• What cyber liability limits do your vendors carry?
• What processes do vendors use to ensure accurate a safe data transformation and management

To help dealers vet their vendors – and as a guideline for vendors - Zonic has prepared a brief PDF download, Data Compliance Questionnaire, at https://zonicdesign.com/#home-form-section.

Last month the CCPA was amended by the California Senate, with two exemptions relevant to automotive vendors. These exemptions are:

• Loyalty programs, for which “certain prohibitions in the CCPA would not apply
• Warranties and recalls, exempting information retained or stores for purposes of warranty or recall-related vehicle repair.

The International Risk Management Institute notes that the CCPA allows any consumer to demand to see all the information a company has saved on them. This invitation extends to third parties with which this data is shared.  CCPA now requires that companies must have visible website footers offering consumers the option to opt-out of data sharing.

For more information or to download the Data Compliance Questionnaire, visit zonicdesign.com.

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First-of-Its-Kind Reference Guide and User’s Manual from AutoAp Addresses ‘Cancerous Grave Risk’ Overwhelming Auto Industry

BEAVERTON, OR, September 10, 2019 – AutoAp, the foremost vehicle safety-recall, monitoring, intelligence and reporting company, announced today availability of Safety Recalls: Think You’re Covered? – Mitigate Your Liability and Increase Profitability, a most-timely and indispensable reference guide and user’s manual for auto dealers.

“Recalls have become a cancer in the auto industry, presenting a grave risk to consumers and all players in the supply chain, with auto dealers on the front line,” writes David S. Nathanson, managing partner for motormindz, the automotive think tank, in the Foreword to Safety Recalls.

Safety Recalls codifies in one convenient and highly readable guide the problems and challenges of the safety recall ecosystem. For franchised auto dealers, 14.8% of inventory have open-safety recalls, even after checking current recall listing systems, including those provided by OEMs, NHTSA and vehicle history reports.

“Our goal is to make plain to dealers the truth of the liability and loss to profit risk recalls present and remind them not to assume their safety recall identification process is protecting them,” said Mark Paul, AutoAp Founder and CEO, and author of Safety Recalls: Think You’re Covered.

For a copy of Safety Recall: Think You’re Covered, the seminal book bringing sanity to recall madness, visit www.reduceliability.com

“Most dealers, when asked about their recall management practices, tell us, ‘We’re covered.’ We know from our industry analysis this is not reality –hope is not a strategy for dealing with such a dangerous risk,” Paul said.

“When we first process VINs through AutoAp’s Safety Recall Dynamic Recall Management service, the reality is dealers have inventory with open safety recalls that their current recall-identification processes did not catch,” Paul said.  “Safety Recall details why this is so – and why this ‘cancerous’ risk continues to exist.”

AutoAp has collected open rate data since 2015 to quantify how extensive this risk is. After “professionalizing” safety recall management – implementing the necessary processes, developing a policy for handling recalls, and having built safety into their culture -- the results, show an 83% reduction in open rates for best-practice dealers.

For a copy of Safety Recall: Think You’re Covered, the seminal book bringing sanity to recall madness, visit www.reduceliability.com.

About AutoAp

AutoAp, Inc. is the auto industry’s number one provider of the most accurate, timely, and comprehensive safety recall-management, reporting, alerting and business intelligence services. AutoAp is available in direct and integrated solutions to help dealers, rental companies and fleet managers reduce liability and increase profitability. AutoAp safety-recall identification technology helps dealers increase customer safety and generate additional parts and labor revenue. www.autoap.com.

Media Contact

Mark Paul, AutoAp, Inc.

503-951-6150

press@autoap.com

Getting used cars ready for resale is so time delicate that even a few hours’ delay tarnishes their value. 

Luxury vehicle dealers in possession of data confirming this reality say they’re working hard to get luxury model trade-ins into mechanical inspection and cosmetic detailing faster, so they are sale-ready as quickly as possible.

Their reasons for getting cars through reconditioning in less time means business, they say:

• Lowers recon-related costs

• Gets cars ready for resale so prime margin potential is retained
• Increases inventory turn to improve used car efficiency

Driving this enhanced used car efficiency and profitability for any dealership is a commitment to applying to the business the most significant commitments determining used car profitability, speed to sale, which proper recon time to line or T2L launches.

“Used vehicle sales are about velocity – sourcing the inventory and getting those vehicles ready for resale as quickly and efficiently as possible,” said Justin Hoisington, pre-owned operations director for Hennessy Jaguar-Land Rover of Duluth, Georgia.

