Is The Juice Worth the Squeeze? | Dealers Compressed Episode FOUR
Time is an often overlooked asset. Sure, you can do certain tasks yourself to save a few bucks on the labor, but how much are you actually losing in the long-run by sacrificing your focus on the tasks that bring you the largest returns?
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Transcription
Is the juice worth the squeeze?
There are a lot of things in life that, over time, no longer make sense. Dale opens this chapter citing that for many guys his age things like lawn care and oil changes on your own vehicle just don't provide the same value they used to. Sure you could save some time and money and get the gratification of doing it yourself, but over time you realize that your time, energy, attention, and money are better invested in the most valuable activities.
As the founder and CEO of Image Auto, this chapter is close to my heart because it's the specific problem we work to solve for dealers. Used Vehicle Reconditioning. Our solutions are specific to the cosmetic side of the equation, but Dale addresses the mechanical and cosmetic side holistically.
The "stand-off" as Dale calls it between sales and service cost the dealer an incredibly precious asset: Time.
He uses a great illustration of a married couple who argues over the value of the husband taking care of the lawn while the wife and child have less quality time with him. They're both in agreement that there's a value transfer, but have never mutually quantified it. Sure, they might be saving money, but at what cost? I'll let you read the book to get the detail of the story, but if you have a family, you'll get it immediately.
Some studies suggest that each day a vehicle sits without being retail ready, the dealer is losing $85 in holding cost and potential front-end gross. Dale points out that's nearly $600 to make the same amount in service gross profit. But most dealers don't analyze lost time in the cost of reconditioning.
Dale admits that even the suggestion of outsourcing can run counter to what dealers have been taught over the years, but he keeps pounding on the fact that it takes an extreme level of commitment and competency to make it work. He recommends a hard, honest look to assess whether or not there is sufficient return on all the effort and resource invested in reconditioning or if that diverted attention is hurting the overall effort. And ultimately, if they have the courage and vision to fix the problem.
He agrees that dealers who have addressed, and largely eliminated, the inefficiency gives them a great advantage. However, he also mentions some extremely capable groups like Sonic Automotive who determined that outsourcing providing them freedom to apply greater attention and resources to make maximum impact on customer paywork and retention.
The latter part of the chapter addresses wholesale sourcing. Dale revisits the founding principals of vAuto and why many dealers have adopted the utilization of a third party to assist with wholesale sourcing. The increased pace of retail led them to explore better solutions than splitting their focus between running their department and being tossed by the constant ebb-and-flow of acquisition. These dealers leveraged the focus of their acquisition specialists who deployed available technology and ultimately, made better purchasing decisions.
Dale urges dealers who haven't yet adopted this reality to do so quickly because they have some catching up to do. Meanwhile, he talks about his continued work with Cox Automotive to deliver even greater efficiencies through automated buying and even cars that arrive frontline ready if the dealer so chooses.
In reconditioning and wholesale purchasing, dealers must ask if the juice is really worth the squeeze.
