The Used Car Cash Machine

I, I want to warn everybody. I've, I've warned you already. If you're, you know, a consistent listener to the service travel revolution, get ready for summer. Please do me a favor, get ready for summer. More people are going to drive and travel this summer. You are going to have more people from out of town trying to get in for check. Engine, lights, tires, coolant, leaks, overheating. We are going to have the summer of fixed ops records.

Yes.

We are going to.

Just literally print money, get ready, hire techs. Now it's coming. You're going to be busier than you've ever been. I can feel it. Hotels are already sold out through the end of the year.

It's getting challenging.

Yeah. I'm going to this thing in Florida. The hotels are all sold out. Months out. I'm telling you, people want to get out. I saw this thing on the news. They were saying people are going to the airport and just saying, wherever I can go that isn't here. Like, I just want to get out of town. Like, that's how I feel too.

Like Tulsa.

Sure, I'll go to Tulsa. Albuquerque. Red or green? Chile. Let's do it.

Okay. Let's talk about how long should used cars take to recon, Christian, how long? I'm trying to think back when you were a service manager. Your used car recon situation.

Yep. And I know I forget when we started, we were just over five days.

Where did we end up?

2. And there was plenty that we were getting done in less than two.

Little tribute to Mr. Camp.

Mr. Camp was all bought into getting those cars turned fast.

The sharpest dressed general manager.

Yeah. And sharp minded too. His clothes and his brain match.

Just a good guy.

Yeah. Well, he had it ironed down. He's like, yep. For every day that we don't have this car on the lot, it cost us $42.84. Like he was just that guy that, like, he got it down to the penny on what the cost was of not having a car on a lot.

So we have to, from a fixed ops perspective, understand.

The used car business. In order to serve the used car business, we can't do it on our terms. We have to understand that used cars are a depreciating asset. They are not going up in value.

It is very rare. Maybe that beautiful collection of cars in Wyler's museum is going up in value. But for the most part, used cars for are going down in value. They are depreciating assets. So Christian just said, like Camp used to say, oh, that car cost us $45 every day. Like you literally can figure out if you take what the depreciation is going to be on that car truck on top of whatever flooring expenses. So take whatever the wholesale value of that vehicle is times, I don't know, whatever 6% interest rate right now divided by 12, divided by 31, and that'll tell you the daily interest you're paying. And then do the same thing with the depreciation. But most of the time, those things in five days have gone down in value. A couple hundred bucks, minimum.

That's exactly right.

They're going, every, every week they're going down a couple hundred dollars in value. They're depreciating assets. They're not going up. And so it is our role.

To understand that, but also understand that if we do a good job and we're in the business of retention, that vehicle selling and not getting wholesaled is giving us another customer in our service job. So whether you're all makes or all models or, you know, a percentage of the cars that are used are coming back because you only work on Hondas or whatever it is, you still want to approach it like, these are our future customers. And this is about retention. And so if we assist the used car department in selling more cars and holding gross, we're going to get more customers into our drive. So hands down, we talked about last time dispatchers. I would move your dispatcher to an internal advisor and I would dedicate, dedicate technicians to PDIs and used cars in every situation. I don't care how small your dealership is, one tech can stay busy doing used cars and PDIs. And usually those techs could be on the lower end of the pay scale. They can be flat rate and they can be very productive. I've yet to have a situation where I go into a shop and there isn't a tech that's kind of in his 50s that's a really good tech, but he's not that excited about new technology. But he's really good. His quality is good and he can flat rate brakes and tires and oil leaks and things like that. You can, you can offer them the position. So let's say they're making $30 an hour. You can say, listen, Tom, I have a position as a used car tech. It pays $25 an hour, but it's all gravy. You're not going to be doing much warranty, whatever it is. You don't have to learn the new electric engine or.

Yeah, you don't have to do wiring harness rebuilds and all that other stuff.

And that, that works. Most of the time those techs are like, yeah, I'm tired, I don't want to do it anymore. And I would love to be the used car tech. If you don't do that, you can run an ad for used car tech in.

Four day work weeks of the nuclear weapon, of, of hiring techs. But use car tax. If you run an ad for most of the time that pulls pretty good. But I would dedicate low cost. So we don't want $40 an hour tax. But we don't want. We also aren't probably looking for fifteen, we're looking in the twenty, twenty five dollar range. We want quality, we want good text, we want them to be able to be flat rate and productive. But understanding that it's kind of gravy. It's an easier, it's an easier job. There's not going to be a ton of warranty and you're going to be doing a lot of retail stuff all day. That's pretty easy to flat rate and make time on. But dedicate a tech and then put a process in place where you're tracking the used cars and work on the system. Most of the time when we go in to fix the used car system, the first thing we have to do is put in tracking because this is what happens. We see. So.

Say we, we have a client that it's taking 14 days on average to get a car from recon to the front line ready to sell. 14 days, which is 12 days too many.

Yeah.