“We’re constantly trying to figure out how to increase our efficiency, and it’s imperative we get used vehicles ready to sell because we don’t have them ready to sell it does no one any good,” said Geoff Meeker, general manager for Mercedes-Benz of Buckhead of Atlanta, Georgia.

Speed to sale

“We see now where used car department profitably improves significantly over status quo where speed-to-sale strategies are applied to reconditioning time-to-line automation,” said Dennis McGinn, founder and CEO of Rapid Recon.

The reality of today’s used car business is speed matters – it matters more than ever, and speed to sale enhances the profit potential dealers expect from using an automated inventory management tool, McGinn said.

“In the car business,” McGinn added, “life begins at a sale. The industry has focused too much on vehicle provisioning, which while important, is routinely a once-a-week event, and consists primarily of going back to the same sources Monday or Tuesday and acquiring the same vehicles. Selling goes on all day, every day — and to sell more cars faster at higher gross, it is speed to sale, not provisioning that determines success for a used car department.”

As speed of sale has its roots in expedient recon, T2L, itself a time-based motivator, is a process discipline that structures, organizes and encourages the multiple steps and people necessary to transform trade-ins, private-party purchases and auction vehicles into eye-appealing, like-new, ready-for-retail vehicles for merchandising online and on the lot.   By implementing T2L technology disciplines as part of used car practice, dealers reduce recon turnaround time from days to hours; a 72-hour turnaround is the ideal.

Time is No Luxury

Dealerships using manual recon management assists such as Google Docs or spreadsheets find those tools too static to help with managing a multi-step, multi-process function such as vehicle reconditioning. Dealers using T2L recon automation typically reduce 10-to-21-day recon cycles.

“The ideal and achievable recon cycle under T2L speed-to-sale practices managed by recon workflow software is 3 to 5 days. T2L may be longer for luxury vehicles, given the often receive the highest level of recon to meet the higher standards the buyers of those brands and from luxury dealerships that sell them,” McGinn said.

In reconditioning, time not only influences recon cycle speed but also how a depreciation value known as holding cost erodes sale margin. Holding cost is defined by dealership benchmarking firm NCM Associates has a $40 per day per car holding cost. Luxury vehicle reconditioning hold costs can be more, by as much as two times the depreciate assigned to non-luxury models.

At a $40 holding cost, a 10-day recon cycle equals a $400 charge against sale gross on every used car the dealer retails. By using reconditioning efficiency tools such as T2L, that 10-day cycle can be reduced to 5 days, reducing holding cost erosion against sale gross by half.

Where faster T2L is at work in recon, the reduction in holding cost erosion to sale gross is evident.

“Our time to line before Rapid Recon was 8 to 18 days; dealers who think their time to line is faster than that kid themselves. I’ve worked for some whose detailing took 8 days alone!” Hoisington said.

Time is Money

Many managers miss the importance of why faster recon matters because they don’t understand cash flow or its significance to dealership vitality, said Joe Lescota of Joe Lescota Management Education & Training Co.

“Faster turn is paramount for luxury car dealers, especially, given their higher cost of inventory, which means higher floor pan and thus higher inventory holding costs, which is why faster recon is so important – it’s about cash flow,” Lescota said.

His team specializes in providing financial statement analysis, variable operations consulting and training to dealers, concentrating in used vehicle operations.

“Import dealers spend more for reconditioning because their market and their customer demands more, but they often allow more dollars for recon than many of these cars will require,” Lescota said. When that number appears in appraisals, it can mean undervalued trades that cost the dealership business. “This happens because managers don’t look at recon as a return on investment but rather an expense.”

 He pointed out that 58 to 64% of the recon expense the service department will charge the used car department is profit to the dealership, as actual recon hard costs are solely parts and labor. “This is why recon must be kept in-house,” Lescota said.

Other cash flow benefits that recon tools provide dealers include vehicle locators, so vehicles get into recon fast and they give managers near real-time costs related to each car. When the sales department has to wait for R.O. and other recon expenses to be collected to complete a customer transaction, recon expenses can be missed. This can require a wash down charged off as Policy Work on the financial statement. When done, this loss affects the dealership’s profitability but not the manager’s who should have caught those expenses before finalizing the vehicle transaction.

“That recon tool is essential as it allows maximum dollars to be earned for your cars,” Lescota said.

PALO ALTO, CA, July 24, 2019 — J.D. Power Valuation Services recently reported continued strong used car sales through the first half of 2019. Though the market cooled somewhat in June, the month’s performance was still better than historic June figures.

