Improve Turn Time by Streamlining Reconditioning

Mechanic looking at a vehicle to determine if it needs to go through the reconditioning processDealers who purchase vehicles at auction will often send those cars through a reconditioning process. It typically takes an average dealer seven to 10 days to make sure a car is ready to sell. How much of that time includes the reconditioning process? Depending on the state of the acquired vehicle, the amount of time reconditioning takes can vary. However, there are always steps dealers can take to improve the amount of time it takes for a vehicle to go through the reconditioning process.

Define the current reconditioning workflow
Many top dealers are able to recondition and have their vehicles customer-ready in approximately five days on average. In order to figure out how a dealer can recondition vehicles faster, it’s essential to know what the current process looks like and how long it takes one vehicle to go through that system. Take note of different ways to shave time off of that process.

Examine key bottlenecks
The people who understand where the most bottlenecks are in the reconditioning process are the people who take care of the reconditioning process each and every day. Ask for their input and their thoughts on how the reconditioning process could be improved. Are there tools available that would streamline employee communication and vehicle status? What individual is responsible for each part of the reconditioning process?

Develop an atmosphere of discipline
Dealership operations are a team effort. A team committed to reducing the amount of time it takes to recondition a vehicle can yield notable results in both dealership efficiencies and profitability.

Though it might seem like a waste of time to some dealers, consider what shaving days off of the reconditioning process can mean for a dealership’s cash flow. Each day a car sits on a dealership lot it costs a dealer money. Average vehicle holding costs can average $32-$40 per day. If one vehicle is front-line ready in three fewer days that can mean a savings of $120. Multiply that savings by the number of average vehicles a dealer sells in a year, that can mean significant savings.

Use Auction Reconditioning
For dealers that might not have an on-site reconditioning operation, it might be worth considering the reconditioning options some auctions have on-site. Reconditioning through the auction can help you move your inventory more quickly through the process, if you do not already have a vehicle reconditioning process in place. For example, Manheim auctions will frequently offer a number of reconditioning services

Take some time to evaluate how quickly your dealership accomplishes the reconditioning process. What steps can your dealership take to reduce the time it takes for a vehicle to go through the reconditioning process?

The Digital Car Buying Experience

Today’s car buyers spend a lot of time looking for a vehicle online. According to Cox Automotive’s 2017 Car Buyer Journey, car buyers spend 60 percent of their time online researching vehicles and dealerships. In addition, 98 percent of consumers want the ability to complete at least some of the car buying process online.

Dealers that invest in their digital presence not only have the ability to establish a solid customer touch point, but can also encourage a positive overall dealership experience. Considering that nearly half of all buyers visited the website of the dealership where they purchased or leased their vehicle, dealers that utilize their digital presence are likely to have more customers that are pleased with their vehicle purchasing process. So what digital experiences are customers looking for?

According to the study, the top three things a consumer wants to do on a dealership website are to take a 360-degree tour of a vehicle, reserve a vehicle for a test drive, and have the option to negotiate vehicle price online. Including some of these features on a dealership’s digital platforms gives consumers a simple way to view inventory and an easy way to contact your dealership. Customers will appreciate the added access to vehicle details in addition to how convenient it is to view dealership inventory and contact your dealership.

Though consumers appreciate the option to research dealership inventory and negotiate prices online, there are still some barriers between a potential customer visiting a dealership website and a customer visit. According to the study, many customers would feel uncomfortable negotiating a price for a vehicle if they haven’t had the chance to test drive it. In addition, 2 out of 5 consumers feel it is still important to have a personal connection with their salesperson.

It’s up to each individual dealer to determine how they want to run their digital platforms. However, providing ways for dealership customers to shop according to their preferences will ensure a pleasant purchasing experience that can lead to return customers in the future.

The Basics of an Auto Floor Plan

dealer looking at their auto dealer line of credit

Dealer talks about his auto floor planIt’s easy for a car dealer to stock up their lots if they have enough money on hand to buy inventory. One of the most common ways for a dealer to have enough money on hand to purchase inventory is to use an auto floor plan.

