I’ve stated in previous writings and workshops that you would hear a lot about "Life Cycle Management," and "Early Warning Radar" from me this year. This article builds on that concept.
What would you think is the number one issue used car managers around the country complain about that kills their ability to do "the numbers?" Ok, you got that right, the Service Department. Let’s be more specific. Do you think they complain the most about the pricing they receive or the time it takes to get a car through? Ok, you got that one right too. It’s the time it takes to get a car in and out of the service department.
I’d say in many ways the market has become "equalized." What I mean by that is a large percentage of dealers are now using a pricing tool to manage their inventory. They know that if they price the cars "right" that the customers show up. A few years ago only a small number of dealers used a "pricing tool", thus they had the advantage. There is still an advantage to using it, especially if you do it right, but to continue to dominate your market there are some other elements you have to get an edge on.
I’m fascinated that when I’m talking to dealers and managers about their challenges that in most cases whatever the issues that they are struggling with are "fixable." Someone, usually the dealer, just needs to want to
Let’s all raise our hands if we can agree that "speed" is critical in today’s market? (Why are you sitting there with your hand in the air?) Good, we all "get it." We have all agreed that speed is one of the most important aspects of our used car operations. We all understand we cannot let a car sit and that getting it on line and online is extremely important.
Then tell me something.Why don’t you just go ahead and fix the service department issue? Oh, I hear ‘ya. Because we’ve always done it that way and we don’t want to rock the boat. Let me say this as nicely as I can. In today’s internet, fast paced world, if you don’t rock the boat the boat will soon sink. You can not and will not survive this business if you don’t speed your processes up.
Used Car flow in a typical Dealership:
2 days sitting before getting ticket written 1 day before it goes into shop 2 days in the shop 2 days in and out of clean up 2 days before the photos are taken and posted online.
You may be better or worse than this, but on average it takes most dealerships 7 to 10 days to get a car ready and out into the market.
The number one excuse that we get from the shop is that they are too backed up and customers come first. I understand that. I really do. When you’ve got retail customers screaming at you, then of course it’s easy to set your best customer, the used car department, to the side. Doesn’t make it right, but I get it.
That being the case you have to fix your scheduling issues in the shop. By and large most service departments are still not controlling the amount of time they have available "to sell." It’s hard to believe that customers are still being told, to just bring it in at 7:30 in the morning. So, the first step is to fix your scheduling problems.
Let’s dig deeper. What other options do you have if the shop is truly backed up and you have 10 used cars you need to get done for a big sale this weekend? Let’s pretend it’s Wednesday and there is no way the shop is going to get it done.
Super hero "the dealer" needs to show up. Here are two options:
1. Pay the technicians extra, lots of extra to stay late and finish them up. The dealer has to make this happen because the service manager won’t do it. The reason they won’t do it is the training we have given them over the years. We’ve taught them to manage "the numbers." They have been well schooled in controlling their cost of sale/labor. They have been taught they need to retain in excess of 70% of the sales number, so if they paid people extra to get your cars ready it would kill their numbers and they would be "bad managers."
I’m just wondering would the technicians be willing to stay if you paid them double time? How about $100 bonus per car that they get out of the shop completed that night. Do those numbers scare you? So let’s do some math. If you had 10 cars to get out that cost you an extra $1000. What does it cost you if those same 10 cars don’t get on line this weekend? Hmmm…
2. Let’s say that’s a real bad idea. Why would you not sublet those cars out to a jobber? Oh, that’s right I forgot. We want to keep all the revenue in house that we can and it’s against our policy to send cars out. One of the reasons a dealer gets to be the dealer is he makes the policy and he gets to break the policy. (or she, please….)
Of course we don’t want to lose the revenue and it’s not a good thing when you don’t have total control of the quality of the work, but sometimes you have to make an executive decision if you’re going to keep things moving. For me it’s far more important to get those 10 cars ready for sale this weekend than it is to sit on antiquated "company policy."
Hey "Super Hero," I didn’t say you allow just anyone to make these decisions. It’s the dealer (or maybe the General Manager) but, sometimes you have to do what you have to do to make things happen.
See, I started this article out basically saying that in most cases whatever the problem is in your store that it’s fixable. You just have to want to "fix it." Getting inventory on line fast is a very fixable issue. Speed is critical.
Realize that most dealers won’t "fix it." They will find hundreds of reasons why they can’t or won’t "do it." So, to get "the edge" all you have to do is be the exception to the rule. Making speed a priority will get you the edge.
Using software gives you an edge when you’re pricing your inventory. Your "decisions" give you an edge when it comes to getting your inventory ready for sale. That’s all I’m gonna say. Tommy