While this data is good news for franchise and independent used car dealers, the profit potential these sales numbers infer could be better, said a leading proponent of dealership speed-to-sale strategies.

“We see now where used car department profitably improves significantly over status quo where speed-to-sale strategies are applied to reconditioning time-to-line automation,” said Dennis McGinn, founder and CEO of Rapid Recon.

The reality of today’s used car business isn’t just that speed matters — it matters more than ever. Speed to sale enhances the profit potential that dealers expect when using an automated inventory management tool, McGinn said.

“In the car business,” McGinn added, “life begins at a sale. The industry has focused too much on vehicle provisioning, which while important, is a once-a-week event. Selling goes on all day, every day — and to sell more cars faster at higher gross, it is speed to sale, not provisioning that determines success for a used car department.”

Visually, this model looks like this: SELL > adjust > ACQUIRE > adjust > SELL

McGinn said speed to sale either advances or delays how quickly the used car manager approves mechanical and cosmetic services to inventory in the pipeline. “It is this speed of approval that is central to used car departments getting cars from acquisition to sale-ready in three to five days,” McGinn said.

Speed of approval not only promotes inventory turns but influences inventory aging, floorplan expense and wholesale losses. It also makes provisioning tools more effective.

With speed-of-approval and speed-to-sale triggers on mobile devices, used car managers can approve repairs from anywhere, and the sales staff has real-time access to cars in inventory, along with their recon status and costs. Some dealers practicing these strategies retail 40% of incoming inventory off the transport or while the vehicle is in recon.

“These speed tools mean cars are sale-ready having most of their prime 21-day retail window ahead of them,” McGinn said.

Rapid Recon benchmarks and best practices have helped thousands of GMs, used car managers and service managers fine-tune their reconditioning methods. As a result, they achieve faster time-to-market and speed-to-sale rates, allowing them to move more vehicles while retaining gross.

An auto dealership’s reconditioning function helps or hurts the used car department.

Recon is not just a process through which trade-ins and auction vehicles get new brakes and tires and dings repaired. Recon, at its best, is a cross-store profitability tool for auto dealer groups.

This cross-store tool gives corporate-level store managers in one report the level of reconditioning efficiency, time-to-line (T2L) speed, and other vital metrics for managing the individual store and group-wide recon profitability.

As the industry continues to consolidate and produce new competition like Carvana and Shift, it has become critically important from a used-car profitability perspective that groups manage individual store recon process performance, store-to-store, and at the group level.

The goal is to use this insight to mitigate risk and transform the profitably of all group used car departments’ profitability.

From helicopter to sidewalk level, group reporting provides oversight of such Key Performance Indicators as:

Location of every car in the group’s possession

Place and position of those cars within the recon process on their way to sale-ready status

Number of vehicles having safety recalls and whether in recon or already on the lot

Per vehicle parts and labor costs – and whether applied as internal or retail costs

• T2L run rate, from acquisition to sale-ready status
•  

Average recon cost per vehicle, by store and group

Sublet status – vehicles released to sublets, status, due date

Progress to T2L goal, with two to three days the target; Non-automated recon cycle rates quickly balloon to 10 to 21 days.

• Holding costs, in near-real time

​​​​​​​Total recon cost at current T2L and cost savings as T2L is improved

Attempts at tracking recon workflow and some of the above metrics using whiteboards, Google Docs or Sticky Notes has proven wasteful, positively not helpful for transforming recon into a profit center of the dealership and its group.

Many dealers instead have embrace reconditioning automation and its accurate and real-time recon management and accountability.

The point is money

David Simches is group used car director for Crown Automotive Group. He oversees Florida operations. He reported that by using recon automation and its group reporting tools, his stores’ T2L dropped from an average 12 days to a 4.6-day group average. Among other gains for the business, reducing T2L by nearly 7.5 days means his stores added at least one additional inventory turn a year.

He said the reports help him inform his GMs and corporate executives precisely how well their recon operations – and as a result, their used car departments – are performing.

“I try to make these group and store reports effective tools for change because GMs are good at making the numbers look good to corporate, but the group-level report tells them what’s happening and how fast stores within the group are moving inventory from acquisition to sale-ready. With that, our sales are up, our aging is down, and our wholesale ratios are in check – this is all good stuff that is supposed to happen when cars get sale-ready faster,” Simches said.

General managers, fixed ops directors, and used car managers tell me that lacking automation to account for recon-related events most T2L estimates are guesswork. They were speechless; they said when they realized that accurate T2L measurement showed their shops’ were taking from 10 to 21 days to get cars to the sales lot.

