Car Dealers: A Friend in Need

Feb 14, 2011

The implosion of automobile dealerships in the United States during the past few years has created an environment in which dealers recognize the need for additional revenue streams. Dealerships can no longer rely on gross profits from new- and used-car sales to fund their operations. The competition for service business also has increased, further straining the ability of dealerships to obtain needed profits.

Forward-thinking dealers have discovered what restyling people have been preaching for years: Accessories make a lot of money.

How much are dealers generating in sales? The numbers might stun you. I had spoken with a number of dealers attending the SEMA Dealer Day in Las Vegas. The numbers thrown around were big. Dealerships speak in terms of tens of thousands, up to hundreds of thousands, of dollars per month in accessory sales. They see the need to move the dial even more – many looking for increases of 20% and 30% per year in accessory sales; some set goals of closing as much as 50% of their car buyers on purchasing additional accessories.

Dealers develop plans of action

Jeff Daniels is owner of Toyota of Muncie, Muncie, Ind. One simply needs to access the dealer’s website, click on “Parts” and there will be an online catalog of accessories fully categorized. Shoppers can peruse the website, but they also are stepped through the accessory buying process as part of the purchase of their vehicle. Daniels started with Toyota corporate and eventually decided to “move to the other side” operating his own dealership. He chose to take on an underperforming store and turned it into a powerhouse. He isn’t shy about being an advocate of accessory sales because they have served as part of his overall plan for profitability.

Asked to explain the importance of accessories to his operation, Daniels says, -“[It’s] very important and growing in importance every day. Our ability to deliver accessories to consumers that otherwise would go elsewhere (and who do) establishes us as a “one-stop” shop for everything related to their vehicle ownership experience. All of this enhances consumer loyalty and ensures they’ll return for their next purchase, service or modification. Franchised dealerships are far too equipped and advantaged in their ability to sell accessories to overlook this new revenue stream.”

One thing dealers recognize quickly is there are myriad choices for accessory offerings. It requires a dealer to develop a plan of action, and focus on things that will sell well. Daniels has several categories he utilizes for his customers.

“There’s some seasonality to our sales,” he explains.”For example, in winter months we sell a lot of heated seats, remote starts, all-weather mats. During other parts of the year we sell primarily those items along with window tint and leather kits. We have a lot of success with truck accessories and outfitting, as well.

Daniels reports a statistic that should be very, very interesting to the restyling industry: “We sell 70% aftermarket to 30% OE”

A big part of the thinking behind this mix is the higher profit margins on aftermarket accessories. Of course, limited OE offerings have an impact, as well. Consumers rarely are motivated to buy without being offered choice. Successful dealers such as Daniels recognize that fact. Retailers often find focusing on only one product/brand in a category is not as successful as offering consumers the choice of a few different brands of the same product. Often, an aftermarket accessory will offer more features than the limited features offered by an OE accessory. Successful restyling companies should be able to see the opportunity right away: Dealerships often need to be educated on the price differences, larger profit potential and selections available. More on that, later.

Restylers become “accessory advocates”

Daniels readily admits that he values his local professional restylers.

“While the financial benefit of doing everything in house isn’t lost on me, we still believe some items must be trusted to those who have made the investment in people and equipment to do it right” he says. “We only do business with restylers whom we know are as excited to partner with us to fix a customer issue as they are to sell an item. Most restylers know dealerships have too many options these days to assume they have a monopoly on what they provide.”

You might be curious about the potential for increases. With all the “doom and gloom” out there, it’s refreshing to learn Daniels’ perspective on 2011. “I see a modest 10% increase in accessory sales generated from new-car sales, but substantially higher increases from service-generated and truck/snow equipment sales, which I’d estimate at 20% over prior year.” Daniels looks for a good 2011.

While dealers such as Daniels are “seeing the light,” many restylers still find themselves in an upward climb to convince dealers to use more accessories. Perseverance, however, brings rewards.

We spoke with three restylers from different parts of the United States to get their perspectives: Tim Moore of Trim City, Amelia, Ohio; Jerry Abt of Auto Trim West Wisconsin, Eau Claire, Wis.; and Darren Smith of Designs Unlimited, Springfield, Mo.

The products all three sell vary according to their respective markets. For Moore, the products are geared toward used-car dealers. “We sell primarily pinstriping, chrome packages (really big sellers) spoilers and wheel skins.-” he says, adding that’s 90% of our business is used cars, mostly larger dealership with used-car facilities, and some smaller independents.”

