Why a dealer would want to sell accessories is an easy question to answer. The accessory market is a $216 billion industry, yet this industry is virtually untapped by automobile dealerships across the nation. Last year, dealers captured a small faction of this market. It’s about time dealers stepped up and claimed a bigger slice of the accessory sales pie?
According to SEMA, the aftermarket accessory market is a $34 billion industry that has been growing at a rate of 8 percent annually since 2000. The OEM accessory market, according to Marketing Worldwide Corporation, is an estimated $182 billion market and is expected to be a $200 billion dollar market by the end of this year.
There are, however, a lot of variables to consider when you consider opening an accessories department in your dealership. Dealers need to know the who, what, when, how and where of selling accessories.
Peter MacGillivray, the vice president of marketing and communications at the Specialty Equipment Market Association (SEMA), said, “It takes a champion within the organization who is willing to get inside the enthusiast community because enthusiasts really differ from region to region.” He suggested to first look within your own dealership for an enthusiast, “The hobby of customization and personalization is so wide-spread right now that you’d be hard-pressed to find a dealership that didn’t have at least one ‘car guy’ employed there.” He also recommended going to local car clubs to scout for gurus.
Second, you need to know who you are selling to. The vast majority of customers accessorizing their vehicles are between the ages of 16 and 30. The younger end of this spectrum, in general, maintains less financial responsibility, which means they have more expendable income available to customize their vehicles. However, the number one rule is to tailor your accessory sales to your market. Your market definitely influences what to sell, which is the next variable.
At Reuther Chrysler, Jeep and Dodge in Creve Coeur, Mo., wheels, tires and lift kits for Jeeps are the biggest sellers, according to Joel Kling, aftermarket parts manager. Reuther customizes some of the vehicles it retails. Kling said, “It helps sell them to have [customized vehicles] sitting on the lot all done up, so [customers] can see what it actually looks like. You really can’t tell what your vehicle’s going to look like in a magazine, opposed to being able to walk up and touch and feel the stuff.” He estimated 80 percent of the new Jeeps sold at Reuther leave with customized tires and wheels.
In Claremont, Calif., at Richard Hibbard Chevrolet, billet grilles are the hottest seller, while cat-back exhaust systems provide the highest profit margin, according to Eric Horn, parts consultant. He said he believes the grilles are popular because they “add a unique look to the front of the vehicle.”
At Sam Galloway Ford in Fort Myers, Fla., wheels are the top seller, according to Accessories Manager Sean Bothwell. He estimated 50 percent of accessories sold there are for trucks, while about 35 percent sold are for Mustangs.
There are some accessories that are popular in all or most markets. Wheels, tires, grilles, DVD and MP3 players, GPS navigation systems, audio products, step and side bars, bed liners, exhaust modifications, tonneau covers (truck bed covers), and remote starters are some examples that would fit in almost any department.
The second aspect of “the what,” is deciding what type(s) to sell. You’ll need to decide if you will sell OEM accessories, aftermarket accessories or both. Dinos Constantine, vice president of AutoStyleMart, gave his advice on offering both OEM and aftermarket products: “The dealership needs to give the consumer choice. OEM is an important part of the accessories niche, but a large fraction of the market is not OEM. If you restrict yourself to only one piece of the market, you’re going to limit you’re potential.”
MacGillivray added, “Technology is changing so quickly that there’s a type of customer that wants the latest and greatest and isn’t satisfied with the OEM options, so they’re always looking for mobile electronics products and the latest technologies.”
Determine when you want your customers to be presented with customization ideas—during the meet and greet, after they choose a vehicle, once in the F&I office or after the sale is complete?
You may want your vehicle sales associates to focus solely on selling vehicles. If so, the vehicle salesperson might initially mention accessories, but turn the customer over to your guru or an accessories consultant after choosing a vehicle. If you don’t like the idea of adding another salesperson to the sales process before the vehicle sale is complete, have your F&I managers turn over customers to the accessories department after docs are signed. Another option is following up with customers after they’ve taken delivery via direct mail or e-mail marketing.
David Stringer, president and founder of the Insignia Group, said, “Selling accessories starts and ends with the process. Dealerships have to sit down as a group and decide how and when accessories will be sold in the vehicle selling process. Just having a pro-shop with accessories on the walls isn’t getting into the business. Sales, service and parts all have a role to play in the process and they all have to agree on consistent pricing.”
Don’t forget selling in the service lane. Many customers coming in for service wait for their vehicle. Make it standard practice to introduce all service customers to your accessories expert, so they can get acquainted with the customization options your department offers.
While utilizing an e-catalog, like the ones AutoStyleMart or the Insignia Group offer, cuts down on costs, saves space in the dealership and offers a wide product selection your customers can choose from, customers will only be able to see the accessories on a computer screen or on paper. They won’t be able to touch them or see them up-close unless you keep some of the products in stock. A set of 20-inch, chrome wheels in the showroom is bound to create more excitement than a 4-inch picture of that same set on a computer screen.
Stocking select accessories and devoting a section of your dealership to a department is the more expensive option, but it will create more excitement. MacGillivray advised dealers opening an in-house department to establish relationships with independent installers and re-stylers in their markets. He said, “Those are the people that have the expertise—the product expertise and the installation expertise—and what’s nice is that they are set up to service your dealership and compliment your dealership and have it totally behind the scenes.”
The second aspect of “the how,” involves marketing accessory sales as a staple of your business so it becomes a lucrative profit center. Considering the majority of accessories customers are young drivers, many of them cannot afford to buy a new vehicle, but many of them do have enough money to customize their existing vehicle.
How will you target this audience—cable TV spots, Internet advertising, direct mail, billboards? How will you market your accessories to them—promoting specials, offering credit for expensive customization options, advertising discounts for spending a certain dollar amount? Once you answer these questions, you may be able to integrate accessories advertising into your existing ad campaigns, leaving your advertising budget unchanged.
If you decide to implement a full-blown accessories department in your dealership, you will have to find or create the necessary space. Many dealers integrate accessory sales into the parts department, but MacGillivray warned dealers against that. He said, “Avoid the temptation to roll your accessories business into your parts business… They really are separate business models, and [an accessories department] is not a traditional repair and replacement business. I think the single biggest mistake that dealerships make is making that assumption because it doesn’t work.”
Even if vehicle sales aren’t declining in your area, selling accessories is a potential source of revenue for your dealership. Besides generating revenue, an accessories department has other perks. Accessorizing a few new vehicles could even jump-start new vehicle sales. At Richard Hibbard Chevrolet, “dressed up” vehicles usually move faster, according to Horn.
Reuther Chrysler, Jeep and Dodge also customizes vehicles on the lot. Kling said, “We have sold every one we have fixed up, and we are waiting for more Jeeps to come in to [customize] more of them.”
Too many dealers are overlooking this $216 billion market. While vehicle sales will always be your “bread and butter,” don’t ignore this rapidly-growing industry that can substantially increase your bottom line profits.
Andrew Stanley contributed to this article.
Photos also provided by SEMA.
Vol 5, Issue 7
Recapturing lost revenue is the first step toward fixed ops profitability. Use this four-step process to reduce or eliminate wasted tech hours, declined services, inefficient scheduling, and lost tire sales.