Dealers cannot operate a profitable used car department when inventory is already aging out before it hits the sales lot (or even online). When inefficient recon consumes 10 days of a premium 21-day margin window to get cars ready to sell, holding cost and market depreciation has burned up any potential profit left in those cars.

On the other hand, highly efficient recon operations will complete all recon steps within three to five days of their acquisition from trade or auction. A three-to-five-day T2L keeps cars’ premium retail window open longer. The margin on fresh cars is always stronger than on those for which repricing is needed every few days to get them sold.

In other words, how does a group, whether it comprises three stores or 300, manage its many recon operations so T2L is low in every store and thus inventory hits sale-ready status having cars still so fresh the sales team circles like sharks.

Science applied

Years ago, Dennis McGinn was an entrepreneurial-minded and earnest young fellow working for Hewlett-Packard, part of a team learning and using quality disciplines known as Six Sigma and Continuous Process Improvement to build efficiency and accountability into enterprise resource systems for major automotive OEMs.

In 2010, he founded the reconditioning workflow software company Rapid Recon, for which he is chief executive officer. This software brings continuous process improvement disciplines to one of the most neglected and undervalued activities of the modern auto dealership.

“We know from our work with hundreds of dealer groups - from small group operators to the major public groups – who, having adopted group-level recon practices, report more profitable used-car departments,” McGinn said.

One example is Larry H. Miller Automotive. Rod Rowley is senior vice president responsible for nine franchise and five used car operations in Utah, plus group-wide used car operations. “Group reporting enables me to look at all my stores in one view, which makes it clear to us clear who needs help in their recon processes,” Rowley said.

These group-level metrics extracted recently from three dealer groups’ group-level reports (none from dealers interviewed for this article) show how a focus on cross-store recon can drive better results.

The annual savings for each group shown in this table originate from multiple gains:

• * Overall savings in time, labor and materials accumulating from improved recon efficiencies the elimination of such T2L killers as lost, misplaced or neglected on dealership lots or at sublets.

• * Faster T2L translating into reduced holding costs; NCM Associates calculates the average daily per vehicle holding cost at $40, which accrues from vehicle acquisition to its sale. For clarification, a 10-day recon cycle depreciates a car $400.

•  
•  
• The actual sale margin erodes by that much. 
• Application of T2L automation, reducing the recon cycle; two additional turns on 100 cars at $1,500 gross equals $300,000 a year or $25,000 a month — a remarkable ROI for a monthly T2L workflow software cost of around $500 per store.

Anthony Martinez, Group Performance Manager for Rapid Recon, explained other considerations that more structured and monitored reconditioning resolves for groups.

“A few examples may include capacity issues in the recon center, inefficiencies dispatching cars to the right tech, delays working with outside vendors, difficulty in getting approvals or a slow down in getting cars into recon caused by delays in title or transportation, to name a few,” Martinez said.

Elaborating on the table data, Martinez said, “When this information is presented in a group report, managers easily spot trends. Cross-store reporting details help build peer recon center competitiveness. Discussions that evolve from the reported data often evolve into a rich conversation across the stores about best practices, lessons, and problem-solving.”

This friendly rivalry at Morrie’s Automotive Group has helped Jerry Heinecke, General Manager and former director, Used Car Operations, manage a more profitable three days’ average days in recon for the Group’s seven dealerships around metro Minneapolis, and in Chippewa Valley, Wisconsin.

“This group-level snapshot gives me the metrics to track, monitor, and manage essential benchmarks. Comparing one store’s performance to another is an excellent way to create a competitive environment,” Heinecke shared.

Jim Leman has been writing about automotive retail operations since 1992. Contact him at Jimleman@gmail.com

Radiant Ride, specialists in professional cosmetic restoration services and customer retention, announced today its SMART cosmetic service agreement program to help auto dealers protect the appearance of their customers’ vehicles and retain their business.

This cosmetic service agreement, like a mechanical agreement for a vehicle’s engine, powertrain and other systems, provides specified levels of prepaid interior and exterior cosmetic services. SMART is the industry acronym for Small to Medium Area Repair Technicians, commonly known as mobile cosmetic services.

Now motorists can have cosmetic blemishes to their vehicle addressed immediately, at their dealership during other maintenance without having to involve their insurance company. Dealers retail the Radiant Ride SMART cosmetic service agreement for $795 to $995 for coverage ranging up to five years. It is available on all new or newer used vehicles.

