Fixed Ops Journal - April 2018 - F16

FIXED OPS JOURNAL

FLEET

says. "And they come back and buy more cars."

continued from Page 14

Sound investment

trucks in-house often take "upward of 10
days." Just the top 20 percent of such dealerships regularly turn vehicles around in fewer
than four days, the report says. Dealerships
are more than twice as likely to do their own
retail reconditioning as to outsource that
work, according to the study.
The cost of reconditioning varies by the age
and condition of the vehicle, and whether it is
brought up to the standards of an automaker's
certified pre-owned program. But Lescota
cites a common industry estimate that it costs
a dealership about $42 a day on average to
hold a vehicle until it is ready for resale. So a
shorter turnaround time means higher profits.
A new trend Lescota identifies is dealerships
sharing reconditioning profits among all departments rather than applying them solely to
fixed ops. Making salespeople happier, he
says, gives them a greater incentive to serve
customers better.
Satisfied customers "spend more money," he

Mark Foster, executive manager at Walker
Cadillac-Buick-GMC in Carrollton, Ga., hasn't
taken the profit-sharing step yet, although the
dealership has been a Lescota client. But he
agrees that money invested in making reconditioning more efficient is well spent.
Foster's dealership employs a full-time reconditioning manager. That hiring decision,
Foster says, caused his used-car manager to
complain that "all you are doing is making a
fortune for fixed ops." But he says the added
attention ensures that no aspect of reconditioning is slighted, and identifies where to
spend money usefully to improve the process.
What happens, Foster asks rhetorically,
when a used-vehicle buyer returns to the
dealership for a first oil change and discovers
that he or she needs new tires or brake pads
because the vehicle was reconditioned badly?
"Is that customer coming back to buy a vehicle from you again?" he asks. "Probably not."
Cox Automotive forecasts U.S. sales of 39.5

million used vehicles this year, compared
with 16.7 million new cars and light trucks.
Cox predicts that 3.9 million leased vehicles
will return to dealerships in 2018, and that the
number of lease turn-ins will continue to grow
until it peaks at 4.3 million vehicles in 2020.
Because leased vehicles tend to be newer
than trade-ins, they generally require less
preparation for sale as used cars and trucks.
But all require some reconditioning.
Used-vehicle prices are likely to decline in
2018 because of abundant supply, says Tom
Kontos, chief economist at ADESA Analytical
Services. High-quality reconditioning is an essential way for dealerships to differentiate
their used vehicles, he says.
"Otherwise, you will just be following the
market down," Kontos says.

Software aids
Dealers and fixed ops managers have more
tools than ever to measure the efficiency of
their reconditioning operations, and to streamsee FLEET, Page 17

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PAGE 16

APRIL 2018

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Table of Contents for the Digital Edition of Fixed Ops Journal - April 2018