Taking care of our best customer…the used car department

What if you had a customer who brings you between 25 and 75 cars a month, not for just an oil change, but to look over each one and tell them what you find wrong with it? What if this customer generally gave you an approval within an hour to a few days on your estimates? What if they paid in full the very second you invoiced their RO, with cash, check or a credit card and you didn’t need to involve a third party warranty company or a receivable schedule you will have to follow up with?

What if they paid you an inspection fee even if they decided not to get the repairs made? What if you dropped the ball several times, missed promise times, had frequent comebacks and they continued to bring you cars over and over again?

When they brought their car, would you wait a day or two to have a repair order written or do it only when you had extra time? Would you park their car out back and get it dispatched to a technician only if there were no other customers’ cars in your shop? Would you become irritated when they asked for an update? Would you use their car to make a lunch run, or to run for parts, or to shuttle a customer somewhere? Would you let your staff blow off a freeway speed road test to check for shimmy and brake pulsation?

OR

Would you take extra special care of this customer? Would you make sure their cars were inspected in a timely manner? Would you make sure the repairs were done by the promised time? Would you follow up with the parts department to make sure their parts were available, or en route? Would you be willing to offer an occasional discount when they asked? Would you offer them a few options on tire prices, would you offer them Good Better Best pricing for a brake job? Would you have a QC process in place to make sure their vehicles were returned to them in proper condition?

Wouldn’t you do ABSOLUTELY ANYTHING IT TOOK to retain this customer and keep them happy?

Anyone in their right mind would respond with an enthusiastic YES to the latter group of questions. But we don’t always do these things do we? Some may think the second set of questions are an exaggeration of how poorly we treat the Used Car department, but upon an honest appraisal they may see that it is quite accurate.

We have all likely been in the situation where we are at odds with the UCD. Trust me, I’m not saying that anyone should be a minion of the Sales Department, but take a serious look at how much revenue they pour in to your department every month. Do they account for 25% of your business? 30%? 40%? How much of an effect does this amount of gross have on your paycheck? Any way you shake it they provide a large portion of gross profit for Fixed Ops.

To put things in perspective, everyone reading this should know that in the Service Department we sell Time, technician time, labor hours. From a merchant’s point of view our “inventory” is our available labor hours. This is simple math: if we have 10 technicians working an 8 hour shift, we have 80 hours available for sale for the day. Imagine if someone took 4 of your 10 techs and had them sit in the back lot all day and wouldn’t let them work on any cars; we could only sell 60 hours, right? Would it make you restless seeing them out there sitting on a park bench smoking and joking and NOT working on cars and turning hours? YOU BET IT WOULD!

A used vehicle is a quickly depreciating asset. This means every day it is losing value, however the cost remains the same or increases if the dealer is flooring the inventory. The Used Car cycle is a heavily studied subject. Statistically, when a vehicle is owned by the dealer for more than 30 days, it is nearly impossible to sell. If and when it does become a retail sale, it’s certainly not for a favorable profit margin. If you look at things from this point of view it may explain the attitudes and sometimes explosive behaviors of our Used Car Managers, even if they remain calm and professional, there is ALWAYS a large sense of urgency. I know I would be disgruntled if someone took my technicians out of commission.

As a best practice, most progressive dealers are paying retail rates for Parts and Labor for their internal work, especially Used Cars. It has been proven by MANY studies that if the UCD is utilizing sound processes for appraisal, marketing and pricing their inventory, that the cost of reconditioning the vehicle will not cut in to their gross profit. As well, by and large these dealers realize the increased retention of the dollar we experience in Service as opposed to the retention of the same dollar in gross on the sale of the vehicle. If you are not getting retail rates for Labor and Parts from your UCD, maybe it’s time for a conversation with your operator. Having said that, as in all cases, if we are going to ask for a raise, we should be sure our product is as close to perfect as possible!

Set a goal for Used Car turnaround time. The big box stores are using 72 hours (not including Sundays) for the goal. Is this generally enough time to get a vehicle inspected and repaired? You bet it is! (Excluding extenuating circumstances, of course…ie parts availability, delays for approval, etc.) Even if 72 hours in not the right number for your shop, select a reasonable goal and make it public! Make sure everyone in the dealership knows the goal.

If the shop is very busy and it is a struggle to get Used cars checked out, then have one placed in each techs stall at night, ready to go 1st thing in the morning when they arrive, have the RO and oil filter on the windshield or dashboard ready to go.
Make it efficient for them to get the job done. Few flat rate technicians are going to be enthusiastic and overly helpful if they have to spend a half hour trying to find keys to a car that is likely blocked in a parking spot by another vehicle that no one knows where the keys are. Nor should you want them to be doing this!
Require each tech to inspect at least one or two Used Vehicles per day, keep the pipeline full with parts coming for vehicles that have been approved.
Keep an accurate Used Car Log or have a designated person keep the log and monitor it every day. It will only take a few minutes of your time.

Communicate with the UC manager daily and update him/her on the status of their vehicles. Find out how many are coming your way.

If need be, add the used vehicles to your daily schedule along with the customers cars.

If you already have good processes in place and help your UCD sell more cars, that’s great!

If not, why not start today? Always remember, the more cars they sell, the more cars we get the opportunity to work on, which means more $$$!

Sincerely,
Rob Gehring, President
Fixed Performance Inc.
rgehring@fixedperformance.com

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