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Used car profitability depends on efficient, automated car preparation processes - guest opinion

Neil Smith

Last month we suggested the necessity of a completely emotion-free, data-driven approach to car buying aimed at improving the ability to both buy the right stock and increase overall profitability.

But what happens once the first hurdle of buying the right stock is solved?

Another common industry challenge for used car dealers appears to be preparing cars for resale quickly, efficiently and cost-effectively in order to both increase stock turnover and retain chassis profit.

Over the past year this has been a major challenge for us as well, in light of our current expansion strategy. Since July, we’ve followed a growth pattern that led to almost doubling in size by bringing on board 4 more sites. As each site holds on average 150 cars, being able to supply the rapid expansion forced us to put even more focus into finding efficiencies through IT development and reducing the time cars spend in our preparation centre, without compromising on quality. 

Full visibility throughout the process

Once cars are delivered to our state-of-the-art preparation centre, assigned a barcode and assessed mechanically and cosmetically, our management software ImperialNet works out the best and fastest route through the preparation centre by looking at what needs to be done to each vehicle in relation to how long the queue in each department is, real time.

It is fundamental to know, at anyone time, how many vehicles are in a particular queue, how’s the queue progressing and how many vehicles overall have been passed through each department, as inefficiencies in this area lead inevitably to increase days in stock, delay advertising and ultimately lose profitability.

Heavy investment in technology and people

It is common knowledge within the industry that efficiency can hardly be achieved without heavy technology investment to support people. This is why, throughout the years, we invested over a million into our preparation centre, which now employs 60 people and handles the majority of the work we carry out internally.

Automated processes

We firmly believe that, wherever possible, used cars dealers should aim to fully automate functions and flows.

Removing human intervention in repetitive and time-consuming tasks and supporting all the other functions with advanced proprietary technology - for instance, automatically ordering relevant parts for each car that completed the initial mechanical assessment; or employing fully automated photo booths taking over 100 hi-res pictures of each car in an auto-prescribed sequence - allowed us to go from 35 to 45 cars prepared each day.

Following our recent expansion, we’re now aiming to reach 55 cars per day, but with further sites opening in 2018, increased stock and resource requirements will likely lead us to open a second preparation centre further north to facilitate supplying vehicles to sites like our newly opened Scottish site of Grangemouth.

It has become apparent by now that used car dealer profitability depends not only on the right stock, but also on efficient, automated car preparation processes that combine advanced technology with people’s skills and experience. Where is your dealership  on this journey?

Author: Neil Smith, operations director, Imperial Cars 

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