The parts and accessories market has undergone a sea change over the years. Dealers are now incorporating accessory sales into their sales processes, and they’re leaning on technology to help buyers customize their newly purchased vehicles — all in the hopes of improving the buying experience and capitalizing on the $30 billion specialty equipment market.
Larry Hook, a 20-year industry veteran and general manager of All American Chrysler Jeep Dodge of Odessa, Texas, recalls a time when vehicles didn’t come with carpet. He even remembers when some Chevrolet trucks didn’t come equipped with either a front or rear bumper, and how Dodge trucks came with school bus-like steering wheels.
“Things have changed, no question,” Hook says, pointing to the wheel craze of a few years ago when consumers began buying bigger wheels and tires. “We used to have to apologize for our product. Now, we can open the door and not say much. Our product has come forward leaps and bounds.”
If a buyer wants to further customize his or her vehicle, the store tries to make that experience as smooth as possible. “If we don’t make it easy and convenient and have the product in stock, then they’ll go and accessorize their vehicle somewhere else,” Hook says.
The All American store, which is part of Medford, Ore.-based Lithia Motors Inc., has staffers dedicated strictly to installing accessories. There’s a technician who concentrates on window tinting and a heavy truck accessories specialist for handling larger items, such as grille guards.
“We have to stock those types of accessories,” Hook explains. “We’re in oil field country, and these guys like to have their vehicles a certain way, so we try to stock those types of items.”
One of All American’s most popular items has been a pre-installed Electronic Vehicle Tracking System (EVTS) developed by Mopar, the accessories division of the Chrysler Group. Hook says the product penetrates at a 50 to 60 percent clip each month. He adds that the product’s three protection packages Mopar allows his F&I office to upsell, which can include anything from a one-year service plan to concierge services and 24/7 emergency dispatch, also provide a boost to his dealership’s bottom line.
The device offers GPS tracking to help customers recover a stolen vehicle as well as track other vehicle behavior. For example, if a young driver exceeds 60 mph, the system will send an e-mail noting the fast driving, Hook says. The EVTS also has been a boon for the dealership, because it can signal if there’s a vehicle being driven off the lot when it shouldn’t be. It also notifies Hook if a vehicle is being driven beyond a preset circumference.
In February, All American, which consistently ranks in the Top 10 for Ram truck sales nationwide, averaged about $660 per vehicle in parts and accessory sales. That added up to $47,000 in additional revenue for the month, Hook says.
Keeping that much inventory in stock does require shelf space, but the dealership’s warehouse remains about the same with enough stock to cover a couple of weeks’ worth of sales. Hook says that’s because most products sell within 90 days. And if a product is needed from a vendor two hours away, or even five hours, the dealership will send someone to get it.
“We don’t want a customer to wait on us with a brand-new vehicle ready to go,” Hook says. “We should be the ones making that extra effort. The customer is the focus of our day, not the interruption of our day.”
Auto dealerships that are willing to likewise invest in their parts and accessories offerings will be joining a multi-billion marketplace on the rebound.
A 2012 Annual Market Report released in March by the Diamond Bar, Calif.-based Specialty Equipment Market Association (SEMA) found the specialty equipment market experienced 5 percent sales growth in 2011, with annual sales totaling $30 billion.
Specialty auto parts manufacturers, according to the report, sold most of their volume to specialty stores (28.2 percent), chain stores (17.6 percent) and mail-order companies (17.1 percent), with an estimated 4 percent of products sold through franchised dealers.
A December 2010 SEMA report titled, “Influence of Accessories on New Vehicle Sales,” found that accessories sales influenced more than 1 million new-vehicle sales each year. The report found that 14 percent of new-vehicle buyers planned to accessorize their vehicle and about one-third of them were influenced to buy a particular model based on the availability of accessories. The report also found that about 8 percent of new-vehicle buyers were influenced by seeing an accessorized vehicle.
Choose Your Option
Showcasing an accessorized vehicle in the dealership has been a solid sales tool for Adrian, Mich.-based Venchurs Vehicle Systems, which specializes in creating expedition versions of SUVs and trucks, says Mark Merriman, the company’s marketing and sales coordinator.
He recalls how an undisclosed dealership’s sales manager said he wasn’t interested in a demonstration Jeep outfitted with hardcore off-road items. That was until the store’s owner pulled up and asked how he could get more of them.
“We have consignment vehicles on the lot so people can see what’s on them,” Merriman says. “You can have pictures and talk about it all you want, but when they actually see it, that triggers it.”
From Merriman’s observations, it seems that regional trends tend to drive the decisions behind acquiring accessories. In the Southwest, for example, consumers have been buying accessories to enhance Baja-looking, off-road vehicles. In Texas and Florida, a young generation of workers has found employment in natural gas mining, which has given them enough disposable income to buy and accessorize their vehicles, Merriman notes.
