A Temporary Level of Success

by Dennis McGinn

Originally published in the November 2021 edition of AutoSuccess

Dangerous risk is in human nature. Our present once-in-a-career gold mine should encourage the adoption of ways to reduce stress and increase accountability for the times ahead. Instead, what too often takes root when times are good is comfort and ease.

The current market has delivered a temporary level of success, but beware.

Earnings per share (ESP) or return on investment commensurate with projected revenue gains will not happen unless key performance indicators (KPIs) and continuous process improvements are put in place throughout your dealership.
  • Integrating consumer-facing selling tools to enable your dealership to share information once closely held — including details about VIN-specific vehicle reconditioning that demonstrate to shoppers the value your recon investment adds to your used cars.
  • Connecting digital reconditioning and digital vehicle presentation portfolio tools for immediate operational and long-term strategic benefits.
  • Bridging fixed and variable to share the reconditioning value proposition with customers for every used vehicle you sell.

To embrace this long-term opportunity, your dealership culture and the decision autonomy regarding reconditioning speed to sale — which the three points above stress — must be viewed as vital as to which inventory management system or even which dealer management system you use.

So that a temporary level of success can become long-lived, we advocate you apply continuous improvement-centric KPIs to sell cars and engage customers. They are:
  • Transparency, so you can see and manage in real time what is happening in fixed and variable — and so customers have complete transparency access to make well-informed, fact-based decisions about your inventory — and you.
  • Accountability throughout all your processes, so everyone works in a “hot potato” fashion to move all work forward prudently, knowing their performance is the measurement of their success and yours.
  • Management by metrics, which in reconditioning means consistent and constant measurement and control of two essential time-based KPIs: average days in recon and time to line.

Consistent application of these practices to your workflow and communications will standardize operational best practices across all stores in public or private groups, across single rooftop stores, and for independent dealerships. Since used cars are the core of success or failure in the near term, this should be obvious, but it is not always a consideration based on the dealership autonomy model.

My Silicon Valley background with the computer and the semiconductor industries, as well as my direct work with OEMs like GM, Ford, BMW, Mercedes-Benz and Fiat caught my attention and started me taking an interest in the phenomenally successful CarMax business model.

When I reflect on how retail giant CarMax started 28 years ago as a subsidiary of Circuit City and how it handled opportunity when it experienced extraordinarily high growth, I notice management consistently delivered better than expected EPS to their shareholders. CarMax did so by standardizing processes like stocking, pricing, merchandising, and sales — all carefully measured in real time using performance benchmarks.

This drove me over 10 years ago to create a process with the lofty expectation of cutting the average recon performance by half. For many dealers practicing our time to line efficiency standards, their time to line dropped by 80%! But even in these dealerships, ingrained inefficiencies between fixed, variable, parts and F&I continue to put their businesses at long-term risk.

Recon systems need to get cars sale-ready faster — they must identify workflow inefficiencies to remove bottlenecks and delays — and eliminate non-value-added time existing in the dealership business model. They must centralize and distribute instantaneous communications to anyone in need of it. They must deliver meaningful performance accountability.

And — essential for today’s consumer-driven market — they must deliver superior transparency into how your reconditioning investment delivers value, trust and integrity to shoppers and buyers of your used cars.

I want to be crystal clear about what does not work and, conversely, what it takes to be the best of the best in changing markets. My advice to every store general manager and public and private group CEO is to look deliberately at the evidence and proof of any solution that promises to bridge fixed, variable and buyers who go to your website vehicle details pages. At stake are long-term efficiency, cost control and superior customer engagement.

About Rapid Recon

Reconditioning workflow automation from Rapid Recon is the industry standard in time-to-line inventory turn and speed-to-sale vehicle revenue enhancement for automotive retailers. Benchmarking data based on 13 million vehicles processed uniquely positions Rapid Recon to advise dealers on how to improve their store’s profitability. Used by more than 2,000 dealerships, Rapid Recon ensures the accountability of processes, property, and people. Hence, dealers know answers quickly, find assets anywhere, and sell vehicles promptly to grow dealership profitability. www.rapidrecon.com CALL US: +650-999-0497