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How long should a used car reconditioning take?

May 2, 2021

Today on the show we talked about how long it takes people to perform used car reconditioning.

Again, I’m Chris Collins. This is Christian Lafferty and that’s what’s coming up on Service Drive Revolution.

It’s very clear that all of these rental car companies are going through bankruptcy because they’re a disaster. They don’t know what they’re doing.

So we land in Kentucky and we go to the part of the airport where you wait for the rental car vans to pick you up and then drive you to the rental car place site. Now in Kentucky, Cincinnati, the rental car places are not in one big building together. Like they would be in Seattle or Dallas. Any other major Metro area there they’re spread out.

They have at the airport, they have like, this is where you wait for the Ava shuttle. This is where you wait for the dollar shuttle. This is where you wait for, you know, whatever shuttle. And this is where you wait for the hurt shuttle. So we get there and there’s no Ava shuttle. So I’m like,

“Should I call Avis?”

and Christian was like,

“Well, I don’t know.”

I look at the calendar invite and it has a phone number and called and nobody answered.

Then all of a sudden, the Hertz van shows up and this guy was an entrepreneur genius. He says he parks in the Hertz thing, which I don’t know is what 50 yards away. But asks us if we have been waiting for a long time.

Then we’re like, “Well kind of, but not really.”

He goes along the lines of telling us that they usually never come and told us that he’ll take us there.

During this time a bunch of people clearly were going to Avis because Hertz was out of cars. So this guy thinks about it and he’s got a family to feed. Furthermore, he’s picking up Avis customers because he knows Avis sucks and that their shuttle comes by once an hour.

They don’t pick up the phone or and provide no service at all. We get in the Hertz thing and immediately Christian and I are like,

“Oh, we got to tip this time.”

I gave him a 20 just because I was so impressed that this guy was like providing service to everyone. He’s showing some ambition and clearly knows that there’s a gap in the marketplace because Avis doesn’t know what the hell they’re doing.

We pull up in the Hertz van to the Avis building and we get out. We go in the door to the Avis building and literally there’s a line of people zigzagging around the room!

I would say there’s 14 people in front of us. There’s two people behind the desk and no cars out in the front.

The energy in that room you could tell that this isn’t working, that these two poor employees behind the counter are like two quick lube advisors with no quick lube techs.

They’re just like,

“Should I go clean the cars myself?”

I guess most of the cars were in the wash rack and weren’t clean and so they couldn’t go out. Meanwhile, what I was told by our problem solving team here is that they had SUV’s there. However, I didn’t see any SUV’s.

I’m not rolling up in a Rav4, so clearly the people at the front of the line are super agitated.

All we know is that they don’t have cars or cleaning cars and so we stood there for probably 10 minutes. It was clear the two people at the front of the line weren’t going anywhere because the line did not move in 10 minutes.

I got on the phone with Patricia, who was still in the office. It’s getting late there and I just said,

“Hey, this Avis thing is a disaster”

and so she says,

“I’m getting a new Uber. We’ll figure it out, just go to the hotel.”

We did that and it was crazy because Uber appeared in like a minute or so.

Now meanwhile, the Avis shuttle did show up in that 10 minutes with like 20 people. There were 14 in line, now just imagine 34 people in all in line.

All I know is that there weren’t 34 cars on the property to rent out.

So we got back to the hotel and on the way to the hotel. Christian pulls up this app called Turo. Before, I’ve only used it in Vegas once.

I rented an Aston Martin in Vegas. The process is interesting because the car owner meets you and gives you the car. It’s super easy and it’s like an Airbnb for your car.

So Christian reserves us a Tesla and this guy brings the Tesla to our hotel and we drive it around town.

When we were done, we dropped the Tesla off at the airport and as We’re driving to the airport…

The guy calls and he says,

“Oh, I see you’re headed to the airport early.”

We’re like,

“Whoa, he’s watching us the whole time.”

Funny thing is the little red light on the camera is there. He’s recording the whole thing and I don’t know about audio, but clearly video.

Overall, Turo made renting cars so easy, like it was the easiest thing!

Using Turo was amazing and I truly don’t know why you would rent a car from any of those corporations again…

People on Turo will meet us at the airport. We don’t have to go to the stupid rental place. The cars are way better quality and it was a great experience!

Anyways, that’s our story about Hertz and Avis.

Also, when I think about Avis, what a joke…

I don’t know if Avis is like that in every city, but they don’t have a clue.

Let’s talk about how long it should take for people to recondition cars, specifically used cars.

For every day that we don’t have this car on the lot. It costs us $42 and 84 cents. This previous manager that Christian knew got his calculations down to a penny on what the cost was of not having a car on a lot.

From a Fixed Ops {perspective for us to understand the used car business in order to serve the used car business, we can’t do it on our terms. We have to understand that used cars are a depreciating asset. They are not going up in value.

It is very rare and maybe that beautiful collection of cars in Weiler’s museum is going up in value. But for the most part used cars are going down in value.

That car costs us $45 every day. Like you literally can figure out if you take what the depreciation is going to be on that car truck on top of whatever flooring expenses. So take whatever the wholesale value of that vehicle is. Times it by the interest rate, for example 6% interest, and then now divide it by, divide it by 31. And that’ll tell you the daily interest you’re paying and then do the same thing with the depreciation.