“We’re enjoying a 30% penetration on this Cosmetic Service Agreement, and, of course, we want to make a reasonable profit on what we sell,” said David Halvorson, president, American Chevrolet in Modesto. “Parking spaces seem to get narrower and as motorists squeeze in their vehicles get dings and dents. This product gives our customers good value at a reasonable price point.”

Finance directors embrace Radiant Ride as well. “Customers understand this product as a cosmetic service agreement, and that idea resonates with them,” said Jesse Ismate, Finance Director for Folsom (California) Ford and Folsom KIA.

“I’ve had customers walk into my office and tell me Radiant Ride is pretty cool.  We see a 30% penetration on finance and lease deals with it,” said Ismate, whose stores write 50 Radiant Ride contracts a month.

Infiniti of Modesto offers Radiant Ride too. “We offer it to every customer, and 75% of them purchase this for their vehicles. They see the value,” said Chelsea Shelton, sales manager.

Dealers who make the Radiant Ride SMART Cosmetic Service Agreement available to customers provide an attractive and high-value solution for owners who prize the appearance of their vehicle as a personal reflection, said Earl ‘Sticks’ Brown, Radiant Ride founder and chief executive officer.  

“We know that consumers whose cars suffer minor cosmetic incidents don’t always know what to do about it - or if they do, how to source repairers and get those blemishes corrected quickly and affordable. Dealers offering Radiant Ride solve this dilemma for their customers by providing a one-stop solution for cosmetic repairs,” Brown said.

Nick Wharton is service manager for Infiniti Modesto. “We enjoy the extra income off sublet charges, and these customers are happy they stayed with us,” he said.

Radiant Ride is a complete automotive appearance package provider. Its SMART teams specialize in professional cosmetic restoration services, which partner with a network of dealerships and mobile restoration specialists. The Radiant Ride Cosmetic Service Agreement program makes customer retention a priority, ultimately bringing customers back for their next car buying experience. For more information, visit Radiant Ride or contact Earl ‘Sticks’ Brown at (209) 601-3402 or sticks@RadiantRide.com.

By Jasen Rice, Founder/CEO Lotpop

You’re in the time business, which I’d guess you know all too well.

You know that time passes all too quickly – and often is allowed to slip by without your wringing a satisfactory return from its potential. You see that all too clearly later through the rear view mirror.

Selling profitably is always about time – and timing. Each of us has 30 days, plus or minus, on the calendar every month, but don’t you believe it; time flies!

Watch inventory aging like a hawk, responding proactively and quickly to move inventory at increasingly earlier aging dates if you hope to make a profit on your investments these days.

A Good March

You probably came off a good March – better than expected. According to MarketWatch, March auto sales were “surprisingly strong.” Citing Autodata information, MarketWatch said March SAAR sales were 17.45 million units, up from 16.57 the prior month.

When you come off a good month, the temptation can be to relax a little, but that is not helpful. High-five the gang, but get everyone back into the trenches. Your adversary, time, is already suited up and coming after you.

Keep an eye on interest rates. Edmunds reported in a late March report, Used Vehicle Market Poised for Record Sales in 2019, new-car interest rates jumped last year by 17 percent with used car rates increasing by 9 percent in the same period.

The report said market conditions have never been more favorable for CPO vehicles, which is good news. Take time to educate consumers about their value. “Many shoppers are unaware of the benefits of CPO vehicle programs, but given the tough financial conditions in the new market, it's never been a better time to look into them," said Ivan Drury, Edmunds' senior manager of industry analysis, in the Edmunds report.

Make it a Better April

Spring fever is hitting now, and consumers have more than a few distractions to keep from spending a warm, sunny afternoon at the car dealership. If you stocked up in used cars in March for a hopeful continuation of that success from your March Madness, you might be disappointed.

If you’re not grinding every day as if it’s already end of the month and moving cars off the lot within 31 days of their acquisition you’re already in trouble. Cars no longer age out as they once did. Oh, they age all right - right under your nose. Sixty days to make a little margin isn’t the risk anymore - it’s 31-to-45 days, and narrowing.

When cars age out faster than they once did, it influences your business in ways you’d do well to heed:

• Buy smarter, so your vehicles sell sooner with more margin
• Recon faster, so cars get front-line ready in 72 hours when they’re still fresh metal, not after 15 days, having consumed half of their prime margin potential in the shop
• Sell from the data, not your gut. Reduce the asking price on cars as they approach 30-days and drop it increasingly more urgently as the unit hits 30 days.

