A onetime chicken hatchery is the secret to dealer Chris Gaunce's booming used-car business.
Gaunce bought the former hatchery, which then was in use as a used-car dealership, in 2007. He spent about $100,000 to convert it to a reconditioning shop to detail and prepare used cars for sale.
Doing so saves him about $25,000 a month in used-car carrying costs and helps improve his used-car gross profits.
"The detailing and reconditioning center has been more of a godsend than I had ever anticipated it to be," says Gaunce, vice president of Central Maine Motors Auto Group in Waterville, Maine.
Dealers increasingly are moving used-car detailing and reconditioning into dedicated centers off dealership property, industry experts say.
Doing so opens up the service lanes for other repair work, and makes detailing and reconditioning more efficient because there is one process in one place. The centers also speed used-car turnaround, which equates to cost savings, those experts say.
"The average boarding cost is $40 to $60 a day to carry a used car," says Chip Maher, dealership management consultant for the National Automobile Dealers Association 20 Group program, in McLean, Va.
Maher says many dealers he works with have or are considering off-site reconditioning centers, often with photo shops, to speed turnaround.
Gaunce opened the Central Maine Motors Reconditioning Center in 2008. It is within a half-mile of all three of his stores, which sell Chevrolet, Buick, Toyota, Scion, Chrysler, Dodge, Jeep and Ram vehicles. The stores sell about 3,300 new and used vehicles combined a year, he says.
Gaunce opened the center because he wanted to make his used-car sales profitable. He had been mainly losing money on those vehicles because of the time it took to recondition them.
"When you sell cars that are not reconditioned, it is expensive because you've guessed what your price would be to the customer. You can't say, 'Well, it's going to be $500 more because I didn't know it would need new brakes,' so you end up absorbing that cost," Gaunce says. "If you've reconditioned it, all your costs are true and you can price it accordingly."
Two shifts work at the center from 6 a.m. to 10 p.m. five days a week and from 8 a.m. until the last task is done on Saturdays, he says. The cars go to the appropriate dealership for any mechanical repairs, but the reconditioning center details them from start to finish, Gaunce says.
Gaunce's average turn rate is four days, down from seven days in 2007. That saves him about $150 on each car in boarding costs, he says.
Gaunce also can sell a wider variety of used cars thanks to the center, he says.
"We now have the time to look at each car more critically because we know we can get it through the system and not sit there extra days and depreciate," Gaunce says. "Understanding the flow was probably the most important thing."
Another dealership group that has begun off-site reconditioning is The Thompson Organization in Doylestown, Pa. Each of the group's six dealerships did its own detailing before 2011. That often created a logjam in service departments.
Then the group bought a warehouse and converted it to a reconditioning center with a photo shop.
"Our brands keep growing and we needed more space to sell our vehicles and service our customers at our dealerships," says Laura Thompson Barnes, vice president. "Your prime expense is real estate. The customer never sees what goes on with detailing the car so it doesn't need to be on our prime real estate."
Thompson carries Toyota, Scion, Lexus, Porsche, BMW, Audi and Volkswagen, selling about 6,500 new and used vehicles a year, Barnes says.
The reconditioning center has about 50 employees and is in a central spot convenient to each store. New vehicles are delivered to the center for distribution to the dealerships.
Used vehicles are serviced at a dealership, then sent to the center for detailing and cosmetic repairs.
The investment has been minimal beyond a car wash, paint booth and photo booth because there are no lifts in the center. But the reward has been substantial in increased productivity and efficiency.
The turn rate to recondition a used car has gone from five or more days in 2011 to one to four days now, depending on the work needed.
If a used vehicle needs minimal service and bodywork, it can be serviced, detailed, photographed and displayed on the lot and online, with more than 60 photos, within 24 hours.
The center also has freed up service bays to handle more customers, boosting productivity. Those bays typically process more than 2,000 new- and used-vehicle repair orders a month.
"That's the main savings," Barnes says. "Taking those detail bays out of each individual dealership allows us to turn them over and use the service bays, which is very profitable." She adds, "We would never go back to doing it any way other than this."