The "Wheel of Profit" is a self-propagating machine if it is well maintained and focused in the right direction.
Let's look at the entire process of the customer's movement through the entire cycle of your dealership.
New Car Purchase Process Simplified: The customers come to your dealership and start considering a possible new vehicle purchase.
The sales staff do their job presenting options and narrowing down the possible units that may work for them.
The customer chooses a vehicle and is moved into the finance department.
In finance, they are presented products and services designed to keep them coming to your dealership for installation and use of those products and services.
The P.O is cut to get the car cleaned, and accessories installed and delivered in a timely fashion.
The vehicle is cleaned, the accessories are installed and the vehicle is delivered.
This process drives the wheel of profit from sales, to finance to parts and service. It is a cycle. Every department takes a profit along the way.
Used Car Process: Basically the same as above, but with an added step of having to go through the shop for inspection, and through the detail department for a complete clean. Here is where service and used sales start to disconnect.
Used car inventory turnover at a rapid pace is important for a few reasons.
The biggest one is that as the car sits there, week over week, it depreciates, costing the dealership $$.
So when a car is traded in time is of the essence. We should be aiming for a 3 - 5 day turnover from trade-in to recon to the used car clean, to the lot for showing the vehicle for sale.
I am speaking about averages of course. There will always be units that are delayed for things like:
Parts availability
Shop capacity
Condition of the trade-in, which can lengthen the time it takes to clean it
We can all agree that the used car department spends more money per year with parts, service, and detail than any single customer you have at your door presently. For that reason, it is a major contributor to the profits of the parts and service departments.
For this reason, a sense of urgency is vital and we should be rushing to get their units through the shop ASAP.
I have found it useful in the past to have the used car manager prioritize which units to get ready first. They have a better sense of what vehicles are going to sell the fastest so we should rely on their expertise in this area.
When I first took over a couple of service departments, the used car recon list was massive! There were so many vehicles to recon, clean, and put on the floor there was no way the 2 person shop could have gotten through it all. The detail department was in the same situation.
As I am a person of action, I put my laser focus on putting processes in place that made generating a profit and moving those units in and out asap much easier.
To catch up, I had to think out of the box. Here are a couple of the solutions I came up with. Some worked, others did not.
I calculated the gross that I was making on each used car clean. I then shopped around the local detail shops, mobile included until I found a great bulk deal that allowed me to mark up the sublet to almost the same amount that I would have made if the detail would have gone through the shop.
I booked two a day for 3 weeks until the shop caught up with all the used car details waiting to get to the lot for sale. I did the same with the local shops and sent a couple of used car inspections each day as well.
In the retail shop, I sent the units that had low mileage, that would not need more than a brake job or a filter, into 3 or 4 bays first thing in the morning. These were the easy, low-hanging fruit that we picked for the techs in our shop to boost their hours without absorbing a ton of their time.
To adjust shop capacity, we booked a couple of cars less each day, and we pushed off morning waiters to 10 o'clock instead of 8 o'clock for a couple of weeks, unless there was a dire situation, to allow a few of them to get through the shop first thing in the morning.
The end result was a massive influx of used cars to the lot that were "sale ready", and in turn, service profits that were generated via sublet labor dollars as well as shop hours in the main shop.
Ask any car salesperson how much better it is to sell a car that has already had all the repairs done, and the major detailing done rather than to have to guess, hope,
and pray that there is not a huge recon bill that will be coming up in the shop that will absorb all the gross in your deal.
With this process, after the sale, all we had to do was touch up the clean and that was it. This made it easy for sales to turn the inventory into sales, which usually involved bringing in a trade-in and starting the process all over again.
This is the wheel of profit in action. It should never stop.
In a perfect scenario, and on delivery of that "sale ready" vehicle, and after a seamless sales encounter, the sales staff would then take those customers to service and hand them over in good faith that we are going to continue to handle them with great care, so when they are ready to buy again, WE are the place they will be coming to.
How much more impressive is it to have vehicles that are ready for sale on the lot that you can present and hand the keys over
As my husband is a salesperson I hear firsthand his struggles with selling in today's market. Pretty much as soon as the car is traded in, it is sold. Without knowing what the shop is going to find. This means that he never knows what the deal is going to pay. There are ways to estimate of course, but I would not like to have much left to chance if I could help it as a used car manager if it were me. So I would rely on my service department to expedite my units in a timely fashion.
For salespeople, it is a feast or famine most of the time, so quick turnover on the sale is imperative. This also makes it imperative for parts, service, and detail. Sometimes deals go sideways or get canceled altogether if it takes too long to deliver them.
This can be a major interruption in the wheel of profit because the sales of financial products, accessories, parts and labor dollars slow down or halt all at once. On top of that, we may never see that customer and their business again in the future.
We should be aiming to be the heroes of the dealership. Bringing it all together when our sales team needs us. We are all working toward the same goal at the end of the day, a satisfied customer.
The customer does not care if the service department is busy or overbooked. When they buy a vehicle they want the possession to take place promptly, with all the fitments they have purchased put on the vehicle before they take it. So we need to work as a team to make it happen or help adjust the expectations of the customer if needed.
Above all, we should be working toward a smooth, cohesive environment for the customer to do business in. We should never sit and lay blame on one person, one department, or one process. We are a team that needs to move like part of a whole.
We should be like water. Many droplets, form one body of water. If something is not working it needs to be discussed, reconfigured, and reimplemented so the customer and the overall profit centers of the dealership do not suffer.
If your department is at odds with the Sales department, I would love to help:
message me at: adviseme@goldstandardservicetraining.com
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