If I ask the service manager why that is, what do you think they say?

Well, we're waiting on this, we're waiting on that.

Yeah. Now if I ask the used car manager why it's taking so long, what do they say?

His services.

By the way, most used car managers that are any good are chain smoking. So in between cigarettes and pacing, when they poke their head in your office, what do they say?

Service is far behind. They can't get them done.

And so both of those are probably true. Honestly, at the end of the day, the thing that I like to do is just put in a simple little Excel spreadsheet that the, the office, when they stock it in, they put in the stock number, what it is and the date. Now it's the internal advisor's job to look at that sheet 100 times a day. And as soon as something's been stocked in, we create a repair order, we go get it and we put it in the shop, literally. Like, within an hour, like that sheet. In fact, you can set it up where they text you whenever they add something to it. If you don't know how to pull up Excel on the, you know, on the network, what. Whatever it is, then there's another column that says, out for approval. We put the time in the date. Then when we get the approval, we put another time and date. Now I can figure out how long it's taking a used car manager, and in most situations, it takes two or three days for the used car manager who says it's the service manager's fault to give them the okay. So then what I do is I go to the GSM or the dealer. I say, listen, if here we're writing them really quick, but it takes us two or three days to get the approval. Could we. Our average recon here at this Honda store is, you know, $700. Could we just have $700? If it's anything under $700, we could do it. And they're like, yeah. And now all of a sudden, we're, we got it now we're making progress. We got to consider we're cooking with gas. Right. If it's a BMW store, 1500. You know, it depends on the. The car line, the area, and how sketchy the used car manager is, because some used car managers are buying stuff that 500 all like, you know, it's a little iffy.

Yeah.

And the market's a little more competitive right now, so people are stepping on cars they might not have normally bought previously. Right. So then. And then you got the detail thing. Then we got. We got another column. How long did detail take? But if you. If you work on that, if you have an internal advisor that is compensated on turn, if they're compensated on from the time it's stocked in to the time it hits the front line. And that's their bonus structure. And you look at the data and you help and you get everybody in a room. And the goal, the common goal between everybody is two or three days reconned, detailed, and ready to go to the front line. And everybody shares in that vision and believes it can happen.

It happens like magic.

Oh, yeah, I've seen it happen. So my internal advisor was so, like, it was really like he was conducting a symphony.

Right.

Like, he could have been in charge of the Philharmonic. Because he would say, okay. Because he also was responsible for the recon part, like the pdr, the bumpers, the windshield, the glass and everything like that. And he would tell the vendors he'd be like, okay, I've got 12 cars coming in. I need you to be here between 10 and 2. And the PDR is gonna happen during this time. And then they'd be like, well, I can't make it on. And he'd be like, no problem, I got another guy I can call and then I'll get that done. So he had two or three backups to each thing that he did. And then they always just made it. He became a priority with everybody. And he had this thing, he's like, well, this one's gonna go into the shop at this point in time. Like, he had it down to the minute and he was able to turn these cars so amazingly fast. But it was because he was organizing it, but he wasn't held hostage by anybody. And he did have that pre authorization.

You know what some people that are listening to this or watching this are thinking right now, Christian?

That it's not possible.

They're thinking, well, if I take the internal work from the other techs, they won't be happy. Oh, because most service managers use the internal work to subsidize the fact that they're not selling retail work.

Yeah. Especially PDIs. That burns my hide when I see a $40 an hour guy doing a PDI.

Yeah, trust me, in 100% of the situations where you take internal and dedicate a middle skill level, 20, $25 an hour tech, your retail sales go up because they have to do inspections because they don't have it to fall back on. And they're, you know, they can't be a band aid. Used cars can't be a band aid or an afterthought. They have to be a priority. You got to think about, you know, you call us and you say, hey, we got to increase our traffic, we got to increase our RO count. I'm telling you how to do that. Fix your used car process and fix your new car process. It sells more cars. The dealership makes more money and more gross. And you get more vehicles in your service drive. It is impossible to scale a used car department with a service department with a 14 day turn. Agreed, it's impossible. But they scale really fast. At a two or three day turn, they scale fast. They just go. It's on us to understand that business and to make it work. And if you don't dedicate, it'll always be an afterthought and you'll never control it. You can only control it by grabbing it by the neck and controlling it.

Yeah. And you can't have everybody doing it because I think that's the thing, is technicians on internals. It's the rainy day car. It is absolutely there just as a filler. And sometimes systems are broken, you know, things don't work. But there's, you know. Did you hear the thing about the chameleon that couldn't change colors?

I did not.

He has reptile dysfunction.

That's pretty good. So how long should it take a used car to recon?

I really think two days is the magic number.

Two days, everybody. Two days. That's dos dias in espanol.

See?

Thanks so much for watching this clip of Service Driver Revolution. We're uploading new stuff, everybody, every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chris collins inc.com. Now that's offers.chris collins, inc. I'm Chris Collins, and I'll see you in the next video.