Smith sells primarily the same products as Moore, but his clientele is mostly new-car dealerships. Smith maintains what most restylers consider to be a dream relationship with his dealers. – “We service 16 or 17 dealerships regularly,” he notes. “Four are relationships based on trust. These four want to save time and to just get it done. They know I know what they want done with their new cars, and we pretty much free to choose the vehicles and do what we want. Used cars may require a list, since the offerings are unique and each one has to be kept within certain price parameters.”

Abt’s business is in a very cold climate, so his product offerings are a bit different. “We sell a lot of seat heaters and remote starts,” he says. -“We also install sunroofs as well as leather kits. Graphics are popular and the current interest by Ford dealers is spurring greater demand: Interest in graphics goes up and down. Right now, we’re going back up.”

Applications different, partnerships the same

There’s an interesting observation that surfaces from all three restylers when it comes to dealership business. Says Moore: “Quality and service is where it’s at; it’s not price. If dealers are grinding you on price, then they’re ripe for the next cheapest guy. If you are there when you say, and you keep appointments, they don’t care about paying a little more. You absolutely must give quality service and quality installation.”

Then he offers up this thought, paralleling dealership owner Daniels’ earlier comment: “Dealers want a vendor that can interact with their customers without them having to worry about you harming the relationship.”

Abt agrees with Moore. “We don’t try to be the cheapest price. We usually are more expensive than others. However, we pride ourselves on our service and skills. The dealers we work with appreciate it and they know they don´t have to worry about anything we do on their customer’s cars.”

Smith finds much the same in his area. -“I need to stay on top of customer-š’s needs and not let the work wait. I’ve never procrastinated. I hustle and I constantly offer suggestions. If you say you’re going to be there, you’d better be there.”

These observations show how critical a good restyler is to dealers who are pushing accessory sales. Maintaining prompt, reliable schedules and keeping your promises are the keys to retaining dealership business. It also makes a restyler a valuable partner in the success of a dealership.

Show your professionalism

Doug Jacobs, president of Restylers’ Choice, a Cincinnati-based supplier, has preached the same message for years: Professionalism. His customer base includes hundreds of restyling companies from all over the United States. As a result, he has a unique “view from the top.” He tells us that “having a uniform, preparing sales literature, having your company name on your vehicle are all key things that need to be done in order to convey the correct image for your business. Perception is reality. That means having the best impression, which can make your customers think you are bigger and better able to handle their needs just by making a very professional first impression.”

Asking Jacobs what he feels is important for growing and maintaining dealership business, he says, “Take care of the customer; but that doesn’t mean “sell it cheap” Dealers want to be well serviced. They need a supplier who communicates on the status of jobs. Stuff happens, and you may not be able to get the product they need when they need it; but if you communicate and let them know, they will deal with it. Take care of them as you would expect them to take care of you, and you will win.

“Also, show them how to make money with your products and services. If you can make this [business] about them profiting they will listen and do more business with you.”

Our three restylers offered similar good advice for retaining and growing dealership business. Smith observes, -“The OE’s have come down considerably in their prices on mainstream accessories like spoilers. The big difference is that I can get things a lot faster for the dealer.”

Abt produces his own product catalogs for dealers. “They may not be the flashiest,” he says, “but they look professional.

“The important thing is that dealership personnel become aware of what you can do for them. I’m always amazed to hear a salesperson comment that they didn’t know we could do something like electronics or other accessories we´ve been offering the dealership for years.”

Trim City’s Moore operates two mobile units to service the needs of his dealer customers.

2011 to be better for industry

A very positive view emerged from Jacobs and the three restylers regarding business in 2011. Jacobs has this to say: “2011 will be better than 2010. How much? There are projections calling for 20% increase in new-vehicle sales to the tune of 12 million per year. Some analysts are even predicting more, to the tune of 14-15 million. Whatever the case, the credit industry is loosening up a bit, and the pent-up demand will help drive accessory sales on these new cars.”

Moore sees similar good things. “Business is on the increase” he says. “There’s a better attitude in consumers and dealers. It was no doubt one of the toughest times, but business is starting to come back. Dealers are willing to spend because they’re making more.”

Smith is positive, as well: “2010 was above average. I’m looking for things to be better with a change in Congress. As we see housing and the economy coming back, things will improve.”

The picture that emerges shows that restyling business is on the upswing. Dealers are eager to increase profits and are willing to utilize accessory sales as an important part of the mix. Now, as never before, there are opportunities presenting themselves to restylers. The key is to make yourself a partner with dealers and hold up your end of the partnership. Maintain reliability. Pride yourself on quality, and don’t be afraid to ask a fair price for what you do. Keep a watch on your business operation while working harder to serve your customers. As Smith observes: “Spend less. Hustle more.”

Restylers who place themselves in this picture undoubtedly will be a tremendous boost to help successful dealers sell accessories.