![]() ![]() Use this e-calculator to determine your Holding Cost depreciation: Whatever this cost, it erodes actual sale gross by that much. A 10-day recon cycle equals $500 per car holding cost reduce recon to five days and holding cost depreciation is halved. Holding cost is a $50 per day per vehicle overhead cost (recently increased from $32, per NCM) assigned to each vehicle, from acquisition to the front line (it actually extends to the day the car is sold, but I am talking here about recon holding cost). So is controlling holding cost depreciation. Managing turn is part of the achieving greater used car profitability. Where turn is high, a dealer can avoid having to discount the vehicle to convince the consumer that even though they don’t need a truck right now, the price is good enough to pick one up anyway. Faster recon that shaves even 2.5 days off this cycle adds one inventory turn. Here’s why achieving a fast three-to-five-day time-to-market cycle is critical to used car gross:Ī typical eight-to-15-day recon cycle erodes so much of prime market opportunity. My point being, vehicle investments are as perishable as leafy greens. It’s tragically difficult to leverage this 21-day market shift when reconditoning time-to-market takes eight to 15 days or more, from vehicle intake to the sales lot! Time-to-market describes reconditioning’s influence on inventory turn it’s a way of timing the market. Miss the boat on getting a vehicle to the front line at exactly the right time can mean sitting on an out-of-season $50,000 truck instead of presenting an in-season $50,000 BMW X5! Spring ushers back demand for large SUV’s and crossovers. In late fall, hunting season drives “truck month,” and the Christmas holidays are for selling AWD luxury brands. For example, in Utah, where our process performance manager Anthony Greenhalgh is based, the market shifts in August to selling economy and rental cars, for the back-to-school crowd. This concept of market change is consistent, and it changes within this 21-day timeframe. This window is when the dealer’s cost per vehicle per day (see holding cost discussed later in this article) is still low on that vehicle, and the customer’s buying excitement is high.Ī GM who doesn’t understand these dynamics may not be the right GM for the dealership. This shift will be unique to the region and even the dealer. NCM Associates says the market shifts about every 21 days. It’s theorized that by turning vehicles quickly, the fresh inventory catches customer interest within a 21-day window. What GM doesn’t want to report that news to the dealer principal? More turns increases used car department gross. ![]()
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