Ascertaining specific figures as to what is the prudent amount to spend on reconditioning can be a bit of a challenge, according to industry experts who crunch wholesale numbers for a living.

While neither ADESA’s Tom Kontos nor Manheim’s Tom Webb shared a specific dollar amount with Auto Remarketing, each economist did explain how grade numbers — what dealers see on run lists showing a vehicle’s condition — are giving analytics teams at least a point of reference to quantify what a wise amount of reconditioning might be.

“There’s obviously more online buying than there used to be,” Webb said. “Some dealers go into their search, and they’re only buying vehicles that have a certain grade. So to the extent that you can take even a modest improvement of the grade of a vehicle sale from a 2.9 to 3.0, there are a lot of dealers who search for vehicles that are only 3.0 and better. If you don’t do that, you’re not on their radar screen.”

Kontos shared a similar sentiment, emphasizing how condition reports are becoming more uniform throughout the wholesale industry and how dealers are gravitating to those grade numbers.

“It’s caused me to rethink my views of reconditioning from how do you come up with the one or two things you need to do on a car that you think will bring a positive return on investment, versus how do I take  a two grade to a three grade,” Kontos said. “That way, you’ve got a better chance of getting eyeballs on that car in the online space and even the lanes.”

Webb explained how the analysis of reconditioning trends has been a perplexing topic for some time.

“As you can imagine, the studying of the return on reconditioning has always been a big issue to the extent that now we have much more improved and consistent condition reports both at the vehicle’s check-in point and post reconditioning,” Webb said.

“It makes it a lot easier as an analyst to determine what the payback on that reconditioning is and to make very strategic decisions on what reconditioning to do or not to do,” he continued.

In light of that evolution, Kontos described how reconditioning at the wholesale level is being impacted by steadily rising supply — especially of off-lease vehicles. What might have been acceptable level of reconditioning 12 to 24 months ago might not cut it nowadays.

“It puts a premium on the efforts of remarketers to do a better job in the area of reconditioning than they’ve needed to do in recent years because the market was so strong,” Kontos said.

“The market is becoming a little less forgiving to those that do recon than when supplies were tight and prices were strong where you could sell without pretty much doing a lot of recon and not worry so much about the condition of the vehicle,” he continued.

“I think people did back away from doing a higher level of recon during the period of 2010 through 2013,” Kontos went on to say. “It was not a huge drop-off, but people tried to be consistent with their reconditioning policies on the institutional consignment side, the banks, the finance companies and the OEMs.”

Editor's Note: This story is part of our “Reconditioned for Success” special section coverage in the July 15 issue of Auto Remarketing. The all-new digital edition of that magazine can be found here.