When determining what relatively inexpensive reconditioning items can be performed, both the consignors and the remarketing auction must consider brand image, expense, and customer needs and influence.

Remove All the Potential Negatives

It is important to take away the negatives of a vehicle for the potential buyer. This can be accomplished through performing a full detail that includes washing the unit, pressure-washing the engine and door jambs, cleaning the exterior, shampooing seats and carpets, and performing a buff and wax.

Other reconditioning touches that enhance the salability and aesthetics of a vehicle are:

• Carpet dye and repair ($50).

• Repair of burn holes in seats and carpet ($60).

• Leather seat dye and cleaning ($75-$100).

• Addition of bed liners ($130). This is a quick fix with big return to the consignor.

• Addition of matching hubcaps, airbrush bumpers, paintless dent removal (PDR) on late-model vehicles, and windshields (safety vs. aesthetics).

The consignor and auction must determine what reconditioning cost will be a value-added at the time of resale, and how much is too much. The consensus of the panel at a recent remarketing roundtable held by the International Automotive Remarketers Alliance was that an educated decision must be made after considering auction’s ability to do quality reconditioning, current market conditions, and who is the consignor’s buying audience.

While it is hard, if not impossible, to quantify the return on investment (ROI) for monies expended on a vehicle for reconditioning, everyone in the panel agreed that reconditioning dollars spent wisely would likely increase the return two to three times to the consignor. For example, you can spend $500 and increase sale price by $1,000, or spend $100 and increase sale price by $300. Because of a buying dealer’s inability to do repairs, the cost of floorplanning, and the cost of internal repair rates, the buying dealer is looking for a retail-ready vehicle if possible, and will pay more because the negatives have been taken away.

Note the Pitfalls of Reconditioning

Reconditioning pitfalls do exist and must be considered. The remarketing auction’s quality control will guide the consignor away from the pitfalls of reconditioning expenses that do not improve sales results. For example, if a vehicle has frame damage, then a consignor should not spend money on the vehicle. Also, if a vehicle has more than two body panels painted or existing poor body repair, then you probably would not waste more money on this unit. Before spending a consignor’s money on reconditioning, an auction partner must check to ensure that the engine and powertrain are in good working order before investing the consignor’s money.

There are pitfalls for consignors who do not do certain reconditioning items that cost the consignor disproportionately (e.g., tires on otherwise “front-line ready” vehicles with less than 50 percent tread life, not replacing cracked or starred windshields).

Ready a Vehicle for Sale on the Internet

The panel also discussed the value of reconditioning vehicles sold over the Internet. The consensus of the panel was that the auction is responsible for a complete and accurate disclosure of vehicles on the Internet. Because of the importance of this high level of disclosure, reconditioning is paramount in this sales distribution channel.

Also, the auction must stand behind a vehicle that is sold on the Internet due to the relatively small population of buying dealers. The buyer’s experience must be good; the auction must guarantee the vehicle.

Certification, whether it be for wholesale or retail, may help to increase buyer confidence in a vehicle with the intention of having the buyer pay more, but reconditioning is nevertheless important.

Communicate Your Strategy

These are the many benefits of retail-ready vehicles, and those types of vehicles with proper and cost-effective reconditioning bring a higher return to the consignor and create a stronger dealer following than those units offered by consignors who do not prepare their vehicles for sale. With the challenges of zero-percent financing, no down payment, and bumper-to-bumper warranties from the new car manufacturers, fleet/lease remarketers selling at auction must invest in those reconditioning menu items that make economic sense and better position their vehicles for sale at the best price possible in the prevailing market conditions.

Realizing that reconditioning is the only weapon in the fleet/lease consignor’s remarketing strategy, the fleet/lease consignors must communicate their overall strategy to their auction partners. Explain the order of importance to the fleet/lease company, i.e., brand protection, days to sell, expense control(s), etc. Conveying this information will allow the auction partner to develop a strategic remarketing plan that will target the buying audience for the fleet/lease account’s portfolio.

A dealer is looking for a fleet/lease consignor with consistent quality vehicles. While it is hard to measure the ROI of money spent in reconditioning, a reconditioned vehicle will bring more money to consignors at the point of sale than a comparable vehicle that has not been properly reconditioned.