French said he began exploring intensive reconditioning during the 2008 economic crisis. It has since become a focal point.
Reconditioning lower-grade vehicles was a key strategy at 500 Automotive Chevrolet-Buick-GMC in Clinton, Ind., where French was dealer principal until he sold the dealership last month. It has been renamed Pilson Chevrolet-Buick-GMC. Reconditioning such vehicles helped the store to go from losing nearly $50,000 each month to bringing in six-figure profits instead, French said.
French, who sits on the board of directors for used-vehicle retailer TruWorth Auto in Indianapolis, adhered to four reconditioning principles during his career:
1. Have a dedicated buyer for lower-grade vehicles. This person has to be knowledgeable about types of damage and the reconditioning costs it would take to get the vehicles ready to sell, French said.
2. Have a remarketer. This is someone with the authority to shepherd the vehicle through the reconditioning process and get it prepped for sale.
3. Don't have a pre-populated cost. There should not already be a reconditioning cost in the appraisal tool. "In other words ... every vehicle we appraise, we just put up $1,000 for reconditioning," French said. "You cannot do that with these types of lower-grade vehicles."
4. Have a unique reconditioning process for lower-grade vehicles. Those at 2.5 to 3.5 on the National Auto Auction Association vehicle condition grading scale should undergo a repair process different from what vehicles graded 4 to 5 go through, for example.
French said it's also an important rule of thumb for dealerships to be upfront about how they fix vehicles.
"The reason we sell them and have had success is ... if you are transparent on your website about the vehicle as its current condition after you've made some repairs, it appeals to a broader base of customers, especially with prices the way they are because they're priced very favorably," he said.