Mobile Electronics Profits Are Music to Dealers' Ears

LAS VEGAS — It is evident at this year's Specialty Equipment Marketing Assn. show that mobile electronics is one of the automotive aftermarket's fastest growing segments.

Some participants see that as an opportunity for new-car dealers to capture a piece of the action.

While much of the electronics market is owned by auto makers and the big box electronics retailers such as Best Buy and Circuit City, car dealers should consider getting in on it, says Keith Lehmann, vice president-car electronics div. for Kenwood USA.

“We have an opportunity for car dealers to form strategic partnerships with mobile electronics dealers,” Lehmann says. “The partnerships allow dealerships to offer upgraded audio, video and navigation systems as dealer-installed options.”

The car dealer sells the system and has its mobile electronics partner install it. Dealers have an advantage of rolling the accessories into the financing and warranty of the vehicle at time of purchase.

But dealers need to be careful with whom they choose to partner, Lehmann says.

He recommends that dealers seek partners with a wide range of products, strong installation facilities and capabilities along with strong problem-solving skills.

Lehmann suggests dealers ask to see a set of financials and do a walk through of the electronics company's installation facilities. Dealers also should evaluate how the company markets to their own customers.

“This really can be a long-term relationship and it should be,” Lehmann says. “We've seen strong partnerships in which both companies direct business to each other.”

A good electronics partner should help the dealer create multiple packages that are tailor-made to fit the both the vehicle and the customer, Lehmann says.

He also suggests dealers develop electronic packages in advance and then offer those to customers, rather than developing a package at the time of purchase.

“Dealers really should limit the choices,” he says. “They're dealing with people who have a low awareness, and too many choices can lead to confusion.”

Packages can simply be grouped as “good,” “better,” or “best,” he suggests.

Also important is the merchandising. In-store kiosks that have an audio system with earphones can help demonstrate the packages capabilities.

Some dealers find keeping a display vehicle for each package is even a more powerful sales tool, according to Lehmann.