Dale Pollak, writing recently in his blog Like I See It, discussed this topic. “Consider how quickly used vehicles run out of margin today compared to two years ago,” he wrote. “In 2017, used cars hit a 90 percent cost-to-market ratio around day 60. You could sell those vehicles then, and still make some money even it wasn’t all you wanted. This year, we’re seeing vehicles consistently hit the 90 percent cost-to-market ratio around day 30!”

That’s what I’m talking about here, so again, the message is: grind every day as if it’s month end if you want to sell cars and make money in this market. You can be sure that this routine will require even more out of you going forward. Here are a few ideas to help manage this risk

• Watch your VDPs (video detail page) - are your cars attracting shopper eyeballs? What is the lead count on that car…why isn’t it selling? Did you buy it at the top of the market? And, no, you won’t retail out of it, sorry!

•  
•  
• Follow and heed key metrics – inventory balance, aging, the cost to market and market pricing. As you observe make/model scoring metrics also look at the conversion percentages for those cars. Are they converting online? What is your lead count on those models?

• Is inventory heavier on a particular year/make/model than your sell rate for those vehicles? Are you heavy in those cars at this time of year? How do those cars’ mileage averages compare to the market average? Is the segment heavy in that car at this time of year? How do your cars’ mileages compare to the market average? Are you too heavy at a particular price point?

Don’t wait until inventory approaches day 29 or 59 to look at the data – do it early and do it often. Take action if nothing is happening on your cars. Watch inventory creep, which occurs when the sale rate of your 31- to 45-day bucket has pulled back. Should you adjust pricing to attract eyeballs or get the phone to ring? Consider the color of the cars on your lot – what do the numbers say about that make, model and mileage in the color(s) of those you inventory. Is the color of the vehicle in demand or an oddball that you’ll need to drop the price on to move or spiff to sell it?

Focus your people, remarketing, marketing and energy on selling cars before 31 days.

To wrap up, if you don’t know, learn what it takes to:

• Manage your used car inventory to maximize both gross and volume
• Understand the metrics you should tweak to bump volume up by 25 to 30 percent
• Excel at sourcing the cars you want to sell and then to sell what you carry
• Become a proactive inventory manager rather than one who reacts to the market

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

• A pattern of vehicles neglected or actually lost on back lots and sublets

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.

By Jasen Rice, founder and chief executive officer, Lotpop -- March 11, 2019 

Traditionally, February and March give dealers some of the highest shopper counts, and April through May sales are brisk.

We probably won’t have that season in 2019.

If you’re still buying and stocking inventory now as you did through last week, stop doing so. The post-tax-refund market may not materialize this year, which typically drives volume through early April. You need to forecast inventory needs for April and May – less demand, meaning less volume – so you aren’t stuck with a lot full of metal that will age as you wait for the uptick.

By April, early tax filers will have received what refunds they have coming, so we’ll see any tax-refund sale bump then, if at all. Late filers typically owe taxes so don’t hope for a late-season hiccup from them.

Cox Automotive has reported that the used-vehicle market sees the most significant impact from tax refunds within the automotive market. March and April have historically enjoyed 10 to 15 percent more used-car sales than the average month and 25 to 35 percent more sales than the slower months in the year. These months also typically see a spring bounce in used-car values.

The strong demand fueled by tax refunds cause used-car prices to appreciate each year when tax refunds are being distributed, Cox noted.

“This appreciation usually lifts prices by 3 to 5 percent at its peak. For a depreciating asset, this ‘spring bounce’ is especially notable, but it is a reliable phenomenon thanks to the impact of tax refunds,” Cox noted.

Last year, the average 2017 refund received in 2018 was around $2,800. Changes to the tax code in 2018 are going to mean “several million households will not receive a refund [in 2019] when they are accustomed to receiving one. Worse still, several million more households will end up owing more money than is typically the case,” Cox reported.

Regardless, I find that year after year as April rolls around, sales slow anywhere from a 10 to 15 percent decline. For dealers having come off a strong February and March, the slowing market can catch dealers with lots filled with cars that will age out waiting for market's return.

This is a mistake I see too often as I analyze dealers’ markets, turn rates, and inventory needs. They come off a strong February inventory flow and roll into March at the same speed, and suddenly they’re holding too many cars and scrambling through May to eat their way out of them.

– if you haven’t yet done so yet, dial back your stocking levels now. Anything on your lot as of today will be 45 to 60-days old when we hit the end of April, going into May. Stay alert!  Call Lotpop at 314-568-2754 for a complimentary analysis of your situation.