To capitalize on a strong used vehicle market, dealers need to explore every avenue they can to increase efficiency and implement a better reconditioning process. According to recent vAuto client results, saving just two days in the reconditioning process per vehicle can increase inventory turns per year, effectively adding an extra month of selling for dealers. Here to tell us more about what it takes to get a vehicle front-line ready faster is Randy Kobat, Senior Vice President, vAuto, HomeNet, Rebates & Incentives, and Dealertrack DMS.
Jim Fitzpatrick: Hi, everyone. I’m Jim Fitzpatrick. Thanks so much for joining me on another edition of CBT News. Today, we’re very excited to have with us Mr. Randy Kobat, who is the senior vice president vAuto, HomeNet, and Rebates & Incentives, and Dealertrack DMS. Thanks so much for joining us today, Randy.
Randy Kobat: It’s great to be here, Jim. Thanks so much for having me.
Jim Fitzpatrick: Sure. So, as we were talking a little bit before we got shooting here today, the recon industry or the recon field has really become quite an area of focus for dealers today, hasn’t it?
Randy Kobat: Yeah. There’s a lot more focus with a lot more available solutions today than ever before, and I think the crux of it is there’s still about 50% of dealerships today still using manual processes, spreadsheets, whiteboards, Big Chief Tablets and number two pencils. So, it’s a big focus today because it is a great opportunity to become more efficient and effective in your used car business.
Jim Fitzpatrick: Yeah. So, let’s kind of jump right in. How can optimizing the reconditioning process help more dealers capitalize on a strong used car market?
Randy Kobat: Well, today, dealers are really having, still, a great success in the used car side of their business.
Jim Fitzpatrick: Yeah, that’s for sure.
Randy Kobat: And we still project … Cox Automotive is projecting a strong year in 2020 as well. Consumers are making decisions more and more online. I think it’s over 60% of the time now, they’re spending online researching a car.
Jim Fitzpatrick: That’s right.
Randy Kobat: And they’re going to fewer and fewer dealerships. Over 40% are only going to one store. So, if you can provide information to a consumer that further differentiates your car by sharing with them the information that you’ve done to that car, the work that you’ve done on that car to make it frontline ready for them, it can help differentiate you and we can help dealers get that information online on their websites and their listings.
Jim Fitzpatrick: Sure.
Randy Kobat: And today, when they’re using these manual processes, sometimes dealers are taking over 10 days to get a car ready to be sold, frontline ready.
Jim Fitzpatrick: I know, right.
Randy Kobat: And just shaving two days off of that process actually gives you like a 13th month of selling in a given year because of the increased turn and the increased velocity of that turn.
Jim Fitzpatrick: Yeah. For sure. And with that car being sold, as we mentioned earlier, it’s like Dale Pollack says, “When you buy a car now, it’s like buying a big block of ice, although the degree is 120 degrees every day on that frontline.” So, every single day matters, doesn’t it?
Randy Kobat: It sure does. Used cars are a depreciating asset, and the faster you can sell it, the more money you’ll make.
Jim Fitzpatrick: Right. And it also has a lot to do with the customer experience, right? I mean, if there’s a vehicle that’s online but not available for a customer to see when they get to the showroom, it upsets the customer, it upsets the salesperson, it upsets the manager that wants to sell that vehicle. Of course, in the car business, you never want to sell a vehicle until it is ready and been reconed, because the customer can’t get that imagine out of their mind, right?
Randy Kobat: Yeah. And they want to drive off with the car today because, like I said, over 40% of the time, they’re only going to the one store.
Jim Fitzpatrick: Yeah, that’s right. That’s right. What can dealers do to cash in on the major profit potential in reconditioning?
Randy Kobat: You know, I think there’s a couple of things that they can do. One of the things that we really focus on is to try to make the process easier so that it’s more streamlined in their day to day processes. And that’s why we think embedding a reconditioning solution inside their used vehicle software, like vAuto, is a great way to make this process even easier than it is today.
Jim Fitzpatrick: Right.
Randy Kobat: And the second thing that we really like to focus on is to really know your plans. Have an idea beforehand of an A grade, a B grade, or a C grade car, or even similar to auction, a condition report.
Jim Fitzpatrick: Yeah.