Venchurs Vehicle Systems, an off-shoot of supply chain management firm Venchurs, also has seen regional differences when it comes to offering dealers their custom packages.
In Chicago, auto dealers tend to keep the work in their body shops, so Venchurs Vehicle Systems would provide mechanics by phone, if needed, to walk them through accessory installations. In California, dealers didn’t want to change up their own body shops, so the company created installation centers that can upgrade the vehicles for them. It’s a mixed bag in the South, Merriman notes, with Venchurs doing whatever it takes to accommodate dealers there, including offering those previously mentioned options. It will even offer to have vehicles shipped to its Michigan headquarters to have a package installed.
“We try to work with the dealer and what’s in their wheelhouse,” Merriman says.
Dealers also are embracing technology to help sell accessories within their stores, including AddOnAuto, a division of izmocars.com. AddOnAuto provides an in-store, web-based program that includes a virtual configurator so customers can see how their vehicles will look when accessorized. The solution also links up parts departments with suppliers, as well as tracks sales.
“There’s nothing better than checking out a vehicle tricked out with everything, but you can’t do it with every vehicle,” says Sidney Haider, president of AddOnAuto. “Dealerships will need to get into this process in our opinion.”
Protection Reigns Supreme
Haider likened the automobile industry to the cell phone industry, noting that telecoms aren’t making money on the phone, but on accessories and minutes. “Dealers don’t make money on new cars, they have to go in this direction if they want to survive and make money,” he says.
In February, Haider’s company released its annual Auto Accessories Trend Report, which looked at 2012 nationwide sales data and ranked the top-selling accessories by volume, revenue and profit. Protection products were far and away the top-sellers at the dealerships, with paint protection and anti-theft/recovery products listed as No. 1 and 2, respectively, for both revenue and profit.
By volume, floor mats, factory exterior and body side moldings led the way. Haider says customers also favor splash guards and window tint.
The report was based on sales data from a sampling of 150 dealerships that utilize the AddOnAuto solution. The dealerships surveyed sold more than $56 million in accessories last year, Haider says.
New-car buyers using the AddOnAuto system spend about $1,000 on accessories at the point of purchase, a common amount throughout the country, Haider says. The top-sellers vary a bit regionally, with purchasers in larger cities favoring paint protection and body side molding, while all-season floor mats are more popular in the Midwest and Mountain states.
AddOnAuto tracks the time of each presentation and has found the average accessories presentation takes about six to 10 minutes, Haider shares.
John Moore, accessory/personalization manager at Knoxville Toyota has been using AddOnAuto for about three years. He says it’s given his department a better profile.
The Tennessee dealership’s top-sellers include window tint, paint protection, wheels and tires, and leather interiors, Moore says. The dealership employs an accessories salesperson who engages customers after they’ve agreed to purchase a car and before they head to the finance department.
“If they use the tool properly, the customer gets to see and visualize it,” Moore notes.
From Foe to Friend
Accessory sales have long been the bane of the salesperson hoping to close a quick deal, but AddOnAuto has shown that the average customer spends about seven to nine minutes choosing accessories, Moore notes.
“We had the finger pointing at us for so long, we used to have an old-fashioned clock on the desk to time us,” Moore explains. “I’m not knocking finance, but usually that’s where the time is spent.”
Toyota Knoxville averages between $700 and $900 per passenger vehicle in accessory sales, and averages about $1,200 to $1,500 on trucks, Moore says. “People are going to buy stuff anyway, whether it’s at Pep Boys or the accessory shop. We’re trying to keep their business here.”
To that end, the dealership has a separate 26,000-square-foot building devoted to just accessories and reconditioning vehicles. His department has about a 50 percent penetration rate with customers, boosting the dealership’s monthly gross profits by about $100,000 to $125,000, Moore says.
He lauded AddOnAuto for not only being a good sales tool, but also a good accounting mechanism.
“The backside of the program has helped me as much as the front side,” he says.
No matter which direction a dealership takes when it comes to parts and accessories, the consumer must always be taken into consideration first, All American’s Hook warns.
“It shouldn’t be hard to buy an accessory or buy a car. It should be easy,” he says.
He also urges sales staff to have some fun while taking care of the customer. “You can’t do business with people and have it be a grind the whole process,” Hook says. “A lot of people don’t like the grind. We need to over promise and over deliver, meaning we need to over deliver what we promise. If you have a product that a customer is interested in, you have to give them better service than anyone else in town.”
About the Author
Paul Chavez is a freelance writer based in Venice, Calif. Contact him at [email protected]