Getting a Floor Plan
In order to qualify to use an auto floor plan, a dealer needs to have credit. Specifically, a history of using credit and paying down debt. Floor plan lenders want to see what a dealer’s credit history is like. Bad credit and some marks on a credit history won’t always prevent an individual from using a floor plan, but it will likely limit the amount of capital a lender is willing to give to a particular dealer. Dealers that manage their floor plan correctly and over time, show they are capable of floor planning responsibly, will likely be able to increase their loan amount.

Using a Floor Plan
Many auction locations accept a number of auto floor plan companies as a payment option. This means that at auction, a dealer only really has to worry about one thing: buying inventory. With a floor plan, dealers don’t have to worry for the most part about handling back-end operations and details. All a dealer will have to do is bid, and take blocked tickets to the correct department to complete their purchase.

Growing Dealership Business
Auto floor plans ensure that a dealer has the capital needed to purchase inventory, and frees up dealership cash to pay for other expenses. Floor plans ensure cash isn’t eaten up by depreciation, and dealers don’t have to spend extra time at auction or waiting for checks to clear.

Using a floor plan gives dealers the flexibility to do what they do best, delivering excellent customer service and putting consumers in the vehicles they want and need.

Tips to Quickly Turn Dealer Inventory

cars in a dealership lot

cars in a lot poised to quickly turn dealer inventoryAfter a purchase, it can take a significant amount of time for a vehicle to become customer-ready. The increased speed of getting a vehicle to market is important. There is a clear correlation between how quickly inventory is merchandised and online to how fast that inventory moves. Dealers have a better chance of improving overall profits the faster that inventory moves. So what can a dealer do to get inventory to their lots faster and turn inventory quickly?

One of the easiest ways to turn dealer inventory faster is to know what types of vehicles sell well in an individual dealer’s market. Evaluate the types of vehicles available at auction. Do those makes and models sell well on your dealership’s lot? Use data from Account Portal and the vAuto Stockwave tool to find which vehicles will sell well on your lot.

Floor planning can speed up the buying process and help turn dealer inventory quickly. Not only does the process move quicker since dealers do not have to go through the steps of writing a check and waiting for it to clear, but they are granted extra flexibility that allows them to make quicker buying decisions, knowing that they have a line of credit to fall back on if their inventory costs are a little higher than expected.

After acquiring a vehicle, there are a number of other steps that dealers can take in an effort to get the vehicle on their lots faster.

One tactic is to get vehicles featured on digital dealership platforms before leaving the auction. The sooner a dealer can get a vehicle online, the faster a potential customer can see and potentially buy the vehicle. Even if a potential vehicle needs to be reconditioned, take a few photos that you can post while the vehicle is headed to your lot.

If it isn’t possible to post anything online before leaving the auction, do detailing work before reconditioning to get images online sooner.

Dealers will also need to evaluate their transportation models to ensure they are using the most efficient means to get vehicles from point “A” to point “B.” Manheim customers can look at solutions such as Ready Logistics to move cars quickly and efficiently. As a bonus, NextGear Capital customers have the added ability to floor plan transportation costs.

Getting a car ready for purchase on a dealership lot can take some time. However, taking steps to acquire and turn dealer inventory quickly is an excellent way for dealers to protect dealership profitability.

Small Changes to Increase Dealership Sales

How Auto Dealers Can Encourage Customers to Re-Purchase

The sale has been made. Your customer is pleased with their vehicle purchase. But does your dealership’s relationship with the customer end after the purchase? In an ideal world, that one customer would hopefully refer their friends to purchase vehicles at your dealership, would come back to get their vehicle serviced for maintenance and would purchase their next car at your dealership. However, according to a study from Autotrader, only 46 percent of new car buyers return to a dealership where they have had prior experience, and only 30 percent of used car buyers return to a dealership where they have had prior experience. That means approximately 70 percent of customers that purchase from your dealership don’t return. What can car dealers do to encourage those customers to re-visit?

