Reconditioning Costs Used Car Dealers Should Track

Reconditioning is where a lot of profit quietly disappears. A car bought well can turn into a break-even deal after a few unplanned repairs, a new set of tires and a rushed detail. The fix is not to avoid recon. It is to track it car by car so you know what you are spending and whether it pays off.

What counts as reconditioning

Reconditioning is everything you spend after you buy a car to make it ready for sale. Group it so you can see where the money goes.

• Mechanical: brakes, belts, fluids, batteries, suspension, engine and transmission work
• Tires and wheels
• Cosmetic: paint, dent repair, bumper work, headlight restoration
• Interior: seat repair, carpet, odor treatment, trim
• Glass: windshield and window repair or replacement
• Detail: interior and exterior cleaning, plus any specialty cleaning
• Safety, emissions or inspection items your state requires before sale
• Transport between the auction, shop and lot

Track it per car, not in a lump

A monthly shop bill tells you almost nothing. You need each invoice tied to a specific car. When recon costs are recorded per vehicle, you can answer useful questions: What is my average recon per car? Which type of car costs the most to fix? Which vendor is cheapest for tires? Are my repair estimates at auction close to reality?

Also record who did the work. Keeping the vendor on each cost lets you compare shops and spot when one is getting expensive.

Decide what is worth fixing

Not every repair earns its money back. A simple test is to ask whether the repair will raise the sale price or speed up the sale by more than it costs. A cracked windshield, worn brakes and a bad smell can stop a sale cold, so fixing them usually pays. A cosmetic flaw on an older, lower-priced car may not.

This is a hypothetical example for illustration. A car has worn tires. A set of new mid-grade tires costs $520 installed. Without them, you expect to take about $400 off the price and the car may sit longer. With them, you hold your price and likely sell faster. The repair is probably worth doing. Compare that to $900 of paint work on a car that retails for $6,000 and is already at the top of its market. The paint may not return what it costs.

Example numbers only. Judge each car against your own market and costs.

Set a recon budget before you buy

Build a recon estimate into your purchase decision. Many dealers set a typical recon amount by price range, then adjust after inspecting the car. When actual costs come in, compare them with the estimate. If you keep running over, your estimates are too low and your bids too high.

Watch the time as well as the money

Set a target turnaround, such as a few days from purchase to front line, and look at every car that misses it. The cause is usually the same few things: waiting for parts, waiting for an outside shop, or a car nobody was assigned to.

Recon time is a hidden cost. A car sitting in the shop for two weeks has burned two weeks of holding cost without being for sale. Track how many days each car spends in service and look for bottlenecks, such as slow parts ordering or a backed-up shop.

Put costs on the car where you can see them

A dealer management system lets you record repairs and other costs against each car, along with the purchase price and auction fees, so your all-in cost is always visible. Vendors can be saved with each expense, and cars marked In Service show up separately from those In Stock, Reserved or Sold. The profit and loss and inventory reports then show how recon affects your margin, and team permissions can hide costs from staff who do not need to see them. DMS Apex is $28 a month flat with a 15-day free trial.