Please see the note below from Chris Irwin, one of the brightest new whiz kids in the business, yet he is struggling with one of the oldest battles. Any insights and advice for Chris?
Dale- Perhaps a topic of conversation on your blog to kick around. Once again the topic of recon costs comes up. Looking at our recon costs from last month we ran north of $1,100/car. Typically we have $320.00 into each vehicle before we really start anything—Used Car Checklist, Detail, and LOF (this number has actually been reduced substantially over the past year). Our used car manager is very conscious of recon costs; nonetheless our Service Dept (and I don’t blame them) isn’t bashful.
Now, granted, on one hand you could make the argument that the Service Dept is missing out on business when an estimate is too high and we decide not to keep the car (usually in this case the Service Department bends some so that they get the work). We try to use as much in the way of aftermarket parts as possible if that makes sense. I’d like to see our average recon costs be closer to the $800 number. However, the money/gross the Service and Parts Dept is generating is ‘guaranteed’ money.
Also, when examining recon costs, are dealers including body work and “Paint and Go/Dent Wizard” type vendors - not just their Service and Parts Departments?
The age old saying that with a used car you are selling the value left in the used car is true to a degree—you’re not trying to make a used vehicle a new vehicle like so many Service Department’s would like to. However, you don’t want to put questionable vehicles on the road. One debate, for example, we have is ‘pad slapping’ instead of a break job—knowing the vehicle might have a shake/vibration with a ‘pad slap.’
Interestingly enough I had a fleet company request a proposal this morning to put some of the vehicles they buy at auction through our shop. The vans they purchase transport children so safety is paramount. In reviewing the past invoices of what they are accustomed to spending it’s around the $400 mark. They do recon through auction houses so prices and/or perhaps quality is reduced. Still, even if you double the $400 number it’s manageable.
Additionally, when examining recon costs, are dealers including body work and “Paint and Go/Dent Wizard” type vendors - not just their Service and Parts Departments?
I’ve given my Service Manager the names of some vAuto clients to call to see how they keep recon costs more manageable. Thought it would be a good topic to bring up on your blog as this topic always gets some discussion going. Thanks Dale.