Excellent Customer Service
Though it might seem like a simple concept, excellent customer service is one way to ensure that customers have a positive experience at your dealership. Use your dealership’s website and digital presence to let consumers to look at inventory and complete any available purchasing activities. If and when customers visit your dealership, let them leverage their knowledge they’ve obtained prior to their dealership visit and let them lead the conversation. In addition, minimizing the number of staff members a customer has to meet with can help to increase customer satisfaction.

Don’t know where your dealership could improve its customer service efforts? Encourage customers to complete a survey with questions about their experience. Look for consistent trends, and make any necessary operational changes based on those survey results.

Offer Incentives
One simple way to encourage a customer to revisit is to offer some incentives. For example, a dealer could give customers two free oil changes and tire rotations after every vehicle purchase. This incentive gives a customer a reason to return, and it gives your dealership another touch point in addition to the opportunity to show off your dealership’s excellent customer service.

When dealers give their customers a great experience and a reason to return, those customers are sure to re-visit, and will hopefully re-purchase.

Canstruction 2017

CANStruction volunteers in green matching shirts work together to build structures out of canned goods

NextGear Capital team members recently participated in their third annual Drive Away Hunger campaign, Cox Automotive’s annual food drive benefiting Feeding America. Feeding America is a nonprofit, nationwide network for more than 200 food banks that feed more than 46 million people and serve 4 billion meals through food pantries, soup kitchens, shelters, and other community-based agencies annually. One of NextGear Capital’s closest community partners is Gleaners Food Bank of Indiana, a food bank that is also a part of the Feeding America network.

Each year, NextGear Capital sets a lofty goal for its Drive Away Hunger campaign. The goal this year was to donate 14,000 pounds – nearly two times the 2015 goal. Team members in the corporate office, those spread out across the nation in the field, and NextGear Capital’s Canada office all participated in the two week long food drive. This competition among departments encourages team members to bring in non-perishable goods that they can use to build a structure and then donate to their local food bank.

The pinnacle event of the drive is CANstruction, which pits departments against each other to build the ultimate structure out of the food they collected. 11 teams across Canada and the United States built creative and innovative arrangements in 2017. From a fire hydrant that “extinguished hunger” to a baseball field that “knocked hunger out of the park”, teams rallied together to fight for the top spot.

Judge’s Choice: The Lending Department’s team, Knock Hunger Out of the Park, CANstructed Wrigley Field complete with a baseball diamond, score board, and decorations that resembled fireworks! The team also secured third place out of all Cox Automotive teams.

Most Wanted: Records and the Shared Service Center team, the Crunch Berries, were awarded the Most Wanted trophy. Using the largest variety of Gleaner’s most needed items, the team CANstructed a ship completed with a sail made of (old and void) car titles!

People’s Choice: Sticking to their roots, Customer Experience’s team, CANtabulous, CANstructed a life size rendering of the state of Indiana including the White River!

With corporate, field, and international team members working together, NextGear Capital was able to donate a total of 14,105 lbs. to food pantries across the continent! The corporate office was able to raise over 11,000 lbs., field team members raised over 2,000 lbs., the Canada office raised almost 500 lbs., and team members donated $1,750 in cash donations, which equates to approximately 5,250 meals.

NextGear Capital strives to make an impact in the communities where our team members live and work. Commitment to Community is not only a Cox Automotive value, but a strong core value for NextGear Capital as well. With over 240 volunteer hours logged for this campaign alone, it truly speaks to NextGear Capital’s commitment to serving the local community.

If you are looking for more ways to get involved with Gleaners Food Bank of Indiana, click here to visit their website and explore more volunteer opportunities.

 

Missing Out On Car Dealership Sales?

