You never get a second chance at a first impression. This is a life lesson that many of us were taught growing up and it's one that many of us have passed along to our children. Presenting yourself in the most positive light, up front, gives you the advantage in many situations. From finding your significant other, to succeeding at a networking event—making a positive impression is crucial. This philosophy also applies to your business! Then why do we still see dealers failing to master the first impression?
Recently, I finished reviewing the Used Vehicle Marketing Special Study with my 20 Groups and noticed a trend among the groups I reviewed. The used vehicles that didn't sell were the ones that weren't fully reconditioned or were sold at such a discount that investing in reconditioning wouldn't have been a wise decision. How then, can you tell if you need to fix your reconditioning practices to ensure all your cars look their best and ultimately move more inventory? Begin by looking at the reconditioning trends in the industry:
Let's discuss what these trends are telling us. Immediately, we can see that there is not enough time for many dealers to get a vehicle front-line ready by the 5-day mark. The frontend gross ($1,500) reflects that. Why is this the case? Does the problem lie in your appraisal process? Expert Lee Michaelson shares some advice to streamline this process in his article about online appraisals. Moderator Randy Fluharty discussed appraisals in his article as well.
The trend changes though, between days 6 and 30. There are a lot of opportunities to earn gross profits in this period, while minimizing the costs of reconditioning. If this is your problem area, reevaluate your reconditioning processes and revise your training. Your employees should be completely up to speed on the proper ways to initiate a vehicle into the reconditioning process. If your processes have been evaporating, check out this article from moderator Brian Faulkenberry to stop process disintegration in its tracks.
In the data set above we can see that anything still left on your lot after 30 days is going to start eating away at your profits and increasing reconditioning costs. Ensure your dealership doesn't fall pray to this end of the metric by reviewing this #AskNCM segment from expert Robin Cunningham.
Armed with this knowledge, it's time to closely examine your pre-owned operation. If you fully invest in reconditioning at the beginning, could the vehicle sell faster? Could it sell at a higher gross? As the data shows, a vehicle will NOT sell until it is fully reconditioned; therefore, is it best to invest on day 1? Or day 90? We let the numbers be the judge.
Learn more from Steve Kain and the other NCM moderators, consultants, and instructors by joining a 20 Group, scheduling in-dealership consulting, or enrolling in a course at the NCM Institute.