If you are an auto dealer or principal, there is a good chance you have viewed the “detailing department” as an unwelcome requirement to do business.
Vehicles are required to be prep’d after arriving at the dealership, and a delivery prep is often required when a car is sold – new or pre-owned. Just a regular part of the business, right? Well, maybe not as regular as it used to be. Let’s take a closer look.
Historically, dealerships would keep several staff on hand to do “make ready” services – whether the vehicles came off a truck, rail, taken as trade-in or came from auction. The preparation menu could range from removing protective plastic and pricing stickers, to full details, including clay barring and buffing.
Costs of maintaining this dealer prep service are broader than most know. Below are some obvious and hidden costs:
- Employment costs – Recruiting, advertising, FICA, FUTA, SUTA, Turnover
- Workers’ Compensation – Training, Safety, Insurance, deductibles
- Garage & Liability Insurance – Deductibles, Premiums
- Chemicals & Supplies
- Management Oversight Requirement
As a result, the cost of maintaining an in-house detailing group has become increasingly expensive, let alone the need for maintaining adequate skill level to keep the cars new-looking and attractive (BTW – Most dealers agree their return on investment of a detail before auction is about 400-600%! – not bad).
The Trend Towards Outsourcing Detail Services
Recently firms that offer outsourced detailing services have come on the scene providing a range of services that now allow dealers to turn a cost center into a profit center. These firms can provide basic prep and detailing services as well as offer enhanced services such as paint repair, scratch and dent, headlight restoration, and ozone treatments.
These firms assume much if not all the liability of the shop including assumption of responsibilities for damages and accidents resulting in the detail department. This alone often saves dealerships thousands of dollars.
The greatest advantage however is the dealership now has the opportunity to offer these services to customers as up charges that can improve profitability. For instance, 50 details at $100 profit can add $5000 of profit to the dealership per month. Selling and applying interior or paint protection can add $100′s in per unit gross margin.
Though there is much more to say about how outsourcing detailing services can improve dealer profitability, it is safe to say then trend continues.