Making margin in challenging Times

By Dennis McGinn

AutoSuccess, May 1, 2025

Here we go again. Strings out of our control are pulled. Things change. What was dependable and predictable this morning may no longer be. You’re a car dealer; such environments are made for your mentality, aptitude, creativity, and long suffering. Congratulations, another trial and test of faith.

Whatever comes down the pike, you can meet it head-on. With supply, interest, tariff, and general market concerns piling on, you’ll want to fine-tune this process so that every dollar you invest returns profit. Consider these actions to reduce market risks to used car profitability.

Used Car Appraisal Tips to Make Margin

As you evaluate potential trades and walk private party purchases and auction cars, use your good sense, but be humble and back that estimate with a VIN scan. VIN devices today are more intelligent than ever. They reveal trouble codes and their potential costs for repair and identify deleted codes that owners have surprisingly hidden. Uber-grade VIN tools also serve up parts and labor repair costs on the make and model to identify performance recon issues before you buy. This is one of the most productive and simplest ways to better manage margin expectations on every used car you buy.

If the objective is to maximize used car profitability, then consider marrying diagnostic data-rich OBD-II at every appraisal and time-to-line reconditioning to improve speed to sale and reduce holding-cost margin losses because those cars will sell faster.

Our data indicates the average reconditioning cost for most newer year used car models is about $700, with many presenting with identified repair needs of twice this and more. With limited two- and three-year-old cars available this summer, you’ll buy older, higher-mileage vehicles to meet demand. These vehicles will present more extensive performance challenges, so you’ll want to know this at acquisition to be more informed of your disposition options.

Here’s where use of diagnostic-rich OBD-II scans with every acquisition a clearer condition report. Their known parts and labor costs enable them to jump the recon diagnostic step and eliminate that time from the processes’ time-to-line average. Plus, these vehicles can move directly into recon, avoiding staging time losses. By providing solutions that help shave days from the recon time-to-line speed, these cars will hit the sale lot faster with more of their prime retail window open for margin retention.

Speeding Up Car Reconditioning to Improve Margin

The most productive reconditioning speed is measured as time to line, the speed at which used vehicles flow from acquisition to frontline-ready cosmetic, mechanical, and safety. By using reconditioning best practices, dealers can reduce this speed from days – even a week or longer – to 72 hours. The best practice standard for highly efficient car reconditioning departments is achieved month after month, which is three to seven days.

Make no allowance for less quality work but beware of tendencies to over condition. More recon cost is rarely recouped and often contributes little to the vehicle’s saleability. Pay attention to visuals, such as dings and dents, scuffed wheels, cracks and chips in glass, and other blemishes that will catch a buyer’s eye before any mechanical issues might.

Shaving a day or more from this time moves profit opportunity to the bottom line. For example, a vehicle reconditioned in six days rather than seven is a win for the dealership. Even one day’s reduction in recon time means reduced holding cost margin and gets cars frontline ready sooner.

Repair Approvals to Help Reconditioning Workflow

A time-to-line speed strategy removes time lags and delays wherever possible without disrupting workflow. You might say the idea here is to change accepted practices to breathe speed into that workflow. Speed repair approvals between the recon department and the used car manager. Slow approvals, often caused by missed communications and incomplete approval details, can delay work from minutes to hours. Meanwhile, the clock ticks, burning the margin.

Reconditioning Pre-Approvals

One idea for getting around approval delays is by setting spend limit preapprovals; you give recon authority to move forward with repairs without used car manager approval. Consider assigning repair dollar “buckets” for vehicles of varying mileage – low, medium, high — based on the mileage and repair averages of the cars you recon.

Structured Phase Times

Set tight time-completion parameters. Vary work order phases based on the vehicle’s condition. Monitor times and hold staff accountable for adhering to them. Compensate for vehicle completion time, not per car: Focus compensation on a production-based measurement.

Boost Training of Your Car Reconditioning Software

If the shop uses a car reconditioning software tool like Rapid Recon, know these systems offer much more productivity, efficiency, and economic reward than many users ever tap into. Insist they receive additional training to enable them to use the software fully. This will be more satisfying for them and valuable for the store.

Sharpen Skills of Your Recon Staff

Continuing education and sharpening personal skills are always good investments. This holds true for giving recon staff opportunities to excel. Automated recon software gives you reports to measure the uptick resulting from this training.

Put Data to Work to Maximizie Profitability

Measure and evaluate each step in your recon process. Did time-to-line reduce? What steps in the workflow improved? How much faster are used cars being made sale-ready? Now you’re managing and controlling outcomes by data, not hunch.

Maximize your used car profitability by leveraging the combined power of fully developed reconditioning with VIN scans at every acquisition. Scanning every vehicle at appraisal creates full visibility to the likely cost of mechanical and electronic repair, providing a roadmap to recondition and resell your used vehicles most effectively.

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