AutoSuccess – Rapid Recon

A Perfectly Urgent Risk to Your Dealership

By Dennis McGinn

I am a passionate but calm individual, but what's going on now in the car business has me agitated and concerned.

Please digest the following risk to your business – and how together we can endure!

This risk is found in human nature to seek ease, which our current markets encourage and is related to this once-in-a-career gold mine created by the pandemic and fueled by the microchip shortage.

Yes, here's a miraculous example of dealers enjoying lemonade out of the lemons of life. You're enjoying the most prosperous net profits in a long, long time – maybe ever.

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

Earnings per Share (ESP) or Return on Investment (ROI) commensurate with projected revenue gains will not happen unless Key Performance Indicators (KPI) and continuous process improvements are put in place throughout your dealership. Specifically:

  • Integrating consumer-facing selling tools to enable your dealership to openly and transparently share the information once held closely – information about VIN-specific vehicle reconditioning shared with shoppers to build value in your used cars and trust in your people
  • 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 the opportunity, your culture and the autonomy given to your general manager regarding reconditioning speed to sale – which the three points above stress – must be viewed at least as necessary as to which DMS you use.

Before the lemonade drives up, choose how you’ll prepare for tomorrow. We advocate that you apply KPIs to sell cars and engage customers. These KPIs are:

  • Transparency, so you can see and manage in real-time what is happening in fixed and variable – and so customers have complete access to information they need to make an intelligent decision about your inventory and you.
  • Accountability throughout all your processes, so everyone works in a “hot potato” fashion knowing their performance is the measurement of their success and yours, and,
  • Management by metrics, which in reconditioning (which drives used car success) mean consistent and constant measurement and control of KPIs Average Days in Recon and Time to Line.

Dealer commitment to these practices will drive the controlling metrics to standardize these operational best practices across all stores in a Group, independent of the market. Since used cars are the core of success or failure in the near term, this should be obvious, but it is not evident because of the dealership autonomy model.

You could call these observations hot gas if it were not for how your own concerns resonate with them. And consider:

  • My Silicon Valley background with computers and the semiconductor industry and work with OEMs GM, Ford, BMW, and Mercedes-Benz have had me continuously interested in the CarMax business model. When I reflect on how CarMax handled an opportunity when it experienced extraordinarily high growth, management consistently delivered better than expected EPS to their shareholders by standardizing processes like stocking, pricing, merchandising and sales, all carefully measured in real-time using performance benchmarks.
  • Dealers are right in objecting that software does not fix people and process problems. This drove me over 10 years ago to create Rapid Recon with the lofty expectation of cutting the average recon performance by half. For many dealers practicing 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.
  • Dealers drive remaining inefficiency from systems by removing non-value-added time existing in all dealerships out of the business model. They do so by centralizing communication, providing transparency, and accountability.
I want to be noticeably 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 individual store GM and public and private group CEO is to look deliberately at the evidence, and proof of any solution offered to you promising to help bridge Fixed and Variable to bring about long-term efficiency, cost control and finally a way for fixed operations to measure its contribution to variable operations.

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