Closing the Appraisal Gap

By Dennis McGinn, AutoSuccess

Dealers today enjoy more predictable used car results because they leverage strategic reconditioning software's robust efficiency metrics called time-to-line or T2L, which we introduced to the market in 2010. 

The latest advancement in the reconditioning revolution we have written about for 14 years is predictable profit per vehicle -- zero sales cost due to little or no disparity between estimated and actual reconditioning costs.  

The profitability of used cars has been, until now, primarily determined by demand and availability. Time-to-line brought a speed element to profitability by getting cars from acquisition to frontline-ready in three to five days. Longer recon cycles erode profitability due to accumulating holding costs losses and vehicles not getting to the frontline until well into their 30-day optimum margin window. 

But that isn't the complete story. Dealers lost incalculable dollars during trade appraisals by lacking information that otherwise would enable them to calculate predictable reconditioning costs per VIN. 

Today's OBD-2 or onboard diagnostic scanner provides valuable diagnostic data but falls short of providing the information most helpful to a fair appraisal where neither party takes it on the chin. The first-generation OBD arrived in the late '80s to help technicians identify and resolve air pollution issues in fossil fuel engines. As vehicles have become networks on wheels, second-generation or OBD-2 scanners are essential for translating a typical vehicle's 11,000 trouble codes into actionable information and providing estimated costs to correct them. 

The service department and some appraisal tools use this type of scanning. However, a new OBD-2 enriched with VIN-centric reconditioning cost data, not estimates, is now integrated into strategic time-to-line workflow software to eliminate intentionally overlooked or ignored yet authentic reconditioning exposure at appraisal.  

What is this exposure? It is the unfortunate and costly gap between the appraised vehicle's reconditioning costs, as estimated by the appraiser, and the actual costs, as determined by technician inspection, and true reconditioning labor and parts costs for the make and model extracted from the reconditioning system. 

GMs who understand this advantage will insist that appraisers use the tool for every purchase opportunity – and for coaching appraiser effectiveness.  

The following best describes the benefits -- closing the risk gap on appraisals -- and starts with every person appraising having their own personal engraved scanner in their pocket:  

  • Creates and equips appraisers as Trusted Advisors who use this data to build customers' trust in your trade-in process 
  • Delivers transparency to neutralize trade concerns so you deliver a hospitality culture 
  • Increases profits from parts, customer-pay services, and used cars 
  • Strengthens your individual leadership mark on staff discipline, process consistency, and store profitability 

"The used car market is as volatile as ever, and this transparency into profit per vehicle eliminates appraisal guesswork. All used car managers across the United States of America share a big fear – we don't want to make a mistake," said Jared Ricart, President of the Ricart Automotive Group, whose used car operation sells 600 to 800 used cars monthly. "This profit per vehicle strategy couldn't have come at a better time." 

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. CALL US: +650-999-0497