If you’re a fitness buff, you know pounds won’t drop or muscles tone without effort – consistent exertion over time driven by a dedication to a workout plan. Most used-car operations could lose weight and tone up. I have the right workout plan for that.

Here is your three-point fitness goal:

  • Eliminate hundreds of dollars of margin erosion from every used car put on the lot.
  • Get more cars to the lot faster to take advantage of their prime window of retail sales opportunity.
  • Tone the productivity and communication of work from vehicle acquisition into reconditioning and to the sales lot to eliminate friction and finger-pointing.

When starting a fitness regime, it helps to understand muscle structure and physiology. Likewise, insight into used-car structure and physiology is similarly useful to achieve maximum burn and gain. For this, I’ll refer to a few concepts Toyota used decades ago to turn automobile manufacturing on its head.

First, though, hop on the scale and let’s get a baseline measurement before we start.

A few questions: What is your current used car turn rate? What is your average time in days to get vehicles from acquisition to the sales line, or time to line (T2L)? What is your current used-car profit margin per unit retailed? (NADA: $1,350 average front-end.) We’ll look here at improving these three essential used-car metrics.

In the 1950s, Dr. W. Edwards Deming developed what became the Toyota production system. He broke manufacturing down to four essential workouts. He called them Plan, Do, Check, and Act (or adjust).

As you consider turn, T2L and margins, apply these workouts to each process, practice and policy until waste (motion, time, and money) squeezes out and opportunity to add value to customers and business alike takes shape.

As you do, you might notice:

Overdoing it: Over-conditioning vehicles can delay getting them to the sold line and make it difficult to achieve the return you want.

Missed opportunity: Cars shuttled to the backlot or forgotten at a sublot decrease time to line by days and erode margin. Such confusion happens when recon lacks accurate tracking and when recon mechanical inspection and repair are pushed to the side.

Drained resources: It wastes energy, time and efficiency when employees must walk lots, search out vehicles or get repair approval from the used-car manager. Use vehicle tracking tools and mobile communications to eliminate this.

Do what is necessary to return the results you want. Check often to see that those changes are implemented and change is occurring. Adjust the workout as necessary.

Work to improve these outcomes:

Turn: Market pricing, stocking the right vehicles for your market and active merchandising affect turn, but the most significant factor you can control to increase turn is to get cars into and out of your reconditioning operation faster. Every 2.5 days you can knock off that cycle will give you one more turn. That means selling more vehicles while stocking fewer.

T2L: Consider applying rapid-reconditioning practices that give precise control and accountability over recon. The goal is to get cars from acquisition to the front line in three to seven days, not 10 to 20, which is common when no reconditioning workflow discipline (Plan, Do, Check, Act) is at work.

Margin: A five-day T2L gets cars to the sales line still having 17 days of their prime retail window available. A 10-day T2L leaves just 11 days. The difference can mean $1,000 or more in sales margin. Fresher inventory sells for more. The sales department works harder when fresh fruit is on the lot.

Margin depends on two factors: time to line (just discussed) and holding cost. Holding cost is each vehicle’s percentage of overhead, per day, from acquisition to sale.

Dale Pollak, founder of vAuto, makes a case that holding cost is $85 per car per day, which includes lost front-end gross opportunity. At NCM’s $40-per-day estimated rate, a dealership reconditioning 200 vehicles a month at a 10-day T2L cycle runs up $80,000 in holding cost ($40 times 10 times 200). At a five-day T2L, holding cost is $40,000, a $40,000 benefit to gross potential.

Organized team training can help build and sustain commitment and results over time. So can using reconditioning workflow technology that tracks, monitors and manages all steps and people involved in a T2L process.

Whether the goal is a healthier body or a stronger used-car operation, if nothing is ventured, nothing is gained.

Dennis McGinn is founder and CEO of Rapid Recon (www.rapidrecon.com). The company offers time-to-market workflow software for auto dealership reconditioning and used car departments.