Mercedes-Benz of Arcadia takes in as many as 100 off-lease vehicles each month and buys more than half of them, Ziemann says. Vanessa Ward, the dealership's pre-owned coordinator, uses DealerSocket's InventoryPlus software and a spreadsheet to track each vehicle in the reconditioning process.
"The quicker you can bring a vehicle to the front line and retail it, the more profit you can make," Ziemann says.
Ziemann posts a description of an off-lease vehicle on the dealership's website to build consumer interest as soon as it is designated for reconditioning. Usually, customers start asking about it even before it is ready to sell, he says.
A whiteboard in Ward's office has magnetized squares that shows each vehicle in the reconditioning process. If a salesman asks when a vehicle will be ready to retail, Ward says she points to the board.
Leasing has been growing in popularity for years, especially for upscale cars and trucks. Last year, the lease penetration rate for luxury vehicles --- the share of new vehicles that are leased --- was 62 percent, according to Kelley Blue Book. The lease rate for all vehicles was 31 percent, KBB says.
Dealers and fixed operations managers likely will face a growing supply of off-lease cars and trucks that need reconditioning. Motorwerks BMW in Bloomington, Minn., is ready. In 2014, anticipating growth in off-lease vehicle volume, the dealership converted a leased warehouse across the street to a reconditioning center.
The five-lift facility does all cosmetic reconditioning work --- such as removing dents, repairing alloy wheels and painting --- says Matt Mickelson, the dealership's general manager. The center also does mechanical reconditioning for non-BMW vehicles; the service department in the main dealership, which has 37 lifts, continues to handle that work for used BMW cars and trucks.
Motorwerks BMW, part of Penske Automotive Group, uses software sold by vendor Rapid Recon to identify any inefficiencies in the reconditioning process. Dennis McGuinn, Rapid Recon's founder and CEO, says his firm works with nearly 1,000 new-vehicle dealerships, including Penske and Galpin Motors stores.
Rapid Recon tailors reconditioning software to a dealership, then spends three months at the store helping to put it into practice. The initial fee is $1,500 for a typical dealership that reconditions 100 or more cars a month, McGuinn says. After that, the dealership pays a monthly subscription fee that averages $600.
Following a stringent reconditioning process is crucial for off-lease vehicles because many of them will be sold as certified pre-owned, meaning they carry a factory warranty, McGuinn notes.
"The manufacturers are brutal if they see any problems," he says.