KEA Advisors has published a helpful technical bulletin providing guidance for used truck professionals tasked with reconditioning trucks.
The company writes as trucks become more reliant on technology, there are more and more opportunities for giant repair bills to insert themselves into the reconditioning process. It’s not unusual to see a more than $2,500 bill just for a truck to pass a DOT inspection, which KEA Advisors says wipes out the chances of making money on a wholesale deal and, at the very least, really squeezes gross profit on the retail side.
How does a used truck manager protect their department and profit margins?
According to the company, “no matter the challenges that your unique market puts in your way, there are a few elements that we recommend become a part of your used truck buying process.”
KEA Advisors says the following three tips are particularly helpful for all used truck departments when reconditioning:
Proper Inspection: Coordinate with and get training from your service department: Get a professional set of eyes on every truck before making an official offer. If there are resource constraints or geographic concerns (e.g., customers are using the truck on a work site and can’t bring them to the service department) your appraisers need to be trained on an electronic diagnostic tool to read the ECM and have a well-defined set of required pictures to review with the service department.
Prepare the customer for “worst-case-scenario” repairs: If time does not allow for a service consultation, buyers should have a list of typical repairs and the costs associated with those repairs to communicate with the customer. Assume that the truck is in the worst condition possible, and let the customer know how much your offer will be increasing if the truck does not require the usual repairs. Giving customers money back tends to be an easier proposition than clawing money back from them once the truck is in your possession.
Stay current by maintaining regular communication with your service manager: Organize a standing meeting with your service manager at least once a quarter. The goal of the meeting is to learn from the service department any trends they are seeing in the repairs they are performing on trucks that you typically buy. Any new trends need to be added to the list of known repairs or incorporated into the documentation SOP.
KEA Advisors says it is impossible to completely remove the risk from buying post-emissions used trucks. However, discipline around these processes and closer coordination with a dealer’s service department during the buying process can and will decrease one’s odds of buying a truck that will wipe out margins for the month.
For more information from KEA Advisors on its assistance in this area, contact [email protected].