Car dealership sales person showing a customer a vehicleYou’ve got a customer on the lot and you spend part of your evening showing them different vehicles. They seem interested, but then they leave. Why is your dealership missing out on these car dealership sales?

Vehicle buyers move through a complex shopping process. Some buyers want to make an educated buying decision after looking at a wide variety of vehicles on your lot. Other buyers begin with an idea of what kind of vehicle they want, and complete complementary research online.

Approximately 40 percent of buyers like to shop around before making a purchase. This small detail is important because it can indicate that many buyers are not going to buy from you simply because they have not looked around enough yet. However, this can also provide a measure to gauge interest, especially if your sales professional asks, “Have you looked at any other dealerships yet?” Depending on your customer’s answer, you can gauge just how ready they are to buy.

One of the biggest reasons customers also don’t purchase is because the vehicle they want isn’t on your lot. According to the 2017 Car Buyer Journey Study from Cox Automotive, 38% of buyers don’t make a purchase because the vehicle they want isn’t on the lot. Keeping dealership inventory updated online can be an easy way to ensure potential customers know what exactly is on your lot at any given time. However, beyond that, there typically isn’t a lot a dealer can do in this situation beyond asking the customer if they would like the dealership to acquire the vehicle they are looking for.

Unfortunately, about 25 percent of all visitors to your lot are just simply not ready to make a decision. Was there a particular reason your customer wasn’t ready to make a decision. Ask why they weren’t ready to make a purchase, and if you should follow up with them at a later date. What kind of follow-up efforts are in place for your dealership?

Though customers might not be ready to purchase when they first visit your dealership lot, ensuring they have a good experience can mean a purchase when they return to your lot.

2017 GIADA Convention and Expo Wrap-Up

Booths at the GIADA Convention and ExpoAutomotive industry conferences are an excellent way to stay up-to-date on the latest auto industry news. In addition, they are a great way to get introduced to dealer partners and network with other dealers that might share similar experiences. Independent dealers in Georgia recently had the opportunity to attend the Georgia Independent Automobile Dealers Association’s annual conference.

Some dealers are required by individual states to complete continuing education courses to receive their dealer license renewal credits. For Georgia based car dealers, one of the easiest ways to earn state-mandated continuing education credits is to attend an association event. The Georgia Independent Automobile Dealers Association (GIADA) is one of the country’s largest independent dealer associations. This year, the GIADA hosted their annual “Rev Up Your Education” convention.

One of the many great benefits that dealers can receive from the convention is the ability to access the most up-to-date trends and information from thought leaders throughout the entire automotive industry. Workshops and sessions hosted by these industry thought leaders covered a variety of topics, including Cox Automotive’s own Majd Saboura, who discussed how dealers can apply real-time market insights to redefine the evaluation of potential vehicles for purchase.

Some other conference workshop highlights included sessions that covered topics such as legal compliance, updates to the Georgia state title process, wholesale vehicle acquisition, digital retailing as well as other workshops that included insights on small process changes that could help lead dealers to a quicker return on investment.

The conference wasn’t just all work and no play. There are a number of fun entertainment opportunities available to network with other dealers. This year, over 580 car dealers attended GIADA’s annual conference. With such a large number of dealers in one place, dealers had the opportunity to meet and discuss common struggles, challenges, exciting wins and best practices.

If you are a Georgia dealer (or close to that region) and you didn’t have the chance to attend this year’s conference, stay tuned to the GIADA website for more information about the 2017 convention, as well as details about next year’s conference.

How Does a Dealer Floor Plan Work?

Kathy Ward sourcing non-auction purchases

image of a flow chart to show how does a dealer floor plan workThe concept of a dealer floor plan is pretty simple: a floor planning lender gives a dealer a line of credit to purchase inventory. However, in the context of daily dealer activities, how does a dealer floor plan work? From winning a bid at a local auction to moving inventory to your lot, there are many unique advantages that a dealer floor plan has to offer, including ease of use and expediting the buying process. Below we have listed the general process for floor planning at an auto auction.