Randy Kobat: So that you can easily apply a reconditioning plan to those various types of cars rather than picking and choosing like a self-service menu. Make it real simple and make it more efficient so you know that I’m doing these things to these type of cars, and these things to that type of cars. And just those couple of things can really make the process a lot easier.
Jim Fitzpatrick: Yeah, for sure. And you know, it’s got to be true that it lowers anxiety in the dealership and among the staff when we know where that vehicle is, what’s being done to it, and what the estimated time is to get it out of recon, right? Because as you were mentioning before, these guys and girls that are still using whiteboards and legal pads and such, everyone’s got this anxiety of, “Where’s the vehicle?” And, “When’s it going to be done?” And, “Are the parts ordered?” Or, “Are they going to get put on the car?” And “What’s the status of that vehicle?”
Jim Fitzpatrick: Sometimes, to your point, they roll out 10 days, 20 days, sometimes a month out of recon and you got to turn that car as soon as it hits the showroom or the lot.
Randy Kobat: Yeah. Knowing where each individual car is in the process is critical, and the solutions that are available today certainly help with that. And not only where is it inside the dealership, if I’m using my service department for some of this work, but also external vendors. How do I manage my external vendors that I currently work with that, on a manual day today, is a phone call, or a text, or an email. So, how do I know how effective my paint vendor is? Or how effective my glass repair vendor is? The software solutions today can really help understand that and understand when you’re overburdening some of these smaller vendors that you work with so that you can parse the work out more effectively and not give too much work to one vendor outside the dealership, so that you can get the work done faster.
Jim Fitzpatrick: That’s right. And few vendors will call you to tell you, “I don’t want to take that car in,” right? They just assume it’d sit on their lot for a few days and still do the business.
Randy Kobat: Right. No, no. I do all the work you need me to do. It might take me 14 days, but I’ll certainly do it.
Jim Fitzpatrick: But if nobody is tracking it, they’re going to take that deal. Right?
Randy Kobat: Right. Exactly.
Jim Fitzpatrick: Yeah. So it really keeps everyone in the dealership held accountable for that vehicle once it hits that lot, right? I mean, all the way through, through the whole process.
Randy Kobat: It does. It creates accountability and the ease of knowing where that car is. And in some instances, some of our larger dealers, the first challenging is finding the car on my own lot. So we have solutions inside our software that will help with that too.
Jim Fitzpatrick: Oh, that’s cool. Okay. Because some of these lots can hold four or five hundred or a thousand vehicles, and if somebody says, “Hey, where’s this car?” Oh, my gosh, that’s another 25 minute ordeal if you don’t know where it is, right?
Randy Kobat: Very true. Very true.
Jim Fitzpatrick: Yeah, for sure. And it should be said that when a customer comes into a showroom or onto a used car lot and says, “Hey, what’s the price of the car?” And the salesman says, “It’s $32,000 for this SUV,” or whatever, but they don’t have anything to back it up. You know, in a situation like this where they can actually see the recon that’s been done on that vehicle, is priceless, right? If they could say, “Yeah. Let me tell you why it’s $32,000. Here are all the things that we just did to this vehicle.”
Randy Kobat: Exactly right. And we call that documentation instead of negotiation.
Jim Fitzpatrick: Yes, very good point.
Randy Kobat: And part of the vAuto vernacular for a long time, and this just takes it to the reconditioning process as well. We actually have a pedigree that we put on each of these cars through the reconditioning process so you can easily share what you did with the car to make it drivable and in great condition for the consumer, and differentiate the car further.
Jim Fitzpatrick: That’s huge. For a salesperson or for a manager that’s trying to close the deal, and the customer says, “Well, I’ve got a sheet here.” Or, “I’ve got it on my phone,” I should say, “Where I can buy this same car, this same year, in a similar mileage at another dealership for 2,000 less or 3,000 less. Why should I buy your car?”
Jim Fitzpatrick: And instead of just standing there saying, “Well, because we’re nicer people,” to your point, you can document it. And that is tremendous.
Randy Kobat: There’s so much information available to consumers online today whether you’re buying a new car or a used car that, many times, consumers can get confused. “How do I make sense of all of this information?” And so, if we can help consumers make sense of all the information by providing that documentation and helping them navigate the purchase process as a car-buying sherpa, if you will, it makes the process more enjoyable for the consumer.
