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Jim Leman

Jim Leman Writing about dealer operations

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A Pilot's Checklist for Safe Used Car Results

SARASOTA, FLA -  Victor Young is managing partner and president of BMW of Sarasota, Lamborghini Sarasota, Land Rover Ocala, Jaguar of Ocala and a used car dealership, International Auto Spa. BMW of Sarasota sells about 1,200 preowned vehicles a year.

As a dealer of high-end vehicles to an affluent community, BMW of Sarasota depends on its ability to merchandise premium-tier, front-line inventory reconditioned and detailed to the highest standards.

“At the same time, we can’t over-recondition these cars or allow them to sit,” Young said.

Getting used cars through the recon process efficiently, correctly and aesthetically pleasing had been a 25-day assembly-line challenge for BMW of Sarasota.

It was an unacceptable length of time, Young recalled. “We’re now below five days, which includes parts holds,” he said.

The dealership’s original, non-automated recon practices led to delay and frustration. Young said the inability to extract answers about bottlenecks and delays — or discover how long it was actually taking recon to process vehicles from acquisition or trade to the front line — was unsatisfactory.

“As we talked about this,” he said, “we realized we never had an accurate measurement on precisely how long our recon processes were taking. In 2015, BMW of Sarasota installed recon reconditioning workflow software. "I knew it would help us get to a true recon time-to-line number, Young said.”

Today, Young has centralized recon in a separate facility on the property. Lamborghini recon is at that dealership, and he said technicians are privileged to work there because they don’t have to “sell” inspections to a retail customer.

He enforces strict adherence to rapid reconditioning best practices.

“I’m a private pilot. Without a preflight checklist, a pilot is likely to miss something that might be life threatening,” Young said. “No one here works on our used cars unless they’re all in with using this Rapid Recon system. If they’re not, they’re off the line.”

One individual taken off the line was a former used car manager who fought against this policy. Young replaced that manager with one who did embrace his time to line or T2L goals. Within two weeks of making that change, Young watched BMW of Sarasota’s original 19-day T2L drop to 4.5 days.

At this much more efficient T2L rate, gross margins improved. Today, BMW of Sarasota average $1,000 more per-car gross because fresher vehicles hit the front line sooner. Newer inventory also frees up capital because inventory turns twice as fast — from a 57-day supply to a 25-day supply.

 “Faster recon has helped us reduce capital expenditures by more than $1 million per month,” Young noted.

This dealer has also rebalanced inventory mix to improve recon throughput. He cut his non-CPO unit count to 35 percent of total used car inventory. By focusing on CPO cars and CPO-quality trades, recon requirements and costs are less, the vehicles reach sale-ready status quicker and they command more sale margin. Lease returns remarketed by the dealership offer similar advantages.

“These cars give us more velocity through recon, so the investment in them is going where it should — into the car. We’re not losing or misplacing cars parked out back as sometimes happens with non-CPO cars,” he said. Every night, lease returns, which might be dropped off on a back lot, are scanned and loaded into the workflow software so that every car is “on the grid” and being measured.

“This tool gives you indicators about what’s changing in the business,” Young said. “Everything might look wonderful, and then you see a kick up in time to line. In a recon operation not managed by this kind of technology, the reasons you’d hear for why the wheels slowed down would be all over the place, but we look into Rapid Recon and see where we’re stuck.”

Corrective actions might be finding a more productive and responsive sublet for paint and dent, for instance. “Little things can happen that aren’t often easily noticed, but rapid reconditioning software  lets me keep my finger on the pulse so I can see anomalies or red flags as they occur,” Young said.

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