How Long Should It Take To Prepare A Sale-Ready Vehicle? – Dennis McGinn, CEO of Rapid Recon

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Every dealer knows that the profitability of your used-car inventory largely depends on the speed and efficiency of your reconditioning team. So much so, that NCM has determined that a vehicle depreciates 40 dollars every day it spends in the recon cycle. Joining us today to discuss how you can motivate profitability from vehicle acquisition to retail-ready, is Dennis McGinn, CEO of Rapid Recon.

Dennis also discusses other recon topics, such as the amount of money dealers spend and lose within their recon department, as well as how dealers can acquire the right vehicles at the right cost. But when it comes to used car inventory, Dennis says that a dealer’s first priority should be the amount of time it takes to turn that to sale ready vehicles. He says he has yet to find a dealership in which their turn around time for recon vehicles is anywhere near what the dealership hopes or believes it to be, and this is one of the major issues that GMs need to focus on within their dealership.

To hear more from Dennis McGinn, check out the full interview above.

reconVIDEO TRANSCRIPT: 

Jim Fitzpatrick:
Hello, everyone. Thanks very much for joining us on another edition of CBT News. I’m so excited to have with us today Mr. Dennis McGinn. He is the CEO of Rapid Recon. I know you know that name. I know you know that face. Dennis, welcome back into CBT News.

Dennis McGinn:
Always great. I love being able to spend a little time with you guys. Thank you.

Jim Fitzpatrick:
Well, we get a lot of great feedback when we have you on about this very topic. I think you’ve been a lightning rod in this area of recon and the amount of money that dealers spend in recon, and the amount of money, probably more importantly, that they lose in recon, which is what we’re going to talk about today. What should be the dealer’s first priority when it comes to used car inventory?

Dennis McGinn:
The amount of time it takes to turn that to sale-ready vehicles. The important thing that we’ve found is to first make sure you know what it is. There’s been too many, and there’s still too many, GMs out there who are assuming or just believing that it’s okay, and it’s not. We’re yet to find the one that is anywhere near what they’d like to think it is, or what they’ve been kind of talking to themselves about, that it’s a couple of days. It never is a couple of days. You know that. You’ve been there.

Jim Fitzpatrick:
Right. Oh, I know. I know.

Dennis McGinn:
But the big thing is, we’re now understanding how much money’s involved with that, with today’s market and what’s going on. I mean, these things get stale. 21 days is the time window that you have to make your target profit.

Jim Fitzpatrick:
That’s right.

Dennis McGinn:
So if it takes you a week or two to get the car ready, you don’t really have any time left. You’re kind of out of runway.

Jim Fitzpatrick:
When while you’re reconning it or it’s sitting back in recon, in most cases, the vehicle’s already being advertised to the public, right?

Dennis McGinn:
That’s right. Everybody wants to get the car up right away. Some people even use auction pictures, although that’s pretty tough. I don’t always recommend that. But they want to do quick clean and get it up, because they don’t want to miss an opportunity for somebody that’s looking for that make, model, year, color, all of that. They have to be ready to answer those questions when they come in through their call center, their BDC or their what. If you miss that, the 21 days is still ticking.

Jim Fitzpatrick:
And there’s no easier way to piss a customer off, if you’ll excuse my French, than to advertise a car and you can’t show it to them when they come in, or you can’t tell them about it or talk intelligently about it over the phone or in email or in chat, because the car hasn’t really hit the front end yet, or the lot. More times than not, the salesperson, even the manager sometimes, doesn’t know where that vehicle stands in recon, or what’s even been done to it, right?

Dennis McGinn:
For those people who are dialed into our stuff, they can answer those questions as a the customer calls in, and they can see it on their phone or on their desktop. Before that, they used to say, “Well, I’ll have to call you back. Give me your number,” and all that, and they’d have to go figure it out and call them back the next day. The difference between those two is enormous. 80% of the people, when you give them good information that makes them feel good, the trust level goes up, but calling them back the next day, they’ve already called somebody else, typically.

Jim Fitzpatrick:
They’re already driving.

Dennis McGinn:
Yeah. They may already be driving the car that they were looking for, from somebody else.

Jim Fitzpatrick:
That’s right. How can dealers acquire the right vehicles at the right cost?

Dennis McGinn:
Well, that’s really probably something that Dale Pollak has done a really good job on with his Provision software. It is the best of the best. I think probably 70% of our dealers use that. I think Dale’s done an amazing job. He’s re-coursed a little bit, redirected a little bit, but I think it really helps to figure out, do I have a car that I can sell quickly, or do I have a car that I might have to haul a little longer, but it’s going to hold gross? Problem with that is that that could change the day the car goes online, it gets in.

Dennis McGinn:
So there’s two parts of this, the way I look at it. There’s one part right up to the time you get the car and it’s in your hands, and then it’s my turf, and it is, get this thing ready and have that information available for the people that call. That’s what I call the realization of the idea that you’re going to provision, you’re going to put these cars out there with the right expectation, and then the next day, when you own that car and you want to get it up online, that’s the realization. That’s what I work hard to make sure that the dealers have their hands on.