But most of the time, those things in five days have gone down in value, a couple hundred bucks minimum. They’re going down a couple of hundred dollars in value and it is our role to understand that, but also understand that if we do a good job and we’re in the business of retention, that vehicle selling and not getting wholesaled is giving us another customer in our service drive.

So whether you’re all made or all models or a percentage of the cars that are used are coming back because you only work on Honda’s or whatever it is, you still want to approach it. Like these are our future customers and this is about retention.

Moving forward about used car reconditioning,

If we assist the used car department in selling more cars and holding gross, we’re going to get more customers into our drive.

Hands down, when we talked about dispatchers last time, I would move your dispatcher to an internal advisor and I would dedicate technicians to PDI. From here used cars in every situation, regardless of the size of your dealership, one tech can stay busy doing used cars and PDs.

Usually those texts can be on the lower end of the pay scale. They can be flat rate and they can be very productive. I’ve yet to have a situation where I go into a shop and there aren’t Technicians that’s kind of in their fifties. He’s a really good Technician, but he’s not that excited about new technology, but he’s really good. His quality is good and he can flat rate brakes, tires, and oil leaks.

Additionally, when talking about technicians and used car reconditioning,

You can offer Technicians the position.

So let’s say these technicians make $30 an hour. Just tell them that you have a position as a used car technician and it pays $25 an hour, but it’s all gravy.

Let these technicians know that they’re not going to be doing much warranty and that they don’t have to learn the new electric engine.

These technicians are tired and they don’t want to do it anymore. I would love to be a used car technician.

However, If you don’t do that, you can run advertisements for used car technicians. But use the cortex. If you run an ad for a used car technician, most of the time that pulls pretty good, but I would dedicate the low cost too.

So we don’t want $40 an hour techs, but we also are probably looking for $15.

We’re looking in the $20, $25 range. It’s easier, it’s an easier job.

There’s not going to be a ton of warranty and you’re going to be doing a lot of retail stuff all day. That’s pretty easy to flat rate and make time on, but dedicate a technician and then put a process in place where you’re tracking the used cars and work on the system.

Most of the time, when we go in to fix the used car system, the first thing we have to do is put in tracking because this is what happens. Let’s say we have a client and that it’s taking 14 days on average to finish car reconditioning and get it to the frontline, ready to sell 14 days, which is 12 days too many!

When thinking about car reconditioning, this what we need to stay cognizant of:

As soon as something’s been stocked in, we create a repair order and we put it in the shop, literally within an hour. In fact, you can set it up whenever they add something to it.

If you don’t know how to pull up Excel on the network, whatever it is, then there’s another column that says out for approval. We put the time in the date. Then when we get the approval, we put another time and date.

Now I can figure out how long it’s taking a used car manager and in most situations it takes two or three days for the used car manager who says it’s the service manager’s fault to give them the “okay”. So then what I do is I go to the GSM or the dealer and I say,

“Listen here, we’re writing them really quick, but it takes us two or three days to get approval.”

Could we average car reconditioning here at this Honda store around $700? Could we just have $700? If it’s anything under $700, we could do it.

And they’re like, “yeah”.

Now all of a sudden we’ve got it and now we’re making progress. We’re cooking with gas! If it’s a BMW store, 1500 of the stores depend on the car line, the area and how sketchy it is to use car managers.

Because some used car managers are buying stuff that costs $500. You know, it’s a little iffy and the market is a little more competitive right now. Therefore, people are stepping on cars and they might not have normally bought one previously.

Then you got the detail thing and then we got another column, but if you work on that, if you have an internal service advisor that is compensated in turn, that’s their bonus structure. Looking at the data and you get everybody in a room to understand the goal. The common goal between everybody is two or three days, car reconditioning detailed and ready to go to the frontline.

If everybody shares that vision and believes it can happen. It happens like magic.

Trust me in a hundred percent of the situations where you take internal and dedicate a middle skill level technician $20 or $25 an hour… This allows your retail sales to go up because we have to do inspections because they don’t have it to fall back on. They can’t be a band-aid, used cars can’t be a band-aid or an afterthought. They have to be a priority. You got to think about and you say,

“Hey, we’ve got to increase our traffic.”

We got to increase our account. I’m telling you how to do that because it takes a team to sell more used cars. The dealership makes more money and is gross profit. You get more vehicles in your service drive. It is impossible to scale a used car department where the service department with a 14 day turn green, it’s impossible.

But they scale really fast at a two or three-day turn. It’s on us to understand that business and to make it work and if you don’t dedicate time to make it work, it’ll always be an afterthought.

Having said this, you’ll never control it. You can only control it by grabbing it by the neck and controlling it. You can’t have everybody doing it because I think that’s the thing with technicians on internals. It is absolutely there just as a filler because sometimes systems are broken.

How long should it take to recondition a used car ?

I really think two days is the magic number two days! Two days everybody.

This calculation was originally featured on our SERVICE DRIVE REVOLUTION PODCAST as a part of our TERMS YOU SHOULD KNOW segment. Watch the FULL VIDEO HERE. We pack every episode of Service Drive Revolution with tons of valuable information just like this, so don’t miss out! Make sure to subscribe today on APPLE PODCASTS, SPOTIFY, YOUTUBE, or wherever you get your podcasts!

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