If a car dealership has a punching bag for frustration, it’s Fixed Operations. So much happens under the Fixed Operations umbrella critical to vehicle sales that when hiccups occur fingers seem to naturally point there.
The Fixed Ops director’s phone often lights up with calls like these from the GM and sales managers:
- “What’s the make-ready status of the car I just sold?”
- “I have a customer on black Mustang we took in yesterday. Where is it?”
- “Why aren’t those cars we bought the other day on the lot yet?
- “I OK’d those repairs yesterday. Why aren’t they done yet?
- “How come you put that much into that recon? I didn’t authorize that.”
- “Figure out how to get internal work done faster!”
Here we have a central issue with any dealership’s backend – balancing talent, resources and time to provide profitable and timely customer-pay service against demands from new and used car departments for quick and inexpensive internal repair and cosmetic needs (including make-ready).
The function within Fixed Operations direct responsible for getting cars, especially used cars, retail ready is reconditioning. It’s in this pipeline as vehicles flow into it from the auction, private purchases and trades, that mechanical, parts and cosmetics touch each vehicle on its way to retail ready status. At any point along the way this flow is delayed, disrupted or confused, expectations aren’t met, promises fall through, and blame escalates.
Which brings us to why our first contact from a dealership is most frequently through the Fixed Operations department. They tire of being the punching bag for the frustration that usually starts outside of their area of responsibility – the used car manager takes two days to approve a repair, for example, that slows the process of that unit through recon. Fixed Ops personnel contact us too because those individuals, like me, are detail-oriented, process-driven individuals. They like the proper flow of things and work hard to structure the movement of people and work, so it’s efficient, measurable – and repeatable, car after car.
They know that when kinks are ironed out of work processes, when individuals responsible for doing a particular task do it correctly, the first time, within the time allotted for that activity, and when all this can be monitor and measured, the whole process works more smoothly, quickly, and with outcomes that are more positive.
Juggling the reconditioning of incoming used cars with the competition for talent, space and parts for customer-pay business is a daily act. It’s always a challenge to manage labor and parts costs to service and repair vehicles safely while still keeping costs down. Every time you’re asked to pull a car out of line for particular attention or to wait for special-order parts or a sublet, you lose days and possibly control.
A service department having a good backlog of used cars to recon can keep tech busy but too often, those easy labor hours detract techs from customer-pay work.
As necessary as customer-pay work is, it’s the used car department that is, in reality, the dealership’s most profitable customer. Balancing these two needs, and satisfying and appeasing the used car manager, the GM and his or her own teams isn’t a gig for sissies.
There is a way, though, to bring peace and harmony (well, this is the car business, you know), and better-reconditioning outcomes to any dealership. Consider how rapid reconditioning disciplines make recon a profit center for the dealership:
- Every Step is Identified: Once a VIN is swiped into rapid reconditioning software or entered into the DMS, that vehicle is trackable from that point to when sold. Every step along the way through recon is structured, monitored, reported and trackable. Now, the staff knows exactly where each vehicle is in the recon process, why it might be delayed, and where it goes next in its flow to retail ready. No more guessing.
- Organizes Every Step: People drawn to Fixed Operations are detail-oriented, process-driven individuals. They like the proper flow of things and work hard to structure the movement of people and work, so it’s efficient, measurable – and repeatable, car after car. Communications between Fixed Ops and the used car manager, for instance, are time-stamped and via email, text or phone to speed repair approvals.
- Every Step is Accountable: When every step of the recon process – from inspection completed to parts ordered to carpets shampooed to photography scheduled – is automatically tracked and annotated and can be viewed via smartphone from most anywhere in real-time, managers can check inventory status instantly, whether with a customer, at the auction, or at a child’s birthday party.
- Workflow is Increased, Cost Decreased: The most profitable recon time to line (T2L) is three to five days. Most dealerships lacking automation to streamline the prior steps will, when recon disciplines are applied, discover they’re recon time is closer to a week to 20 days! That recon operation is no doubt generating a lot of complaining from the used car side of the business. We often hear stories from Fixed Operations directors and their GMs who learn about rapid reconditioning that they recognize these process-driven advantages right away. Then they look further at the economics of rapid reconditioning and sell themselves:
- Reduces Costs: A dealer saves $40 (on average) per day per car for each day it can reduce that vehicle’s travel through the recon process. This $40 is an estimated per car share of dealership overhead, as calculated by NCM Associates. A recon time-to-line of 10 days means that cycle costs the dealer $400 to get that car retail ready, exclusive of any mechanical or cosmetic costs. A three-day T2L requires just $120 days. This cost is taken off the sale gross, providing an exact margin. The importance of faster T2L is evident.
- Increases Inventory Turn: A faster T2L translates into more fresh cars getting retail ready faster; shave 2.5 days off a current recon time, and your dealership will add on additional inventory turn, fueling the possibility of selling more cars in the same time thank you could before.
- Delivers Fresher Inventory: Get cars retail ready quicker means benefiting from more of the available 21-day prime market window – take 10 days to get cars from trade or transport to the front line and that window is open only 11 days. Take three days to recon cars and 18 prime retail days remain. Fresh cars sell for more margin – and the sales team is more enthusiastic to sell fresh inventory than cars sitting.
We sometimes lose sight that used cars should be the most profitable department in the entire dealership. The reconditioning staff can play a lesser or more significant role in that outcome. Fixed operations directors who sense and share in the frustration when recon isn’t an efficient machine know things can be better. Here’s a way.