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Creating Predictable Profit in a Volatile Automotive Market

By Dennis McGinn, Founder & CEO of Rapid Recon

AutoSuccess, October 2024

In 2024, dealerships face a challenging landscape, with revenue and new car sales on the decline. As profit margins tighten, managing profitability has become more crucial than ever. However, amid these challenges, used vehicle sales present a bright spot. While the broader market may struggle, used car sales have remained steady, providing a significant opportunity for dealerships to focus on areas within their control to drive more predictable profit.

One of the most impactful areas for improvement lies in reconditioning and how efficiently vehicles are turned. Speeding up the recon process not only reduces holding costs and depreciation but also ensures that vehicles are frontline-ready faster, allowing dealerships to sell more units and protect their gross profits. In an unpredictable market, managing this process effectively can make a substantial difference in profitability and overall performance.

Before any improvements can be made, dealerships must first understand their current recon performance. Just like someone stepping on a scale before starting a fitness plan, dealerships need to track and measure their recon times and processes. Without this data, it’s impossible to identify bottlenecks or inefficiencies, which are crucial to making the necessary changes for improvement. Having a clear baseline allows dealerships to monitor progress and make informed decisions that lead to better outcomes over time.

Once the data is collected, it’s time to streamline processes. Fast recon is essential for reducing both holding costs and the risk of gross profit erosion. Vehicles that sit too long in the recon stage lose value quickly, significantly affecting overall profitability. A well-managed recon process ensures that each vehicle moves through the necessary stages swiftly—from acquisition to sale-ready. This not only reduces downtime but also protects margins in a way that simply reacting to market conditions cannot achieve.

In today’s competitive landscape, dealerships that master their recon processes gain a clear and measurable advantage. By optimizing this internal operation, they can control one of the few factors within their power to maintain consistent profitability. On the other hand, a sluggish recon process can lead to vehicles sitting idle for too long, resulting in increased costs and eroded profits. Speeding up recon and improving turn times allow dealerships to minimize the negative impact of market fluctuations and keep inventory moving.

While the market dictates pricing and demand, recon and turn times are entirely within the dealership’s control. By focusing on managing this process efficiently, dealerships can significantly reduce holding costs, minimize depreciation, and ensure that vehicles are ready to sell as quickly as possible. Controlling these internal factors is key to creating more predictable profits, even when external market conditions are uncertain or volatile.

Focusing on the fundamentals of fast and efficient reconditioning becomes essential for long-term profitability as dealerships face mounting external challenges. By implementing streamlined processes and tracking recon performance, dealerships can build a more resilient business model. This approach ensures that they maintain profitability, regardless of broader industry trends, and position themselves for sustainable long-term success.

About Rapid Recon

Reconditioning workflow automation from Rapid Recon is the industry standard in time-to-line inventory turn and speed-to-sale vehicle revenue enhancement for automotive retailers. Benchmarking data based on 13 million vehicles processed uniquely positions Rapid Recon to advise dealers on how to improve their store’s profitability. Used by more than 2,000 dealerships, Rapid Recon ensures the accountability of processes, property, and people. Hence, dealers know answers quickly, find assets anywhere, and sell vehicles promptly to grow dealership profitability. www.rapidrecon.com CALL US: +650‑999‑0497

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OUR EASY-TO-USE CLOUD-BASED APPLICATIONS CAN BE CUSTOMIZED TO ACCOMMODATE AND IMPROVE YOUR CURRENT WORKFLOW PROCESSES. THIS INCLUDES QUICK UPDATING TO MEET YOUR CHANGING NEEDS. FROM THE VERY FIRST DAY, YOUR IMPLEMENTATION TEAM WORKS WITH YOUR STAFF TO ENSURE YOUR SYSTEM DESIGN MEETS YOUR DEALERSHIP’S SPECIFIC REQUIREMENTS. WE THEN PROVIDE UNLIMITED COACHING, TRAINING AND FEEDBACK, TO HELP YOU REACH AND MAINTAIN YOUR TARGET SPEED-TO-SALE PERFORMANCE GOALS.

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