Jim Fitzpatrick: Who is it that you want your message to be heard … Or, who at the dealership do you want your message to be heard by? Is it the general manager? Is it the dealer? Is it the used car manager? Is it the fixed-ops director? Maybe it was a recon manager in some stores? Who has to understand the problem and the fact that there’s a solution for it?
Randy Kobat: Yeah. That’s a great question. It certainly is the used car manager and the general manage because they’re the ones really looking at how quickly I can get my car frontline ready. And really, this is a great experience for us as we’ve been rolling our solution out as part of the integrated vAuto platform because it does really require great communication across the dealership. Like you mentioned, with fixed-ops, with used car managers, with general managers, with the reconditioning manager. And this simple to use tool that is mobile-ready and mobile-first, really allows some of that communication to be more effective and efficient across the dealership.
Jim Fitzpatrick: Yeah, that’s for sure. And I appreciate all the time you’ve giving me here today to talk about this issue. Just a couple other things. What are some of the results that you’ve seen from dealers who have taken the steps to better connect the physical inventory with their digital lots?
Randy Kobat: Yeah, one of our early adopters, John Malishenko at Germain Auto Group, it’s great the results that we’re seeing from that store. They’ve seen a 25% improvement in the time it takes to get cars frontline ready, and through this documentation process of the reconditioning work that’s being done, they’re holding list price 70% of the time in the store now with this additional documentation.
Jim Fitzpatrick: Wow. What’s the average number of days that a vehicle is in inventory when you go into a dealership that’s not focusing on their recon? And then the follow-up question to that would be, how low can you get that in some of your stores?
Randy Kobat: Well, the time it takes to get a car frontline ready when we go into a store is typically more than 10 days. I think some of the outliers, like you said, are a month, 21 days.
Jim Fitzpatrick: Right.
Randy Kobat: And we typically … Our best dealers are getting cars frontline ready in three to four days.
Jim Fitzpatrick: Three to four days, wow.
Randy Kobat: Probably, the average is somewhere around seven. So, we’re typically saving two to three days in the reconditioning process, which, like I said, gives the dealership a whole extra 13 months of selling.
Jim Fitzpatrick: Yeah, because you take that three or four days savings among 500 used vehicles that’s getting through there, and that’s a huge saving, both on interest rate and maximize, as you said, selling price, lowers anxiety, happier salespeople, better customer experience all the way around. So, yeah. That’s really what dealers need to be shooting for, right?
Randy Kobat: And like I said, we see this solution really broadening our impact inside the dealership from a vAuto perspective, and that’s why we’re so excited that we’re part of Cox Automotive because we can begin to build those integrations across Cox Automotive.
Randy Kobat: You know, we’ve started with integrating the software with vAuto, and we’re looking at other ways to integrate it with our fixed-ops solutions for next time. Like, “How do I know that I have time in a bay to get the reconditioning done?” How do we embed a scheduling tool for next time there?
Jim Fitzpatrick: That’s awesome.
Randy Kobat: One of the unmet needs that dealers have on the reconditioning process is the arbitration and the negotiation with the freight carrier, if there’s damage done when I bring in the car from auction to my dealership. So, because we have a freight company that’s part of Cox Automotive, we can streamline that process for our clients as well. So, we’re looking at this more holistically across all of our assets at Cox Automotive.
Jim Fitzpatrick: My gosh! You’ve connected it all. That’s incredible.
Randy Kobat: We’re trying. Yeah. We’re certainly trying. Yeah. We’re really across the whole enterprise on this project.
Jim Fitzpatrick: Sure. And who better than Cox Automotive? You guys got a solution for everything. So, why not recon, right?
Randy Kobat: Absolutely.
Jim Fitzpatrick: Randy Kobat with Cox Automotive senior vice president of vAuto, HomeNet, Rebates & Incentives, and Dealertrack DMS. Thank you so much for joining us on CBT News. This has been very enlightening. And for dealers that are out there watching this conversation about recon, you’ve probably heard a lot about it. We talk a lot about it here at CBT News. Spend some time in this first quarter of 2020, and I promise you, you will not be sorry that you looked at your recon center in a whole new light and said, “Let’s shorten the time, let’s save some money, let’s lower anxiety among our staff and make for a better customer experience.”
Jim Fitzpatrick: So, Randy, thanks so much again for joining us.
Randy Kobat: Jim, that’s for having me. Have a great day.
Jim Fitzpatrick: Thank you.
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