By Dennis McGinn – Ever watch the offbeat TV police procedural Monk, about obsessive-compulsive private eye Adrian Monk? His twitchy investigative style helps him “see” patterns and connect dots that escape others. He always solves the case.
The best general managers have, like Monk, a smattering of obsessiveness enabling them to juggle and manage the many varied business patterns and connect the process dots necessary to keep a dealership running and profitable.
Performer Randy Newman wrote and sung the Monk theme song, “It’s a Jungle Out There.” You might be thinking so yourself, as the car business moves off into scary new directions.
Great GMs are equally good at grasping the big picture, understanding each department and identifying the meaningful clues from the distracting red herrings. I know many dealership GMs given over to obsessive attention to things and they’re some of the best leaders and managers in the business.
An obsessive style gives GMs an edge in this jungle car dealers face every day.
See change differently
Significant change is upon us – CaaS or cars as a subscription service, ride-share, autonomous vehicles, electric vehicles (EVs), and increasing competition from used car specialists like Carvana or Echo Park. Then there’s the industry cycle – slipping new-car sales, tighter used car supplies and the increasingly aging fleet of cars still on the road.
Retail revolution aside, dealers will still must get used cars, however acquired, mechanically and cosmetically reconditioned, so they are safe and visually presentable for fast retail-ready status.
Foreseeing all this and managing it well takes an exceptional individual able to grasp industry and business fundamentals solidly. Borrowing another bygone TV example to solidify this point, recall the plate spinner on the Ed Sullivan weekly variety show. The plate spinner places china dinner plates atop long poles he set spinning. His talent was keeping all the dishes in action without allowing one to crash to the floor.
Some have described the GM’s role as being part plate spinner. One spinning plate that great GMs keep an obsessive eye on is vehicle reconditioning. Reconditioning as a process will have more going on – more plates in the air spinning – than most departments in the dealership. Manage it poorly, and the wail you hear is recon-driven opportunity crashing. Manage it well, and tens of thousands of heretofore-unrealized revenue will flow to the bottom line.
Some dealers suggest that if a GM doesn’t recognize this potential, the dealership might have the wrong GM.
Obsessive about profits
Managing recon so it flows measurable gross dollars to the used car operation need not get you or your team tangled in jungle growth or letting plates crash. Tools like recon workflow software will help you identify time-delay patterns and connect the time-and-money-waste dots, so you can move cars from acquisition to retail ready in fewer days.
A definitive recon measurement is time to line or T2L. Get yours down to three to five days and watch inventory turn increase, aging reduce, used car gross improve, and sales excitement…well, excited!
Here are a few questions, all clues, to faster and more profitable reconditioning results:
- What is your recon T2L? If you don’t know this, you can’t improve recon. Here’s a tip: most recon operations managed by spreadsheet or whiteboard tracking (with great intention, I might add) will, when you investigate the facts, will show, upon close study, the shop takes eight to 20 days to get cars through the recon to retail ready
- What is your T2L costing your dealership? You can’t calculate this cost until you know your true T2L – and the most accurate way to measure T2L is by using recon workflow software. This tool will help you determine your current, precise recon time and will show you the steps to be eliminated or to reduce T2L to an ideal three to five days. Until you know your exact recon time number, you can’t calculate the
- What is your holding cost total for your operation? Holding cost is each car’s daily overhead cost – estimated by NCM Associates at $40 per car per day (high-end import higher). If it is taking your recon process 10 days to get cars to retail-ready, your holding cost is $40 X 10 days X your inventory total. This cost reduces the overall sale gross by that much. A 20-day T2L cost is $800 per car; a 3-day T2L is $120. Even a lousy detective can read that clue.
Getting refreshed cars retail ready faster helps increase turn – on average one additional turn a year for every 2.5 days eliminated from T2L. This savings translates into two additional inventory turns a year. At an average sale gross of $1,500 per car on a 100-car volume, two extra turns a year generates an additional $300,000 in gross.
If you’re not maximizing T2L to improve recon operations, it’s a crime against your owner, yourself and your team. Like a good detective, look elsewhere for all your options, but if what other GMs are telling us is a pattern then the connection is clear – there is no better ROI investment for the entire dealership than putting your money to work improving reconditioning performance.
Dennis McGinn is Founder and CEO of rapid reconditioning workflow software company Rapid Recon, who also wrote the book about recon time to line, RECON T2L, the Starting Line for Reversing Margin Compression. Visit www.rapidrecon.com for more information.