LAS VEGAS — Many dealers have heard that selling and installing aftermarket vehicle accessories can add significant margin dollars to a new-vehicle sale.
The folks at the Specialty Equipment Market Assn. (SEMA) have been telling that story for some time. They told it again to dealers this year at the SEMA convention here in a special seminar called, “Dealers' Boot Camp: A Guide to Creating a Profitable Dealership Accessory Program.”
The accessories market has grown from $16.66 billion in 1995 to nearly $31 billion in 2004. New-car dealerships enjoy just 17% of this pie, which leaves a large slice remaining for them to capture from the specialty installation outlets, automotive chains and mail-order outlets that command the market.
According to SEMA, the hidden profit available to dealers who sell accessories is found in the comparison in markup between aftermarket accessories and factory-installed ones. SEMA notes that dealer profit on factory-installed accessories averages about 10%-15%. Dealer profit on dealer-installed accessories, however, is 50%-75%.
The average consumer spends more than $1,000 per vehicle to accessorize, purchasing aftermarket add-ons such as running boards, ground-effect lights or engine-performance boosting tools from dealerships or independent parts shops such as Auto Zone or the local Pep Boys.
Just because SEMA has been preaching the accessory sermon to dealerships does not mean necessarily the congregation has been listening. And some dealers prefer to keep it that way. North Carolinadealer Ed Woods, a panelist on the SEMA seminar, customizes many vehicles his dealership sells, and says his peers' inaction with accessories is good news for him.
“According to the National Automobile Dealers Assn., 85% of all dealers don't customize at all,” he tells Ward's after his presentation. “At our dealership, we always have something different than anything our competition has because we make our vehicles unique through accessorizing them.”
Woods has been accessorizing vehicles at his Ciener-Woodsdealership in Kernersville, NC, since 1983. Accessories account for 25% of the store's business today. Woods isn't one to dramatically display an array of accessories at his store; he prefers to have his parts department order the accessories and then have his service department install them on inventoried vehicles and let his salespeople sell these very unique, one-off, customized models.
He customizes at least two models in each vehicle category he sells and places at least one in the showroom and others at the corners of his property. He customizes new and used vehicles. “The goal is to get the customer on to the lot, to suck them in, because we offer them something different,” he says.
That may sound simple, but perhaps simplicity works best when selling accessories, according to Tom Carre of DTC Retail Consulting, Indian Harbour Beach, FL. “If you want to be in the accessories business, just do it. If you ask for the business you'll get 50% penetration,” he tells attendees. “You make money by falling down.”
As the seminar's panelists note, selling accessories or selling vehicles already accessorized is all about adding unique value — eye appeal, if you will — to a vehicle so dealerships move more metal.
“Accessorizing is a step toward getting customers excited about a vehicle,” Woods tells the predominately dealer personnel audience. “If you are not accessorizing now, start off with one car — the oldest car on the lot. Even if all you do to that car is add a rear deck spoiler, park it in a prominent place on your lot.”
It's all about the car. It's all about emotion. Accessorizing helps you inch up the price of the vehicle. It makes the vehicle easier to sell to the customer and it helps put more money in the pocket of the salesman.”
Dealers looking to establish an accessories program may want to consider involving all of the dealership's profit centers, Carre suggests. “You need synergy between the front and back ends,” he says.
As many dealers and salespeople will note, unless service, parts and, in some cases the body shop participate in the accessories sale profits — and unless the individuals in those departments are trained to work as a team to ensure that the dealer-installed accessory sale moves swiftly through to completed installation — dealership-installed accessory programs will struggle.
Here is the proof: Many salespeople know the specialty shop down the street can install a spray-in bedliner, install a sunroof kit or special ground effects more quickly than can in-house services. As a result, they never consider having the dealership install the customer's newly acquired accessory. This loss of service and sales income can be stopped and reversed when dealers work to educate and train all dealership personnel on the importance of selling and installing accessories.
Carre also recommends that dealers embrace a diversity of suppliers that can backup up their products with warranties, while providing new ideas along with prompt service and deliveries.
“Customer satisfaction is always an asset to be lost by shoddy product and shoddy installation,” Carre says. “This is no place to take shortcuts.”
Seminar moderator and SEMA's director of dealer relations, Ellen McKoy, notes selling accessories is as much about selling fashion and style as it is about selling ground effects and spectacular body graphics. As such, dealers may benefit from having some further insight into how to set-up and market accessories for their business, she says.
To that end, SEMA offers dealerships access to the Professional Restylers Organization, to help dealerships set up the right type of accessories business, displays and accessorized vehicles to maximize their potential from such a program.
Planned and managed correctly, dealer-installed aftermarket accessories can help dealerships add profit to the bottom line. Selling aftermarket accessories that help a dealership set apart look-alike vehicles helps build excitement in those cars among consumers as well as salespeople looking for added value to make a vehicle distinctive and increase their commissions.
“Do not sell on price, because selling vehicles on price is miserable,” Carre says. “Sell on value, and be happy.”
|Survey conducted of 1.4 million CarDomain.com members Source: CarDomain Inside Track November 2005|