Once you have made a decision to keep a pre-owned vehicle for retail, track how long it takes your store to get it through the shop and to the display area?
An ideal goal would be three days. But if you find it is an average of more than five days, look hard at some attitudes and basic processes within your store.
Let's start with attitude. If you were to sit down with your service managers, would they share your sense of urgency in getting the pre-owned vehicle ready for retail and on the lot as soon as possible?
If not, you may want to explain to them the volatility of the pre-owned vehicle market, depreciation and daily holding cost.
If you are a general manager, have the owner sit in on the meeting. If you are the pre-owned vehicle manager, have the general manager sit in. They understand how slow reconditioning times hurt the bottom line.
Perhaps the lax attitudes toward reconditioning in the service department are based on your internal labor rate. If it is lower than your customer rate, pre-owned vehicle reconditioning becomes less desirable work for the service manager.
This situation is easily remedied by raising the internal rate to retail. There are several benefits in doing this. At a minimum, the service manager begins to realize that the pre-owned vehicle department truly is his or her best customer.
An all too common time waster is the technician walking around with repair order in hand trying to locate the vehicle on the lot in order to start the work.
This can be avoided by establishing a dedicated area or lane near the service department for all pre-owned vehicles that need reconditioning. No other vehicles should be parked there. Every person in the dealership should be aware of this designated area.
Setting up this reconditioning parking area creates a couple of interesting side benefits as well. If the lane is highly visible at a glance, your people know what work is waiting to be done without having to be told.
It may visually create a sense of urgency. Additionally, during slow times when technicians are looking for more work, they will gravitate to the established reconditioning lane to see what is there. That could happen even before your dispatcher or shop foremen see the repair order.
If you sell many off brand pre-owned vehicles, the other essential area you should designate to make your process more efficient is a parts hold lane.
Establish this lane or area for only those reconditioning units that are awaiting parts. When the technician is working on a vehicle and finds out a part needed to complete the job is not in stock and must be ordered, the unit should be moved out of the shop and into this lane, if possible, while the dealership waits for the part to arrive.
This frees up the bay for other work and may keep the technician more productive. Once you set up this lane, train your back-counter parts person to receive the parts as they come in and place them in the specific vehicle out on the parts hold lane.
After doing this, the parts associate should pull that unit out of parts hold, restage it in the reconditioning lane and notify the tech, shop foreman or the dispatcher.
How many times has the pre-owned manager gone to the service department looking for an overdue vehicle, only to learn the hold-up was an ordered part that had been received and sat on the back counter for five days?
Finally, set up established standards for reconditioning different classifications of pre-owned inventory. This could help avoid the shop waiting for the pre-owned vehicle manager to get back from the auction or from his or her day off to approve reconditioning expense.
With a little focus and effort, you can avoid reconditioning time traps and keep your inventory investment working for you.
Tony Albertson is NCM Associates' conference moderator. He is at [email protected].
