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Jamie LaReau composed an article in Auto News with the following information: “In 2014, Northern CA dealer Jeremy Cunningham ran out of space in his service department. He writhed to balance reconditioning of pre-owned cars, new-vehicle processing & customer-pay work. So he spent just shy of $1M to build a satellite facility, known as a reconditioning center, to house & prep new & pre-owned vehicles. Within weeks of opening, his pre-owned-car sales increased by 25%, & service revenue soared by 30%, now that his service techs were freed to do more paid work. He also saved a great deal in annual costs.
Off-site reconditioning sites have been around for several years, pre-owned mostly by landlocked dealerships in large cities. But now, more dealers beyond larger cities enjoy the benefits, too. An off-site reconditioning site is expensive to build & staff. But advocates say it can truly limit the time required to refurbish pre-owned cars, making costly charges amassed every day the dealer retains the car & can’t sell it. It creates more parking for inventory, &, since new autos are delivered to the center, traffic backups are somewhat reduced at the dealership. A reconditioning site frees the dealership’s service garage & skilled techs to do profitable customer-pay work.
Finally, it can be a key to recession-proofing operations. The dealers who use an off-site reconditioning center safeguard dealership profits in an era of shrinking new-car margins, added regulations & a potential sales plateau. Steve Emery, performance manager at NCM Associates in Dallas says he knows of a minimum of a dozen retailers who constructed reconditioning centers in the past 5 years.
Cunningham says his 30,000-sq.-ft. off-site center is a good revenue source for his stores. These stores, roughly 150 miles from Sacramento, sell over 2000 vehicles per year. He was constrained by the capacity in his service dept. meaning it would take too long to refurbish more pre-owned cars profitably. A fast turnaround in reconditioning pre-owned cars can be critical since dealers pay to hold, or stock, a car each day. The average cost is roughly $50 each day. If the dealer takes 7 days to refurbish a pre-owned car, that’s a $350 cost. Limiting it to 3 days is a big savings. In his 20 Group, dealerships notice the costs to form a centralized refurbishing center made good sense only for a group of 3+ stores, and staff costs were high. Mark Scarpelli has a solution by converting a 2,500-sq.-ft. spot & Raymond Chevy into an on-site refurbishing center to assist it & Raymond Kia, also on the same street.” The complete article is available here.
Summit County Junk Car Quote
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