How does a dealer floor plan work? It typically begins at an auto auction…
Using a line of credit begins when a dealer wins a bid for a vehicle at auction. Typically a dealer will be asked how they want to pay for the vehicle. For dealers with a floor plan, they will tell the auction to use the line of credit from their floor plan provider to pay for the purchase.

From that point, the auction will check on the dealer’s line of credit. The auction will send information about the dealer’s purchase to the floor plan provider for funding and approval. Once the purchase is approved by the floor planning lender, the auction will stamp and approve the bill of sale or vehicle gate pass. This shows that the car was paid for, and means that the dealer will be allowed to leave the auction premises with the vehicle. Some dealers will use third party transportation, like Ready Logistics or Central Dispatch to take vehicles back to their dealership lots.

Though each step of the floor plan process is spelled out above, the floor planning experience is extremely simple for dealers purchasing inventory. Do you have questions about how floor planning can benefit your dealership’s business plans? Reach out to your local NextGear Capital representative to learn MORE.

3 Ways Dealers Can Reduce Turn Time and Protect Profits

How long does it take to get newly acquired vehicles on to your dealership lot and ready to be sold? After purchasing, transporting, reconditioning, and posting vehicle details online, it’s easy to see how it could take a while to get a vehicle back to your lot. Unfortunately, taking too long to put inventory on your lot and post it online could be putting your dealership’s profit margins at risk.

It typically takes the average dealer seven to 10 days to make a car customer-ready. However, some reports indicate that the top 20 percent of dealers are able to get cars on the front lines of their lots in fewer than four days. In addition to this, it takes nearly 13 days to merchandise the vehicle online, yet again the top-performing 20 percent of dealers find a way to merchandise within a four day window.

It costs money to keep a car on a dealership lot, even if it is just sitting in a parking space. Figuring out the dealership holding cost per unit per day is a useful metric that can help dealers keep their inventory balanced. Dealers that are interested can use our three floor plan finance formulas to figure out what individual unit holding costs per day are.

Improving efficiency and the speed to retail is one of the most important steps a dealer can take to protect a current and long-term profitability. The faster a dealer can get vehicles to their lot and posted online, the faster that dealer is likely to turn that inventory into profits. The faster a dealer has those profits in hand, the sooner that dealer can buy more vehicles.

In terms of floor planning, it can also be an advantage to speed up the amount of time it takes to get a vehicle ready for customers. Overall, a dealer will spend less purchasing inventory on a floor plan as opposed to cash, especially if a dealership experiences aged inventory. However, the faster a car sells off of a dealer’s lot the less they will spend on floor planning expenses.

Some simple tangible ways dealers can increase speed to market include the following suggestions:

Use tools and resources to buy right: What vehicles in your market are in demand? Are you getting these vehicles at a good price? Tools like vAuto Stockwave, value lookup and individual dealership statistics via Account Portal and the Manheim Market Report are great places to begin looking for details about quality inventory.

Adjust the current  dealership transportation model: It takes time to move a vehicle from point “A” to point “B.” In order to speed up the auction-to-lot process it’s crucial to evaluate how quickly your dealership can transport those vehicles. How efficient is your dealership’s current transportation? Manheim customers can look at solutions such as Ready Logistics to transport dealership cars quickly and efficiently. In addition, NextGear Capital customers have the extra ability to floor plan any transportation costs.

Get vehicles online sooner: In an ideal world, dealers would get vehicles listed for their dealership before leaving the auction. Though that isn’t always possible, aim to have every vehicle online within 24 hours of arriving at the dealership. The sooner the vehicles are online, the sooner potential customers can see the type of inventory available on your lot.

Dealers who take steps to speed up the amount of time it takes to get vehicles from the auction to their lot have increased their chances of turning inventory quickly and growing dealership profitability.

For more information on the benefits of expediting the process from acquisition to retail, click here.