Used Vehicle Reconditioning

Used Vehicle Reconditioning

Used Vehicle Reconditioning – Reducing the Conflict

I am a fan of simple solutions to age old problems. One of the reasons I love what I do is because I am constantly exposed to resourceful dealers who share elegant solutions to vexing issues rather than reverting to the old hat adage of  “because this is the way we have always done it.“ I don’t know whether I picked this up at our most recent General Manager’s Bootcamp or General Sales Manager Bootcamp, but it makes all the sense in the world.

The age old problem: Below the surface at many dealerships there is conflict (in some stores it’s openly noticeable) between the service manager and the used vehicle manager over used vehicle reconditioning.

The beef: The used vehicle manager thinks the service department charges too much and takes too long for used vehicle reconditioning. He often feels underappreciated and taken advantage of.

The service manager, on the other hand, feels that the used vehicle manager is unreasonable in his requests, takes short cuts on what really needs to be done on the vehicle and is always in a rush because there is a ”hot prospect” on the vehicle. He is tired of having to make changes; including shifting work schedules to accommodate the used vehicle manager in order to promptly push a ”sold” vehicle through the recon process only to find that it is languishing on the used vehicle lot.

The root cause issues: Price and cycle time. None of the protagonists think it is a fair two-way street.

The solution: Create an agreeable cycle time for reconditioning. Most of our top performing used vehicle clients at NCM use a three-day cycle to get vehicles reconditioned and front line ready.

Create a pay plan that rewards the service manager for keeping to the cycle time guideline and a penalty for exceeding it. The reward is full retail if it is within the three-day window. The penalty is that the work is discounted by say, 20 percent, if it exceeds the three days.

The process: All trades are evaluated every morning and the vehicles are determined to be either retail or wholesale. The retail vehicles will immediately have an internal repair order opened. This is critical as it becomes the start of the cycle time. On a daily basis, print a listing of open internal repair orders and isolate all ROs that exceed three days, changing the pricing on these specific ROs (one dealership has created a different labor sales code for these lagging recon units with the discounted labor rate embedded in the pricing matrix. The instant an internal repair order exceeds the agreed cycle time, the repair order is switched to this discounted rate.).

The end result: There are many. The service manager is highly motivated to complete reconditioning work within the allotted time period. The used vehicle manager is recompensed when ”let down,” but is okay in paying a higher price for better service. Internal repair orders will be closed on a timely basis, thus leading to less commission chargebacks.

Now that is an elegant solution to the conflict often associated with used vehicle reconditioning.

This article by Jeff Sacks originally appeared in Dealer Magazine.

Jeff Sacks, president of Jeff Sacks & Associates, is an auto industry speaker, consultant and trainer and is actively involved with dealership and OEM consulting and training.
His website is www.jeffsacksauto.com and his phone number is 800-867-2160.