Delays In Used Car Preparation Can Cost Dealers 25 Percent In Lost Profit, Says Motor Trade Expert Fraser Brown.
Dealerships are losing up to 25 percent gross profit on every used car due to the delays in preparing vehicles for sale, according to motor trade expert Fraser Brown.
Whilst many have vehicle progressor and paper-based systems charting the progress of vehicles from car auction or trade-in to forecourt, they are often outdated and vastly underestimate preparation times.
Fraser, who is managing director of MotorVise Automotive, said it has developed its own vehicle progressor software enabling senior management to see where each vehicle is throughout every stage of the process. He said: “Progressor systems that fail to efficiently monitor every stage of the preparation process are losing dealerships money, or worse – ensure they make no money at all.
“Streamlining the system and measuring the performance of each department can add as much as 25 per cent gross profit to the bottom line. This is even more important to dealerships in these uncertain economic times as the importance of used car sales to the overall business continues to rise. An ineffective vehicle progressor system makes spotting bottlenecks and tackling inefficiencies almost impossible. This means that for many dealers the time taken from buying a car at auction to it going on sale is measured in weeks, rather than days.”
“A vehicle sitting idle can end up losing any chance of profitability. Multiply that across the potentially hundreds of vehicles on site, and the importance of tracking preparation time accurately is clear. By achieving more efficient check-in and vehicle preparation processes, vehicles are sold more quickly, resulting in faster stock turn, reduced stocking charges, and an increase in sales. All of which leads to a greatly improved profit per unit.”
MotorVise, which is based in Colburn, North Yorkshire, carried out one recent dealership consultation which revealed its average vehicle preparation time to be 19 days – 11 days longer than its eight-day estimation.
Its vehicle progressor software accurately shows, at a glance, where in the preparation process any vehicle is and how many vehicles are due into which department.
Dealers who have implemented the system have seen the following results:
> Days taken for used cars to go on sale reduced by 34 per cent
> Overage stock cut by 40 per cent
> Days taken for used cars to be sold reduced by 19 per cent
> Stock turnover increased by 38 per cent
Fraser added: “The benefits to dealerships also include opportunities to save time and improve business efficiency. No more ‘lost’ cars between branches or ‘lost’ paperwork between departments, effective job planning, and much improved timescales for management approval of work.
“These are all key to car dealerships being able to overcome the economic challenges of a post-COVID world, creating efficiencies, meeting customer demand and improving profitability.”