Today’s economy has changed the landscape of consumer demand in the U.S. auto market. In spite of the decline in new-vehicle demand, one factor has remained consistent; consumers still want their vehicles personalized. Accessorization is a $38-billion per year industry and dealerships have barely tapped this highly-profitable revenue producer, capturing a mere 17% of the market.
Accessory sales offer high profit margins and will help any dealership boost valuable lost profits in today’s declining economy. To ensure maximum profits and customer satisfaction, it is important to not only to choose products your customers want, but it is equally as important to choose the right accessories providers. Understanding these guidelines will help you create a winning strategy for your accessories program.
Get in tune with customer demand
Every dealership must take into consideration market demographics while managing their new car inventory. When deciding what accessories to offer, management must also consider the same criteria. If your clientele is younger and trendier, then consider aggressive restyling packages and more cutting-edge technology in your electronic accessories. Body kits combined with aggressive repainting, lowering springs, high-end audio technology are obvious choices for this category. If your clientele is older and looks for more practical options, simpler restyling that enhances a vehicle’s look as well as useful electronics such as rear-seat DVD players for the kids or navigation systems for trips should be at the top of the list.
Regardless of your general demographics, the best way to find out what your customers want is to ask. Create a list or brochure of available accessories you have available and present it to every prospect during the sales process. Additionally, make sure to ask your prospects what accessories they are considering that might not be on your list. Recording and channeling this information to the accessories manager will allow him/her to keep your accessories program fresh and better meet customer demand. Even if you don’t intend to stock every item requested, having pre-sourced vendors for as many products as possible will still allow you to offer a quick delivery option and greatly enhance your opportunity to make the accessory sale before other competitive outlets get the chance.
Choosing the right vendors – high profits AND customer satisfaction
Factory accessories are the primary option for dealers when offering accessory options. The products are “factory-backed” and the dealership gets all of the perks of purchasing though the manufacturer. The downside of factory options are (1) every other dealership offers the same options, (2) the MSRP prices are set by the OEM. This forces you to compete downward on price against the competition limiting your profit margins. Typically, factory-installed options offer about a 10-20% profit while dealer installed options can net you profits in the 50-70% range. Additionally, you can offer accessory packages that the competition doesn’t have thereby uniquely branding your dealership without concern for OEM published sales prices holding down your profitability.
Profits and branding are persuasive reasons to expand your accessory sales. But, your dealership needs to protect it’s reputation for quality and service or risk declining CSI scores. So, it is important that you choose your vendors wisely. Here are some criteria to consider when choosing your accessory partners.
1. Do they currently supply to any OEM’s? If they do, then they will be aware of the quality standards required to service OEM accounts. Ask if the products available to you are manufactured to OEM standards.
2. Do they currently sell to any dealerships in your make? If so, ask for 3-5 referrals and call them. Ask the referral if they have had any quality problems, warranty issues, return issues, etc. If the vendor won’t or can’t give you any referrals, be very cautious in considering their products.
3. Do they match your factory warranty? If the vendor is an OEM supplier, they should match the factory warranty. Having the ability to “match” the factory warranty on your accessory products is a great way to easy concern about “non-factory installed” options. If your prospective vendor’s warranty isn’t up to auto industry standards, consider alternative sources.
4. What is their service parts availability? This doesn’t apply for all types of accessories, but restyling, wheels, and other accessories that can be easily damaged in accidents or from heavy usage typically get frequent requests for replacement parts. Make sure that your supplier offers a satisfactory service parts availability in the event that your customer has an unfortunate accident a couple of years down the road and needs one of these accessories fixed.
In spite of declining new-vehicle sales, there is considerable profit and dealership branding opportunity available for dealerships in today’s market through accessorization. Take the time to understand your customer wants and your vendor’s ability to provide reliable products and service that your customers have grown to expect from your dealership. Doing this bit of work today will make everybody happy many miles down the road.