Jim Fitzpatrick:
Right. Because you’re focused on it. I mean, in so many cases, there’s dealerships, large and small, where that’s just not necessarily their focus. I mean, the used car manager might buy the car and then be kind of getting with the recon manager and saying, “Hey, we got to get these cars out, we got to get them out,” but they don’t have anything, until now, they don’t have anything to really monitor that and manage that process, right?

Dennis McGinn:
Yeah. They’re just doing reactive stuff. They’re just hitting the high points, and then the low points kind of sit back there and they catch up with them later. What we do more than anything is get the people into a process, a thinking of the process and understanding their numbers. Because everybody’s pushing a button. I’m done with my part, I’m done with my part, I’m done with my part. And they love it, because everybody can see they’re doing a good job of moving the cars through. But the people that are most involved with this thing, the used car manager and the general manager, they know where they stand. So if they’re not happy with it, they can start to look at resources or whether they are getting the right cars.

Jim Fitzpatrick:
Talk to us about the four factors of used car profitability, from your perspective.

Dennis McGinn:
The four factors are, you have to have the right car, you have to have it priced right, otherwise people are going to go to the next one, you’ve got to have it ready quickly, you have to have that information there, and it’s got to be done right. It doesn’t make any sense to do everything else, and then you get a car that you didn’t get all the dents out, or you didn’t clean it properly, or there’s something you missed. That’s just as bad. So those four things, I think, are really important, and they all have to work together.

Jim Fitzpatrick:
Yeah, that’s for sure. The phrase, you never get a second chance to make a first impression, is never more true than when you’re presenting a used car to a customer, right?

Dennis McGinn:
Yeah. I mean, they-

Jim Fitzpatrick:
If you’re making excuses for it or you’re apologizing for it, you’re in trouble.

Dennis McGinn:
When they come, they can’t un-see anything.

Jim Fitzpatrick:
That’s right.

Dennis McGinn:
You can’t say, “Hey, would you forget that you could see the marks there?” You can’t convince them of that. It doesn’t work.

Jim Fitzpatrick:
Yeah. It really doesn’t. It really doesn’t. How does time to line, or T2L, motivate used car profitability?

Dennis McGinn:
Ah, my favorite topic. Well, so T2L takes the recon process, all the people pushing the buttons, I’m done, I’m done, I’m done, mechanical, cosmetic, and pictures, and all that, and puts it into a process that they can compare with others now, whether it’s their brand or whether it’s their zone or whether it’s with the whole industry, because we’ve got all that data. But we’ve added to that the time from the time they acquire the car, so that you’ve got … The time to line starts when they own the car, the minute they own the car to the minute it’s sale-ready.

Dennis McGinn:
That’s a look at the asset. How well are you managing your assets? Well, and this varies quite a bit, because some people, like you know, the Land Rover guy that I know so well in Atlanta, Justin [crosstalk 00:09:35], he buys a lot of cars from California. So he’s got a little different situation. But he makes it up on the other end, because he actually … His hands are on that particular market.

Dennis McGinn:
But time to line is a metric that, basically, I created for the industry based on the fact that just doing reconditioning wasn’t enough. You needed to see how well the asset is being handled from the time you own it. It all matters. If you’re looking at holding costs and turns, it all matters.

Jim Fitzpatrick:
What should dealers be doing to market their used cars, even before reconditioning is completed?

Dennis McGinn:
Well, some of our customers are getting those first photos up, and when they have real information, when they can talk to the caller about what’s really going on with the car, “Oh, well, it’s getting brakes put on it right now, new brakes, new tires, and then tomorrow it’s going to be detailed and so on,” then that changes the whole algorithm, because they have information that somebody’s looking at something that’s real, saying, “Oh, yeah, we know what that is.” Now they can send it to them. They can say, “Oh, we’ll send you a copy of what’s being done.” And the car, they just got the car in a day ago or two days ago.

Dennis McGinn:
So we’ve got this approval process really working, which is really the trick. I mean, the car’s up on the rock, technician’s gone through it, he does a couple of clicks, and the parts and labor breakdown is right there. In one click, it’s in front of the used car manager that’s approving that stuff. He isn’t going to approve [inaudible 00:11:21]. I mean, that’s just the way it works. They’re always going to propose $3,000 or whatever, the whole megillah. The used car manager’s going to say, “Well, that car will only hold so much gross, and so I’m only going to do $1,200.”

Dennis McGinn:
That happens almost instantly. So all the lubrication is extremely high. It makes everybody happier. Then it’s ready. It’s [inaudible 00:11:46] mechanical, or sometimes it has to wait for a part. But that part, that kind of creates the baseline for the urgency and the whole approval process.

Jim Fitzpatrick:
Dennis McGinn, CEO of Rapid Recon, I want to thank you once again for joining us on CBT News. For dealers that are listening to us, please check out Rapid Recon. You’re a click away from changing your bottom line in used cars. It’s just that easy. Thanks again.

Dennis McGinn:
Oh, you’re very kind. I really enjoy the opportunity to spend a few minutes with you on the air.

Jim Fitzpatrick:
Well, we love it, so hopefully we’re going to have you back soon.

Dennis McGinn:
Thank you.

Jim Fitzpatrick:
All right. Thanks so much.

CBT Automotive Network, the number one most-watched network in retail automotive.

This has been a JBF Business Media production.

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