Fixed Ops Magazine - 2022 Vol19 02 - 40

Having spent most of my adult life working in dealerships
- and now as a reconditioning performance manager
- I've noted a few critical observations. The data I
study tells me that, on average, internal tech efficiency
is 68%. At this efficiency, technicians cost the business
40% of their payroll for this category.
DETERMINE YOUR GAINS
Use this formula for calculating unapplied time's cost to
payroll:
1. Unapplied time hours = " X. "
2. Subtract the difference of 120% = " Y. "
3. Total hours a technician should be producing
4. Calculate your average inspection and repair = 4.5
hours (for example) total per Repair Order = " Z. "
5. " Z " calculation divided by the house per unit times
total potential hours = how many additional units
could be made sale-ready (X x Y/Z).
40
While lost production time was the most quantifiable
loss here, poor labor efficiency also means fewer cars
promptly get through the reconditioning process.
Poor labor efficiency directly affects a recurring cost
per car per day called Holding Cost. An NCM Associates
study estimates that the daily holding cost per vehicle is
$40. Better holding cost management for dealers with
average size inventories can save hundreds of thousands
of dollars during the year. For instance, a monthly
recon volume of 100 cars at a 13-day per car recon cycle
is $52,000/month or $640,000 a year. A six-day cycle
cuts that to $352,000 - a $288,88 cost avoidance.
What's more, if vehicles are moving to the front line faster,
more inventory turns happen. Turns increase by one
for every 2.5 days eliminated from the reconditioning
process. That is more business and more revenue for the
dealership.

Fixed Ops Magazine - 2022 Vol19 02

Table of Contents for the Digital Edition of Fixed Ops Magazine - 2022 Vol19 02

Fixed Ops Magazine - 2022 Vol19 02 - 1
Fixed Ops Magazine - 2022 Vol19 02 - 2
Fixed Ops Magazine - 2022 Vol19 02 - 3
Fixed Ops Magazine - 2022 Vol19 02 - 4
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