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View Full Version : Cash Conversion election


InBloom94
10-04-2014, 04:54 AM
Can anyone explain whether it is worth it to use the cash conversion election option? 275k inventory, around 25-30k I would like to return. I know it's 75% credit, do you get that immediately or does it not show up until may? i currently have only a little over 3k in reserve so I am curious which option is better the cash conversion or the 35% return of cso's? also, what can you do if it is over 1 year old? and the selling of stuff for under cost on oe how is that? sorry for so many different questions combined, thanks.

tnpartsguy
10-04-2014, 06:00 AM
Cash Conversion used to be ok when we earned decent return reserves. Taking a 25% hit is only justifiable if you have a lot of old part number changes, or broken kits, ect.

I did the CC several years ago, and also converted 40% of my 687 money from my local ACD purchases to clean up a mess previous fixed ops managers had left. When I took over the inventory was 80% obsolent. It took about 4 years to turn it around. This was pre-RIM, and even pre-RSG. I'm not sure you could clean up a mess like that these days without the dealership taking a huge writedown.

GM is putting a huge mess in our laps if we let them. I fight every day to try to keep a fair balance here, but it's getting about impossible.

I had very little luck selling at a discount on OEC. I think OEC is another huge boondongle that GM got us into. If GM would use it to fill SPAC cases, and would penalize dealers that list every part ever made, it might be ok, but I'm paying $199 a month to list my inventory that another dealer will get penalized to buy from.

The 35% restocking on CSO should be charged to service if they ordered the part and the customer didn't return, simple as that.

zep33
10-06-2014, 05:13 AM
Cash conversion credit shows up in May

You can use your return reserve to return just about anything. It has nothing to do with the 35% CSO returns.

If you have any seatbelts/airbags you want to return, put those in as they will just have you field scrap them anyway. Good way to get rid of them without creating any extra work actually returning them.

I only took the conversion once but I use the reserve down to a couple dollars now every year.

The reason I believe dealers are able to sell below cost on OE is that they already wrote that stuff off and used their cash conversion to cover it. So anything made after that is pure profit (aside from the 25% you lose on the conversion) But GM charges approx 5% in freight charges on a regular return so the actual hit is closer to 20%.

Say you had 10k in reserves (don't we wish) and you took the conversion, you'd net $7500 and keep all the parts. If you do a return, you would only get $9500 back but would have to send back $9500 in parts. By going with the conversion, you could then list $7500 worth of parts on OE, Ebay or whatever and if you were able to get $2000 out of them, you would break even and anything more than that would be 100% profit.