Reconditioning is at best misunderstood and considered by most people to be one of the more boring aspects of running the pre-owned vehicle department.
The truth is it should be intertwined into our sales philosophy and the selling system of our dealerships. It is a major part of our customer handling and owner retention philosophies whether we intend it to be or not.
What is the result of an undefined or inadequate reconditioning process in pre-owned management?
On the sales side, in an obvious manner, your inventory is on display to your customers 24 hours a day, 7 days a week. It is a direct reflection of what you as a dealer are all about and has a direct correlation to your customer's perception of whom they are doing business with.
It has been proven statistically that, when you place a pre-owned vehicle on the display lot, you have a 65%-70% probability of selling that vehicle within 30 days — if all processes are in place.
Moreover, data show that profits are greater for used vehicle units sold within that time period. As the vehicle ages on the lot, the profit opportunities decline.
If the reconditioning on the vehicle is lacking, you have reduced the probability of sale by 22%! Now you have a 43% probability of sale before it becomes an aging issue. Once the vehicle hits 30 days, the original 65%-70% probability goes down to 25%.
Define your reconditioning process from day one.
The fresh trades, or purchased vehicles, should be reviewed daily by your pre-owned vehicle manager and the service manager.
There should be agreed upon standards for mechanical reconditioning. The pre-owned vehicle manager has decided to retail the vehicle, and the service manager knows how many hours he or she has available in the shop to effectively schedule the work required.
This essential communication between departments is often the most neglected and results in compounding aging issues, especially if the vehicle is stuck in the service department waiting to be reconditioned. It is important not to delay getting the vehicle in selling shape and out on the lot where it belongs.
Once the vehicle leaves service it should go to your cosmetic department and another set of defined reconditioning standards and processes.
Whether you use outside vendors or do all cosmetic reconditioning in-house, be certain there is a level of expectation on the quality of your final product and all the essential tools, chemicals and equipment necessary to get the job done right.
Before the vehicle is placed in the display area, install a quality-control process using a pre-display checklist. This ensures nothing goes in front of the public that does not meet the standards represented by your sales staff.
To manage your inventory in the display area, have a daily lot-walk process in place to identify inventory that is 16-22 days old and re-check those target units for possible touch up to the cosmetics or do additional mechanical reconditioning as needed.
How often are you amazed by sales people just walking around a car with a dead battery or a low tire, or a vehicle that is out of gas or just plain dirty? Not only will those cars not likely sell, they also convey a negative image about the dealership itself.
Define your reconditioning process and train your staff until it becomes part of your store's culture. Use these processes as part of your equity statement and sales philosophy presented to customers.
If you spend the time and effort to recondition a car, it's wise to let customers know that you did so. It enhances the likelihood of a sale and also instills customer confidence and trust in you.
Reconditioning will ultimately affect the probability of sale by a third. Are you giving it at least that much attention in your daily management?
Tony Albertson is executive conference moderator for NCM Associates. He is at [email protected].
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